Gordon O’Regan discusses the challenges facing the industry in 2018, and the solutions that will future-proof the Irish construction industry.
The industry may be in an upswing, but now is not the time to celebrate our wins; rather it’s a time to concentrate on building a sustainable industry for the future. So says Gordon O’Regan, the man appointed to lead Clare-based Engineering firm L&M Keating into its next phase.
It’s an exciting time for the company, which was established in 1987 and employs around 90 people with turnover figures of €67m in 2017.
The key for the CEO is to build on this success. “The business has been growing over the last number of years and we want to continue this through planned and sustainable growth. This means strengthening our internal governance and operating processes to make sure that we are fit for the future, not least to manage the associated increasing levels of risk and opportunity, and most importantly to ensure consistent delivery in accordance with our company values and our customers’ requirements.”
L&M Keating has been working extremely hard in Dublin Port of late in a joint venture with Roadbridge. “We need to look at the Irish construction industry in more than just monetary terms,” he explains. “For example, if you look at the work that we have carried out at Dublin Port, there is social value there as well as economic value. In addition to our ability to employ local people, build skills and deliver legacy benefits for the community, the visitors that are getting off the cruise ships are going into the city to shop and spend money and there is a significant increase in container & freight activities also, which in turn creates jobs and that can only have a positive effect on the area. It’s not just about money.”
This all comes back to the core need to build a sustainable industry, according to the CEO. “We need a sustainable industry. We are talking about building equality in the industry at the moment, which is essential, but where we need to start by building a sustainable industry, which attracts the right people and will help build equality.”
The move to the UK enabled O’Regan to observe the way another country handles the procurement process and consider how that might apply to Ireland. “The UK industry has worked hard on responsible procurement methods over the last number of years working towards a more sustainable industry.” It does have a bigger economy, and as a result there is more investment and there is real emphasis on establishing employment and skills strategies to meet long-term needs – encouraging apprenticeship and graduate schemes, promoting attractive employment propositions and providing equal access to training and promotion opportunities that help all individuals fulfil their potential.
In the UK there is a focus on protecting STEM skills in schools, encouraging more women into construction, reaching out to local communities, creating accessible supply chain opportunities for smaller local businesses and targeting hard to reach groups. “We need to be a more attractive industry to school leavers in order to attract the best people. The cyclical nature of the construction industry is a problem and we need to address this.”
The lowest price form of tendering has got to make way for a new form of procurement, says O’Regan. “Right now, some contractors and subcontractors can’t offer their employees what they need, development and training, because they’re not making money on some jobs. It’s a vicious circle.”
The solution is in diversification, suggests the CEO. “Where the UK have it so right is that their forms of procurement are not wholly commercially and transaction based. The UK procurement process balances the commercial and technical expertise with behavioural skills likely to promote effective team working. It may not be a direct transfer of these procurement methods but there is allot we can learn from them.
The procurement process considers individual and team behaviours, alignment of objectives along with quality-based factors and behaviour assessments. Scoring is weighted across the various criteria meaning that commercial aspects may represent only 30% of your bid.
Collaborative forms of contract are commonplace in the UK and promote development of effective and productive relationships, early contractor engagement and development of shared solutions on a best for the project basis.
Clients know that the contractor needs to make money in order to survive and they know that the benefit of having a contractor in early is that they will help them set the budgets and get the scope right. This in turn means that the final cost will be no different than what is set out in the early stages. The benefits are huge to both sides.”
These benefits include a model of shared risk. “I think sometimes the client is in a better position to share more of the risk and actually can manage that risk rather than the contractor. There needs to be more responsible procurement and not a race to the bottom,” explains O’Regan. “It’s down to the client again whether the client is the government or a private client. It’s about how you procure the job, and the scope is secured.”
In order to build an industry that will last and grow during economic cycles, Government needs to address some glaring issues in its current procurement & contracting policies, states the CEO. “For example the Sectoral Employment Order, which added increases to the contractors cost. There is no mechanism for the contractor under the public sector contracts for existing projects to recover that additional cost. This is effectively putting the cart before the horse. There needs to be a bigger vision. Cost recovery as a whole needs to be reviewed in public sector contracts.”
We may be going through an upsurge in the economy and there are certainly more cranes on the horizon than the last number of years, but it is extremely important to note that some contractors are still struggling, says Gordon O’Regan. “We have to keep coming back to what we want. We need a sustainable industry that is shared over commercial, building, social housing and infrastructure that will future-proof the country as population increases. We need to think about what infrastructure we will need to be sustainable in twenty five years, and as a result, what procurement & contracting methods we need in order to deliver that infrastructure. The Government have set out an ambitious national planning framework with Ireland 2040. This kind of long-term planning is exactly what the economy needs. The challenge now for government should be to get the funding & procurement of those major projects right.”
What is Gordon O’Regan’s vision for L&M Keating in the coming years? “Our main goal for the next year is to sustain our growth in Ireland and to maintain our adding value to our clients, existing and new. We are currently developing our 5-year business plan to achieve this. We want to create a company that provides local jobs and local opportunities, and that is fit for purpose to compete on an international level. We are based in Kilmihil in County Clare and we are a big part of the local economy there, which we want to continue contributing to.
With a company culture that staff and CEO are proud of, and a client base that features repeat business again and again, the focus now is on ensuring that the entire workforce at Keating remain upskilled in line with industry requirements. “It’s about the development of our staff; galvanising the people that work with you with different sets of skills. The company grew in the last number of years from €15m to €67m in turnover, so we have to reinvest in learning and skills and our support infrastructure. We need to allow our people to grow within the business.”
With a stellar workforce and an international reputation for excellence, Gordon O’Regan would like to see the Government financing bedrock projects that boost both the industry and the country. “There is no denying that the graduates from Ireland are exceptional; our struggle is that we can’t hold onto everyone. We need to focus on big anchor projects that provide the work and benefit the economy in both social and a fiscal way. The Metro North is a big spend, but it’s essential for both attracting graduates, providing jobs and attracting investment into the country. We have to have this future vision for Ireland.”
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.