CEO of BAM, Theo Cullinane took some time out of his busy schedule to chat to Irish building about how he sees the Irish construction industry in 2018.
Established in 1958, BAM Ireland is the largest multinational construction business operating nationally, with a history of delivering many of Ireland’s flagship infrastructural and building projects, using PPP, Design & Build and traditional contract models. BAM currently employs over 2,000 people directly and indirectly and its turnover is expected to grow to €550m this year.
Now in its 60th year, BAM has been boosted by high profile contract wins such as being appointed Main Contractor for the new National Children’s Hospital in Dublin – the largest healthcare infrastructure project in the history of the State. In addition, it has also been awarded the National Children’s Hospital Satellite Centres at Tallaght and Blanchardstown. This followed on from BAM’s successful delivery of the enabling works for the hospital development, under an earlier contract.
BAM has just completed a number of significant developments. Can you tell us about some of the milestone projects?
One Microsoft Place, Leopardstown is one of the landmark projects of the last year. This 35,000m² campus, is creating a new standard in workplace environments. The 9,000m² One Molesworth Street Development for Green REIT, located on the corner of Dawson Street and Molesworth Street in Dublin city centre, was a key project for us. This prestigious commercial development is LEED Platinum Certified.
Construction works are near completion on the Courts Bundle PPP comprising a combination of new build/ refurbishment/ extensions of seven courthouses around Ireland. There is also our 25-year commitment to manage the facilities after construction.
What markets are you performing strongly in, and how do you see the current level of public sector investment?
While our operations cover the entire spectrum of construction across Ireland, our most recent year-end results showed that we increased private sector revenue by 34%.
Commercial office, and retail building are now a major part of our portfolio with the pharma sector being a strong growth area for us too.
Public sector investment has remained low – relative to GDP – in recent years. The €116bn NDP spend is most welcome as infrastructural investment needs an immediate boost. The first of the three residential PPP projects, planned by Government, will shortly be awarded and will hopefully be the start of a new phase of PPP schemes. These schemes, which are so necessary for providing homes, give an immediate investment and an economic return.
How are activities progressing in the newer markets?
In 2016, BAM in JV with Graham completed its first building project in Northern Ireland—the £80m Ulster Hospital project at Dundonald, Co. Down. Works are also progressing well on Ulster Hospital’s new £95m Acute Services Block for the South Eastern Health and Social Care Trust; the £28.5m Replacement Acute Mental Health Inpatient Facility for Belfast Health and Social Care Trust and the £57m New Maternity Unity at the Royal Victoria Hospital, Belfast.
BAM Ireland and BAM International have partnered to construct the €200m Museum of the Future in Dubai. The use of BIM technology enabled the construction of this intricate 30,000m² torus shaped unique structure. Elements include a futuristic stainless steel facade with illuminated glazed Arabic calligraphy. Our Irish project managers are leading the delivery team and works are progressing well. Once complete, seven floors of exhibition space will showcase innovative and futuristic concepts, services and products.
Recent projects in the Middle East also include the Aqaba New Port project—a second port developed as part of Jordan’s economic master plan. Works are also complete on the second phase of the Al Ain stadium mixed use development in the emirate of Abu Dhabi. These comprised 650 apartments in seven, five-storey buildings with retail units, a 10,000 m² office building, a four-star hotel, 650m² of food and beverage outlets, a 1,350-car park building and infrastructural works. The development is situated next to the 25,000 seat Hazza Bin Zayed stadium in Al Ain, which was previously completed by BAM. An extension to the original scope of work of a 100 unit residential building, was awarded to BAM earlier last year.
Could you talk about the current challenges in the market, as you see them?
The industry has certainly bounced back from what was an extremely difficult period which saw capital investment effectively dry up in this country. However, the recovery has not been felt everywhere equally. While the construction sector is currently very active in the greater Dublin area and to a lesser extent in other large urban centres, there are still many areas, especially in rural Ireland, that are suffering from a chronic lack of investment. I would like to see the recovery spread more evenly across the country over the coming years.
