Ian Gunter is UK Business Development Director of construction firm Bouygues UK which is a subsidiary of Bouygues Construction – the second largest construction firm in the world with prominent positions in the building, civil works and electrical/maintenance markets.
Dorothée Queyroux: Bouygues began working in the UK on a project by project basis – sending a team over to carry out the build only for the life of the construction period. When was Bouygues UK set up and to what extent have more opportunities presented themselves as a result of the move?
Ian Gunter: Bouygues UK was established in 1997 to coincide with the signature of our first design, build and operate project, being two research and teaching facilities for Kings College London.
Bouygues delivered these two buildings, totalling 60,000m², in an extremely challenging time frame of 16 and 18 months respectively and in addition, established a facilities management company, Ecovert FM, to provide a fully integrated DBO offer. The FM contract is for 25 years.
This first project paved the way for further success in PFI with (to date) 5 major hospitals, 3 grouped schools (and subsequently BSF schools), social housing and the new Home Office at Marsham Street.
From a very early stage colleagues from Bouygues International and France moved to the UK on a long term basis. We have also been recruiting locally and we very quickly established a permanent management team and work force. We now have around 40 nationalities represented in the UK.
DQ: Over the last decade, you have been very active in PFIs, PPPs and more recently BSF (Building schools for the future). As a French contractor, how did you get involved in UK governmental projects?
IG: As mentioned above, Kings College was the start and our first pure PFI was Barnet Hospital. The key strengths of Bouygues – financial, technical and risk management expertise – are absolutely suited to the PFI form of procurement. Furthermore our unique offer of Design, Build and Facilities Management/Operation under a global contract is extremely compelling and attractive to clients.
As to the "Frenchness"; we believe that UK clients are very pragmatic in their approach to procurement, with a focus on value for money as a key driver. Furthermore when you consider that the majority of the construction and all the FM is procured locally, nationality really is not an issue.
DQ: What is the trend in terms of the type of asset classes Bouygues has started building over the last couple of years? For example am I right in assuming you are building fewer large flatted residential schemes?
IG: As the market has evolved we have continued to spread our portfolio which now includes health, education, social housing and housing for sale (including large flats!), offices, hotels and mixed use.
Over the coming years, with the slowdown in public sector we see further diversification to the private sector and mixed use regeneration.
This does not mean we are deserting the public sector, far from it, we will continue to pursue the right opportunities to which we can add value.
DQ: What is your forecast for build prices over the coming 12 months?
IG: It is true we see many conflicting forecasts on build prices from various sources particularly QSs. Certainly there is current pressure on prices but with continuing demand for raw materials in other parts of the world it is hard to see prices being squeezed much lower.
The continued rise in oil prices will have an increasing effect on contractor's on-site costs (equipment, machinery etc) and even more so for all material prices where oil is involved in some way in their extraction/manufacture/haulage (i.e. most). This will inevitably pass through to build costs. Also adding to the pressure of cost rises are the ever increasing demands of environmental and other regulations.
Against this backdrop we have an overall reduction in the construction market and additional capacity from other countries who have even worse markets, such as Spain and Ireland (from where we see contractors bidding at negative margins). There will always be contractors who gamble with short to medium term price fluctuations and bid with the intention of squeezing suppliers and subcontractors, but this is not our approach and in my experience is a recipe for disaster.
Our focus is to find ways to drive efficiencies in the overall design and construction process and thus economies. We particularly challenge the design to drive out unnecessary cost. Finally we seek to work with clients and on projects where our added value is recognised and procurement is not just about the cheapest price. Whole life cost is far more pertinent.
DQ: What is you long term vision for sustainable development? Is it currently part of your policy to deliver innovative solutions for your clients that benefit the environment where possible. How important is building in an environmentally responsible way and how does the cost of such schemes compare with traditional practices?
IG: Sustainability in all our activities (design, construction, operation) is an absolute priority and must be part of our DNA; it is not a nice to do but a must do.
Building in an environmentally responsible way is extremely important to us and while we totally support the various industry and government standards, Bouygues sets its own benchmark with such initiatives as "Ecosite".
From a design perspective, if we consider buildings over the whole life, there certainly should not be a cost premium, quite the reverse.
The whole industry has to and is changing its mind set and together with our consultant partners and supply chain we continually look to deliver innovative solutions that benefit the environment.