SIAC Construction

Source: Exec Digital UK

Date :27/06/2007 11:34:51

An off-site solution: bringing quality and control to construction

SIAC Construction’s Group C.E.O spoke to James Hurley about PPP's, diversity in the Irish workforce, and the company’s innovative approach to implementing lean principles in a construction environment

Written by James Hurley & Produced by Ben Weaver

SIAC Construction is one of Ireland's largest contractors. Through a strategy of alliances with major international civil engineering contractors and specialist contractors, it is able to undertake multidisciplinary projects of scale and complexity. It has built a strong reputation and is growing business in Ireland and the UK.

The company, with it’s partner Cintra was responsible for a €300 million motorway project comprising of 18 overbridges, 2 underbridges and grade separated junctions at Kilcock, Enfield and Kinnegad in Ireland for the joint public/private funded M4/M6 motorway. That the company finished the project in December ‘05 (ten months ahead of schedule) is convincing evidence to support its claim that it has grown its business by delivering quality projects that always meet, and often exceed, its clients’ expectations.

Combining disciplines

A qualified engineer and chartered accountant, SIAC Construction’s C.E.O

Finn Lyden was head-hunted from Holland by the company from building materials firm CRH in 1994, having previously worked in a management consultancy role for both KPMG and Ernst & Young. “My current role effectively combines both the engineering and the financial disciplines,” he says.

This combination of skills is proving increasingly relevant as SIAC becomes involved in an increasing number of PPP’s (Public Private Partnerships) in Ireland. “Projects have become a lot more complicated. Where the contractor is providing part of the funding an understanding of both construction and financial issues is vital.” SIAC Construction is currently involved in a €600 million PPP joint venture project with Cintra.

“Our financial director has a similar combination of skills; he’s both an engineer and chartered accountant. In hindsight it would be hard to find a career that’s more suitable for someone with these qualifications.”

SIAC is currently taking advantage of an industry that is anticipating both exciting and challenging times, especially in Ireland. “The industry is changing quite a lot,” explains Lyden. “One of the main things that’s happening is more control of the process is being given to the contractors, and to the extent that control of processes can be influenced by contractors, that’s very useful. The move to design and build from traditional contracting has really helped.”

Increased risk

As PPP’s become increasingly commonplace in Ireland, Finn Lyden says that construction projects have become increasingly complicated, simultaneously bringing both opportunities and threats for SIAC Construction and the industry in general. “We have a number of specialist sub-contracting businesses. That’s a difficult market because of some of the contractual conditions that people have to work under. It also appears to us that people are taking contractual risks that they shouldn’t be taking and that’s not good for the long-term health of the industry.”

The Irish construction industry is currently tackling a significant political issue in the form of a new type of contract introduced by the Irish Government. “The new contracts transfer a lot more risk to the contracting sector than previously,” explains Lyden. “A lot of the risks are inappropriate transfers. The basis of the new contracts that are being used is similar to what’s involved in the public/private partnerships. I think that’s quite a challenge for industry in Ireland because I think the industry doesn’t appreciate the level of risk they’ll have to take. I don’t think it makes sense from the Governments perspective to be imposing these contracts because in a lot of cases the contracting industry can’t manage the risks better than the public sector would. So it’s inappropriate to transfer them.” SIAC is in a strong position to meet the challenges posed by the new contracts, but Lyden believes smaller operators may be less fortunate.

“Ultimately, I think these changes will favour large contractors. We’ve trained our people as to the implications of those contracts and it’s only through training that we can deal with them. It might have a larger impact on some of the smaller contractors. The levels of risk that a lot of the jobs will entail are far higher than previously. When you get into a high risk environment it’s going to be far too dangerous for small contractors in that they will have less ability to survive the risk. It really depends on how they are administered after the event as to whether the fine print is applied or not. Only one thing is certain – a lot more work for lawyers.”

Diversity in the workforce

The economic boom that Ireland has been experiencing since the early 1990s has brought prosperity to the country, with Irish workers now amongst the best paid in the world. With a strong economy demanding a constant supply of new workers, immigration from other European Union countries where there are still high levels of unemployment and few prospects has risen dramatically. In construction, a workforce that has a high proportion of Eastern European, and particularly Polish workers is common. “They tend to integrate quite well,” says Lyden. “They tend to be very good people. They are well qualified and speak good English. They have given up their home life to go to a new country and make their living there.

“The Irish population is nearly ten percent foreign now, and the vast majority of that has come in the last ten years. The need has been greater to attract that kind of workforce and for them to integrate than in the UK. It means there are less inflationary pressures now in the industry than there were four or five years ago before this happened. I suspect that will happen in the UK in time – if the Olympics causes a skills and resource shortage, I suspect Polish people in particular will come to address that.”

With the 2012 Olympics looming large in the not too distant future, and the Wembley fiasco still fresh in the collective memory, the construction industry has had its fair share of bad press. While SIAC Construction has a reputation for delivering projects early, Finn Lyden says that the reason many other contractors’ projects overrun is the unrealistic demands that deadlines place on them. “All projects are unique,” he explains. “They may have similarities, but it’s not like building a car where you have already made 100,000 so can predict exactly how many nuts and bolts go into it, meaning you can predict the costs of the next one. With any construction project, getting cost certainty is rarely possible, because people change their mind during the course of the process.

“Very few projects are built exactly as planned. There are significant variations and difficulties encountered simply because of things that haven’t been planned in advance. With a car, you know exactly what kind of carburettor you’ll use, so it can be bought months in advance. In construction, design decisions can be made late, so people are playing catch up. It’s hard to have a very efficient process for one off projects.”

Making construction projects more efficient may be difficult, but it’s something that SIAC are making strides towards.

“In our ‘envelope’ business,” says Lyden, “where we do the steel and the external envelope on industrial and commercial buildings, we have developed a process that we call a structure clad. We combine a lot of on-site activities, which include cladding and putting windows in. That’s traditionally done on external scaffolding. We have a process where we do the pre-assembly on a frame of a lot of these components in a factory environment and then we ship that completed assembly onto site. It’s then backed onto the structure so you don’t need any scaffolding. This has applications on larger buildings such as hospitals and schools.

“The net effect allows us to reduce the on-site labour time by 25 percent. Of course there are factory and transport costs involved, but from a site point of view, this solution does away with scaffolding and is a lot less weather dependent. Wastage is also substantially less and quality control is better because a factory environment is inherently more controlled.”

It’s a fascinating way of implementing a lean philosophy in a construction environment; since the principle originates in Toyota’s strictly controlled factory environment, it makes perfect sense to bring site labour under the control of the factory.

Lyden also believes the solution helps with another perennial construction industry issue; the skills shortage. “Part of the reason for the skills shortage is that less and less people want to work in a construction type environment. They are happier to work in an enclosed factory. We’re reducing on-site labour time, which also has a health and safety benefit.”