Consultant Turner & Townsend is beating tough times in the UK with a global plan. Mark Hansford meets plan architect and company chief executive Vince Clancy and discovers a firm on the up.
Markets are challenging, and the UK market more than most. In the UK it’s going to be a tough, challenging 12 to 24 months,” states Turner & Townsend chief executive Vince Clancy. But he’s not depressed or even downbeat. Far from it, in fact: he’s a man with a global plan − a plan that is well on its way to fruition.
Clancy joined Turner & Townsend in 1989 and since 2000 has spent much of his time developing this global plan, establishing new operations in the United States, Canada, Europe, Middle East, China, India and Australia.
“Ten years ago we set out our strategy with two planks. One, globalisation, gives us access to markets where growth is still on the agenda. The strategy was to be as large outside the UK as in the UK, and in terms of staff we now are, and in terms of turnover we will be next year.” Non-UK turnover has increased from £20M to £80M in recent years.
“It gives us a lot of confidence,” he says.
Confidence also comes from the second plank of the strategy. “That one is about how we face the market. We see anyone who owns and operates an asset as a potential client. We now have a very significant presence in infrastructure and natural resources markets, particularly in sustainable energy and mining,” he says.
This philosophy has considerably insulated the firm from the downturn in commercial property markets around the world.”So the wide scope of who we can work for offsets some of the challenges.
“Our markets are ones that continue to invest − infrastructure and natural resources − so we can capitalise on those and retain our ability to work in the property market.”
“Our markets are ones that continue to invest − infrastructure and natural resources − so we can capitalise on those”
The fact that Turner & Townsend’s key role is helping clients deliver more efficiently also means tough times are not necessarily bad times. The fact that those clients are often global players helps even more.
“One of the reasons we wanted to grow properly overseas − rather than just depend on a few regional outposts − is because many of our clients are global,” explans Clancy. The firm works with the likes of mining giant AngloAmerican, car giant Nissan, energy giant Shell and engineering giant Siemens.
They are a great way to get into a new territory. “We can travel in with our global clients. Our initial entry into China was in joint venture with Siemens,” he explains, stressing that the business that has been built up on the back of that is local. That was in early 2008. The firm’s South Korea business developed in a similar way in late 2009, this time with a joint venture with South Korean project manager HanmiParsons.
“Typically we go where our global clients are active and our sectors are active. We have seen competitor companies go to these countries, put the sign up and then not understand why people don’t come,” he says.
Clancy says other firms are simply too far behind the game.
“A lot of companies are trying to go overseas now when their base location is under stress, and that’s tough.”
Turner & Townsend, by contrast, has spent the last five to 10 years investing in a global infrastructure to back up the local offices. “We invested a lot in the good times. For example, India for us is a 10 year project and we’re now in the fourth year of it,” he says.
The firm opened its first permanent Indian office in Mumbai − and secured its first commissions as project managers and cost managers in the country − in July 2008.
“What you need more than anything else is good management. You have got to take your best management and put them into your growth markets”
Key to that infrastructure is having top people at the top. “What you need more than anything else is good management. You have got to take your best management and put them into your growth markets. That’s the real key to success,” he says. “A lot of companies make the mistake that you can turn up anywhere in the world and it will be the same as working in London − and it’s not.
“Our business mantra is that we are one business. We own all our regional operations and have the same culture, capability and service offering wherever we are. You need your best people there to make that happen.”
Clancy says it’s one of his regrets that he himself has never had the experience of running an overseas office. “Since taking charge of our international business in 2000 I have spent a lot of time overseas, but have never worked there,” he says.
Instead, he is reliant on the seven regional MDs on firm’s operations board. They meet quarterly. Global sector leaders back these MDs up by connecting across regions, sharing best practice and managing resources. “There is a lot of dialogue that goes on between business units, making sure that we have resources in the right places,” says Clancy.
“Our business mantra is that we are one business. We own all our regional operations and have the same culture, capability and service offering wherever we are”
Most parts of the globe are doing well for the firm, with mainland Europe, Asia, the Americas and even the reborn Middle East all singled out for a mention. But Africa is the place that’s really on top of Clancy’s agenda.
