Galliford Try chief executive on the business benefits of doing the right thing

Bill Hocking explains the firm’s strategy, post-pandemic, to Lem Bingley, and gives an insight into the type of business the company is striving to be

We meet Galliford Try chief executive Bill Hocking in early April, in a freshly refurbished office that sits a short walk away from London’s Liverpool Street station. The large, open-plan floor is entirely empty, save for a small table and chairs set out in a corner for our meeting. The blank canvas of the room stands in sharp contrast to the bustling street below – a handy reminder that commuting has resumed for many and the need for offices is not yet dead.

Our example is 280 Bishopsgate, where Galliford Try is nearing completion of a £50m, 264,500-square-foot refurbishment for Arax Properties. “This is not particularly billed as a green retrofit, but this building, a few months ago, was just a shell,” says Hocking. “The innards were totally gutted. All the M&E [mechanical and electrical systems], everything. And the new stuff is far more efficient.”

It’s a type of job that Galliford Try hopes to do more of, says Hocking, as the company aims to reach £1.6bn in turnover and a 3 per cent margin by 2026. “That’s putting £500m of revenue on to the full-year 2021 numbers,” he adds, before acknowledging that there is also a way to go to raise the 2.2 per cent margin reported with the firm’s recent half-year results in March.

Some of the topline growth may come through bolt-on acquisitions, such as the “opportunistic” purchase of failed contractor NMCN’s water division. That business unit, which is expected to add an immediate £100m in revenue, was secured for £1m from administration in October. Galliford Try gained 900 employees and now works “for every water company in the country, bar one”, Hocking says. “We were agile, we were quick out of the blocks; we had the balance sheet to transact very quickly,” he adds. “It was a cracking acquisition.”

Galliford Try works “for every water company in the country, bar one”, says Hocking

Going downstream

It was also a takeover that fits with the mission to boost margin: “One part of our strategy is to move into – if you’ll excuse the pun – the downstream part of water,” Hocking explains, adding that post-construction work has “higher margins, typically”, than building the actual infrastructure. “At the moment we design, we construct, and commission water and wastewater plants, but we don’t do the long-term O&M [operations and maintenance] or asset optimisation things. But we look to grow into that. The NMCN acquisition has given us a little acceleration.”

“We’re saving a huge amount of carbon, and a huge amount of time and money, by not travelling as much as we used to”

Another route to higher margins is property development – putting some of the firm’s £180m average cash balance to work in the booming build-to-rent sector. Hocking says self-developed, private rental-sector projects are lined up in Cardiff, Leeds, Birmingham and Sheffield. “We’re looking to take options on a piece of land, design them, get planning permission and then sell them at that point, because they’re very popular assets at that point,” Hocking says. The goal is to bank the development gains and then proceed to build the project for the new owner.

“The blended margins there will be typically double the standard construction margins,” he adds. “We’ll look to do two or three a year. It’s not going to be huge, but it will augment profitability.”

The focus on margin is key, Hocking adds, noting that topline revenue growth won’t win him any bonuses, and the same goes for the rest of the business leadership. “It’s about ESG [environmental, social and governance] credentials; it’s about cash, it’s about profit. There’s no revenue target in there at all. We don’t want people taking the wrong jobs.”

Galliford Try workers on site

Flexible working can be applied to on-site roles

Workforce strategies

Alongside financial goals there are, of course, many other concerns that are harder to quantify, such as the workforce shortages that plague the industry. Hocking addresses the topic in the same quiet but intense fashion as the numbers. He speaks quickly, with an accent that gently reveals his Zimbabwean roots.

“I’ve been at Galliford Try now for six and a half years, and you cannot recognise the business from [then],” he asserts, adding that the contractor has developed “a really dynamic, friendly, diverse, inclusive culture” during that time.

“Take the NMCN guys who joined us […] last October – the feedback from them has been fantastic in terms of the welcome they received, the support they’ve had,” Hocking says.

“We bought the [division] at 3:15 on a Thursday afternoon and it had been in administration from Monday, so there was nobody doing any work,” he explains. “And on Friday morning we paid every single weekly-paid person. […] we didn’t mess around. So that got us off to a good start.”

A staff survey carried out in November 2021 found that “94 per cent of our people said they were inspired by the vision that we have, of the type of company we want to be”, Hocking adds.

