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Two become one

Black & Veatch/ Gleeson - By merging construction and design Black & Veatch hopes to improve protability, its head of UK water Tony Collins tells Bernadette Redfern.

If Tony Collins acts as fast as he speaks, there is no doubt that consultant Black & Veatch and contractor Gleeson will be fully integrated by September 2007 - the self-imposed deadline for achieving this feat.

Collins was former head of Gleeson's water business, bought by Black & Veatch on 19 October (NCE last week). He now heads Black & Veatch's enlarged, 2,000-strong UK water business.

The merger of two of the water sector's biggest players gives clients the option of buying a 'one-stop shop' of design and construction.

If the merger works as anticipated it will also offer the combined designercontractor internal savings, boosting protability. 'We hope the margins will get better.

Protability in the water sector has changed from a percentage fee to gain share. Clients are trying to stimulate ever better performance against target cost, ' he says.

Collins adds that, with plans to treble global turnover to £3bn by 2011, it is likely Black & Veatch will make further major acquisitions in the near future.

Collins is tasked with streamlining the company's operations around five regional business centres - in Scotland, the north, east, west and the Thames Valley - serving the major water company frameworks the company is currently working on.

Both Collins and Black & Veatch Water Europe president Bruce Ainsworth acknowledge that both companies must get to know each other better. 'The first 100 days is a discovery phase. Each will be learning how the other does things and we have a team that is taking time to compare processes so that we get the best of the best, ' says Ainsworth.

'Within the rst 100 days we will have the same tendering, review and approval processes.' But it's not just the systems that have to be integrated.

'The challenge for business directors will be to fully utilise all of the combined capabilities.

Former Gleeson people will have to get their heads around being responsible for utilising consultants. Gleeson people are not used to managing in a feeearning capacity, ' says Collins.

Although he acknowledges that it won't happen overnight, Collins is condent that the business will be a better, more efcient one once the integration is complete. 'Without a doubt this puts us one step ahead of the competition. We will become a more efcient and better performer, and that is what clients want.' But do clients want design and construction rolled into a single package? 'Some will want to make a Christmas cake with their own ingredients and that's fine, ' Collins says, alluding to companies such as Wessex, which is carrying out its own design and construction. Others prefer to commission design and construction separately.

However, there is demand for a combined service, he insists.

One of Collins' key challenges is proving to customers who are interested in a one-stop shop that the integrated business is more efficient than the sum of its parts. 'With an integrated team the design side will understand what the construction side needs.' This will eliminate the to and fro of design iterations seen on many jobs. 'And it means there will be no need for lots of options to be worked up. The designs will be geared to how we want to build them, ' Collins says. Better understanding will improve risk management, he adds.

There are benets on site.

'If we have a problem on site people should be willing to own up to it. You can't do that with separate companies because of professional indemnity insurance and liability.' Despite his condence in the new model, Collins acknowledges that 'making promises is easy, delivering is the difcult bit'. Contractual arrangements in the water industry mean that many of the frameworks are xed until 2010 giving limited scope to utilise the new model. Collins, therefore, is bidding for major capital projects tendered by Thames, Yorkshire and Southern Water, on which he hopes to demonstrate the savings that the new look Black & Veatch can offer.

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