“Africa has exploded in the last five years and continues to do well,” he says − he’s off there next week looking at potential acquisitions. “We are keen to expand in Africa, and are looking at various ventures over there.”
The firm provides contract administration, cost estimating and risk evaluation services for South African transport operator Transnet’s $10bn (£6.1bn) capital expansion programme, was lead consultant on the just opened King Shaka International Airport in Durban, has its eyes on mining and oil and gas projects in Ghana, is working on the first PPP in Uganda to provide services to the country’s police force, and is even working on Botswana’s national library.
But the firm is busy across the globe − from programme managing London’s Crossrail as part of the Transcend consortium to project managing Brisbane’s A$8bn (£5bn) Cross River Rail, one of a number of its major infrastructure schemes in Australia.
Australia is probably as important as Africa to Turner & Townsend right now, with some mind boggling energy schemes on the go. It is working on the £27bn Gorgon LNG project, a massive plant being built on Barrow Island, off the northwest coast of Western Australia by a joint venture of Chevron, Shell and Exxon Mobil.
It is also engaged on the similarly massive Browse LNG development, planned for 60km north of Broome, also in Western Australia. Detailed design of this scheme is due to begin this year. These are major civils schemes and play well with Turner & Townsend’s skill set, says Clancy.
As a UK consultant doing so well in developed countries like Australia, Clancy is well placed to comment on Infrastructure UK’s recent report attacking waste in UK civil engineering. It says that efficiency improvements could reduce the cost of building and maintaining infrastructure by 15%.
These improvements included government working with businesses to improve procurement and raise productivity, simplifying some processes and promoting innovation.
“I passionately believe that many UK businesses are as good if not better than those around the world and we should be quite bold in saying that”
“The cost of civils report, as a report, contained no real surprises,” says Clancy. “It articulated quite well the key issues in play. But it is clear that there is a big gulf between the best and worst managed projects.
“What drives success in this industry, or any industry, is clarity of need, clarity of funding and clarity of process.
“I passionately believe that many UK businesses are as good if not better than those around the world and we should be quite bold in saying that.
“In the UK what gets in the way is lack of clarity in process − whether that is the planning process or other factors. Our Capital Efficiency tool, which uses data from hundreds of projects to work out what the enablers of success are, shows there is a difference of up to 30% between well managed and badly managed projects. A huge amount could be saved.”
Clarity about funding also remains a major issue, of course. Getting private investment into UK infrastructure remains time consuming and expensive.
“We are competing with a lot of countries around the world for finance, and we have to get our act together. When it comes to return on investment the cost and time it takes to get projects on the ground creates a big question mark.
“I spend a lot of time in countries like China and Uganda, and when they say they are going to do something, they do it quickly. The new government here has protected major infrastructure projects. Now we need the structure to deliver it quickly.”
TURNER & TOWNSEND: KEY PROJECTS
● Transnet Capital Expansion Programme, South Africa
Turner & Townsend is working for the Hatch, Mott MacDonald and Goba joint venture to provide contract administration, cost estimating and forecasting and risk evaluation services for sections of Transnet’s ambitious rail and port expansion programme, parts of which are due for completion in 2011.
● Crossrail, UK
Turner & Townsend is providing cost planning support to Crossrail programme partner Transcend, a joint venture of Aecom, CH2M Hil and Nichols Group.
● Gorgon LNG, Australia
The £27bn Gorgon project sets Australia on its way to becoming one of the world’s biggest suppliers of LNG. Turner & Townsend is supporting the project from offices in Perth, Western Australia and London, England. A joint venture between Chevron, Shell and Exxon Mobil, Gorgon is one of a cluster of LNG projects underway in Australia with many others scheduled in the near future.
● Police Force PPP, Uganda
Turner and Townsend is acting as lead transaction advisor on a pioneering £300m PPP scheme to create new facilities for the growing Ugandan Police Force. Senior PPP director Mark Walmsley has transferred from the UK to Africa to support the growth of its business here.