McGee’s expansion of its piling division was always going to be the next step in the growth of the London-based contractor, according to managing director designate Seb Fossey.
“It’s been on the radar for some time; we always knew that it was the next piece to strengthen,” he says. “Towards the back end of last year we began to take the proposition more seriously and look at ways we could do that. This led to positive conversations with the guys that we have ended up bringing into our business.”
Fossey believes that expanding the capacity of the piling section of the group will add value to what it can provide its clients and improve what he terms ‘security of delivery’.
“Our focus is delivering value to our clients at the front end of the project. That covers everything from decontamination, asbestos removal, demolition, piling through to deep basement construction and, more recently, superstructure work too.
“We’ve had piling capability for a number of years, albeit focused on supporting our temporary works need and the smaller permanent works where we could. We knew that greater piling capacity was what we needed to complete our offering and so add greater value for our clients, at the front end.”
The three-man team that Fossey effectively cherry-picked from Cementation Skanska are Shane Baker (previously Cementation’s director responsible for London projects), Julian Mansfield and Darren Smallman. Mansfield joins as piling pre-construction manager while Smallman will be piling operations manager.
Baker, now head of piling at McGee, brings 25 years’ industry experience to the role, 11 of those in South Africa but 14 of them with Cementation Skanska. His credits include ‘The Scalpel’, the 190m-tall skyscraper in the City of London, and Westfield London, Europe’s largest shopping centre.
This experience makes Baker a perfect fit for McGee, which rarely strays out of central London and never beyond the M25. Certainly, Baker shared Fossey’s vision of piling as an essential component of a vertically-integrated operation.
“Skanska introduced me to the UK piling market but over the last couple of years I’ve seen McGee as a key player in the London market and that market is definitely shifting to integrated delivery,” says Baker. “The McGee offering and its offering to me personally was absolutely something that I saw as the future of the industry here.
“I was very interested in what they’re intending to do and putting into action,” he says.
As Baker sees it, clients want to involve contractors such as McGee far sooner in the construction programme so that they can contribute to the design and methodology in order to produce the most effective solution to developing a site.
“The piling market in London is driven primarily by the integrated model of working which starts much earlier than getting on site with a piling rig – it starts with demolition, asbestos removal and all those other activities. McGee has a very strong offering in all these,” he explains.
“By bringing all these together you’re able to offer the client a much better cost and risk certainty and at an earlier stage in the project. McGee won’t be the first or the only one to offer this service but it is the way that the market is moving and we need to change to keep up.”
Fossey agrees that McGee’s move to raise the profile of its piling capacity is, in part, driven by client demand. “We’re certainly seeing greater interest in early specialist contractor engagement,” he says.
“Different clients have different appetites for how involved that should be – what breadth of services they require from a contractor like us – but there is a trend and we feel it’s driven by the desire to de-risk the beginning of the project and so devote more time to the permanent works design and main contract works from a lower risk position because the design is more developed.”
That said, it does not seem that the market will see any sudden movements by McGee. Fossey and Baker are set upon buying at least three new rigs for the piling division but, as negotiations are still underway, are unwilling to talk about budgets, size of rig or the sort of projects they will pursue or, indeed, what scale of projects will be tackled in-house or ‘self-delivered’.
“Our focus at the moment is understanding how our capability will be deployed, procuring the larger rigs we need to deliver that greater capability and dovetailing that into our pipeline as it stands,” says Fossey. “We’re still fine-tuning our requirements with rig suppliers and then we’ll develop the human resource that goes alongside that.”
As things stand, McGee has the three people it has recruited and 10-12 people already within the business who are experienced in piling. The new recruits are currently looking at the plant and equipment that McGee has and how it might best be deployed. Fossey reckons that the new rigs will be procured and ready to use by autumn, while Baker predicts that the new rigs will be at the ‘top end’, enabling McGee to tackle its bigger projects in-house.
“At the moment we have small rigs for projects that require a small amount of piles in a restricted space and a small fleet of medium-sized rigs that I’ve been assessing so we can decide how to bolster that mid-range offering,” Baker says.
“The new rigs will put us squarely in competition for and able to deliver all the large basement projects that McGee has had to sub-contract out to the supply chain in the past. We will be procuring well-known rigs of the biggest capacity that you will see in and around London so we can tackle complex and large projects for different activities from embedded retaining walls to deep bearing piles.”
Fossey is adamant that recruiting Baker and his team does not signal any change in strategy for McGee: it has no interest in pursuing piling work for other contractors and the size and scope of its business will remain the same.
“Our model and the type of work we pursue won’t alter. The value we see in having this stronger piling capability is that we can serve those projects better,” he says. “Our approach is to understand the scope, the constraints and risks of a project, and then the best methodology to deliver it so we can then look our client in the eye and tell them with certainty we will deliver that job for them. Bringing the piling capability in-house simply enhances our ability to do that.”
Both Baker and Fossey emphasise that this move into ‘self-delivery’ will not be overnight. Their goal is to become self-reliant in piling over the next 12 to 24 months, providing their clients with greater value through having more control over the whole process. Fossey says that the measure of success is not increased profits or market share for the moment.
“As we offer the integrated model and the ability to overlap and to develop the smart engineering solutions that give the best overall programme, we will be lowering risk for our client on the project and we’re maximising the certainty of delivery,” he explains.
“That is the goal for us: greater certainty for our clients. When we’re delivering that, that will be success.”
Will sale start a brain drain?
Seb Fossey’s decision to strengthen McGee’s piling division is both timely and significant for the sector, especially in light of the fact that Skanska put its piling division up for sale in May 2018.
Cementation had been part of Skanska since 2000, when the Swedish-owned contractor bought its parent company Kvaerner Construction (formerly Trafalgar House). But Skanska UK chief executive Greg Craig considered Cementation too costly to keep. He believed its constant need for capital to buy and replace plant and equipment was onerous and reasoned that the sale would release capital that would be better invested elsewhere in the business.
In January this year concrete frame specialist Morrisroe withdrew its bid, saying that the £55m price tag was far too high. Cementation Skanska remains up for sale, even though Craig had hoped to sell the division by the end of 2018.
After more than a year on the market, it remains to be seen how much of Cementation Skanska is left to sell – or how much more time Craig will have at the helm of the UK operation.
One conclusion to draw from McGee’s recent recruitment is that it has shown there is a far cheaper way to set up or reinforce a piling business than paying £55m for an existing one.
The logic behind McGee’s move is to reduce or remove risk by taking a critical speciality in-house. Similar moves by other contractors might encourage other senior staff at Cementation to follow the example of Baker et al and to pursue their careers elsewhere.
The other dilemma for Craig is that, as both Baker and Fossey have pointed out, the market for piling (in London at least) is changing. The move to an operation in which piling is ‘self-delivered’ as part of an integrated operation removes specialist piling contractors from the supply chain.
Checking-in at Claridges
A major feather in McGee’s cap – and a showcase for its expertise in low-headroom piling – is the ongoing construction of a five-storey top-down basement under the Grade II-listed Claridge’s Hotel in Mayfair.
The company was appointed design-and-build main contractor for the project in 2015 and appointed Arup to undertake the detailed design on its behalf.
McGee has tunnelled beneath the existing foundations and installed a temporary and permanent works solution to support the structure, transferring the load from the building through a pair of 800-tonne hydraulic flat jacks.
More than 30,000m3 of material has been excavated to create the five-storey basement underneath the hotel, which has remained in full use throughout. All of the material going into and coming out of the site has had to pass through a single window opening.
This article was first published in the June 2019 issue of The Construction Index magazine