A most worrying aspect for today’s construction industry is its fragile nature, with its inability to invest in innovation, technology and training. Very thin margins of 1 to 2% are the result of inappropriate risk transfer and uncertainty in the construction process. While aggressive competition may provide short term returns for the exchequer, the unsustainable consequences of the many disputes arising because of it, are a huge waste of scarce industry management and financial resources.
To sustain our recovery and to respond to our infrastructure deficit, Government should explore with industry ways to avoid the race to the bottom. The ability to innovate, to employ modern technologies and to protect the supply chain is a necessity to continue Ireland’s economic development.
Government and industry also need to work together to tackle the homelessness crisis by solving the problems in our homebuilding sector.
Like every Irish industry, the construction sector must be mindful of the challenges posed by Brexit. The European project is about free trade and free movement of people, and this objective should remain a key focus for Ireland in the post-Brexit landscape. There will be challenges, but there will also be opportunities with increased FDI investment potentially opening new avenues for Irish business.
Another significant challenge is the potential skills shortage in trades due to emigration and fewer graduates coming from construction related courses.
New strategic thinking regarding construction delivery, societal expectations and change and the use of Mass Rapid Transport (MRT) systems, in respect of work life balance, are issues that Government, society and the industry must address in the short term.
Would you like to comment on finance and funding in Construction?
Last year, we noted that Government investment is always going to be a crucial factor for the industry and called for further investment in the inter-urban road network. Projects such as the Dunkettle Roundabout upgrade and the M28 Cork to Ringaskiddy Motorway scheme remain important upcoming projects.
The Government’s shelving of plans for the Cork-Limerick motorway was extremely disappointing for us. This scheme will cut 30 minutes from the commute time between Ireland’s second and third largest cities and more importantly, will represent a safer gateway between the two hubs. While I’m glad to see initial activities commence, it can’t come soon enough.
What do we need to do to deliver the infrastructure outlined in the NDP and Ireland 2040?
Given the right environment, the construction industry can address most of Ireland’s most pressing social and economic needs. Building on the existing relationships between government and the industry, by forming a true partnership, we will work to remove any barriers to meeting the demand for social and productive infrastructure.
What are the challenges and what assistance does the industry need to deliver this?
The industry needs complete confidence in the consistent application of regularity rules, particularly in the procurement process and this is sometimes not always seen to be the case. Clearly, the use of any discretion available for public authorities must be carefully administered and used with caution. Ireland’s international image and reputation will be measured on the integrity of its procurement process.
What do you think of the modern industry in Ireland and can we do more to become more efficient and deliver greater value to clients?
It is heartening to see how the industry has rallied and thrived in recent years and the construction sector is once again delivering the world-class infrastructure that is required to allow Ireland to punch well above its weight on the international stage.
While the turnaround has been hugely impressive, we must be under no illusions about the challenges that remain ahead as we move to fill the gaps that were created when capital investment all but dried up. A healthy, efficient, countrywide construction sector that can respond quickly to the demands of a rapidly growing economy and population is an absolute necessity if we want to ensure that Ireland continues to be one of the best places in the world to live and do business.
What are your takeaways from 2017?
2017 proved another strong year for BAM with several private projects representing significant highlights. The real takeaway from the year from BAM’s perspective is that no matter what changes we see in our sector, in the Irish marketplace, or the global economy our company succeeds when we stick to our business principles. These have remained unchanged for 60 years: we listen to our clients’ needs; we deliver cost savings, innovations, and efficiencies; and we attract the best talent and take care of our staff. These principles are as relevant today as they were when we started in 1956, and they will continue to be a core element of our business in 2018 and beyond.
What does the future hold for BAM?
We continue to implement our global strategy by working together to better serve our clients, improve on our financial performance, and be a preferred employer and partner to create a better, more sustainable future. Key priorities for 2018 are digitalisation, further IT standardisation, enhancing business control, and our continuing improvement of pre-construction management.
The content of this site is subject to copyright laws and may not be reproduced in any form without the prior consent of the publishers. The views expressed in articles do not necessarily represent those of the publishers. This article first appeared in the ‘Leaders in Construction’ issue of Irish building magazine June 2018.