Assuming that figure reflects real sentiment, it seems remarkable for a firm that put 1,200 people on furlough during lockdown. Hocking says a key lesson taught by the pandemic is the importance of cohesion between on-site and back-office roles. “[When] we had all of our sites back at work and half the company sitting at home, I felt there was a danger you’d end up like World War I, with the generals all sitting back in their chateaus drinking wine and the troops out on the frontline, so we had a huge effort to make the people who were working feel engaged. I went out, and [the] senior team were out and about, as best we could, talking to people.”

The company also sought expert advice on “the psychological aspects and health aspects, and anxieties”, Hocking says. He adds that many of the initiatives developed in adversity have stuck: “I think camaraderie is much better now than it was in the past.”

The firm also repaid the furlough cash before resuming business as usual. “Sometimes you’ve just got to do the right thing – that’s the end of it,” he says flatly.

Hocking talks enthusiastically about the potential of flexible working – another initiative developed during COVID – to attract a more diverse workforce, including for on-site roles. “You can be flexible within the limits of the job you have,” he argues, explaining that start and end times, and weekly working patterns can all be adjusted.

“The tradespeople are the ones that are most difficult to [get to] understand how this can work for them,” he concedes, but notes that in the depths of the coronavirus crisis, sites “were starting at six in the morning and staggering shifts to 10 at night, and that made us look, as an industry, at productivity and how many people you try to shoehorn in at any one time.”

He cites a surprising example: “A piece of plasterboard is too big for one person to handle and two people were too close together [for social distancing]. We ended up cutting it in half, and then one person can do it. And, actually, the productivity went up, because smaller panels were easier to manage. It meant a bit of additional taping [of joins], but, overall, it was better.”

Staggered working across a longer day brought similar benefits, he says: “The trades only used the same eight hours [each], but they weren’t falling over each other quite as much, and they were more efficient as well.”

Net-zero ambitions

Another lockdown measure that Galliford Try aims to keep is “not automatically jumping on aeroplanes and trains and getting in your car”. Hocking adds: “We’re saving a huge amount of carbon, and a huge amount of time and money, by not travelling as much as we used to.”

“We were agile, we were quick out of the blocks; we had the balance sheet to transact very quickly. It was a cracking acquisition”

Galliford Try has a formal goal to reach net-zero carbon in its own operations by 2030, and to reach zero across both operational and embodied carbon by 2045. He calls even the first goal “a stretch” and says offsetting may be needed to reach the 2030 target, “but I think we’re going to get close”. New company cars are now either battery electric or plug-in hybrid models, which has cut the rated CO2 fleet average from 133g/km two years ago to 67g/km today, Hocking says.

“We’ve got a target across the fleet – and we’ve got about 1,300-odd cars now – to get down to 25 grams in 2025.” Taking the same step with heavier vehicles is harder, however: “We’ve got about 100 vans and they’re a bit of a problem because the range of the electric ones isn’t very good yet, [and] the charging infrastructure has still got a bit of catching up to do.”

On the bigger questions around embodied and operational carbon of new buildings, Hocking says his firm is gaining insights through its facilities management business. He outlines a project to monitor school buildings that Galliford Try initially built and now runs. “We know the real-life energy efficiency – or not – of that school, because we operate it, and so we can compare it to the design and how it’s actually being run.”

In a similar vein, in November, the contractor was appointed to build a special-needs school in Bromley, which will employ various low-carbon technologies as part of a sustainability pilot scheme being run by the Department for Education.

In December, Galliford Try signed up to become a ‘Business Champion’ for the ConstructZero programme being run by the Construction Leadership Council, which aims to develop and share best practices in sustainability. Hocking describes this decision as “a big leap of faith”. Hocking explains: “If you go back probably 20 years, safety was a differentiator, [which resulted in] safety secrets. And then we all grew up a bit and said, ‘we don’t want to hurt anybody, so I’ll give you anything that I’ve got to help you improve your safety’.”

Today, “carbon is still a bit of a differentiator, and so we all agreed that’s the wrong thing. As an industry, we need to get on and work together to drive carbon out,” he says, adding that abandoning competition on carbon means “we rely on our clients to recognise that maturity”.

The next step is to address specifications that prevent the use of low-carbon alternatives. In the water industry, for example, Hocking says different water companies have their own engineering guidelines: “Some are still very conservative – and I understand that you don’t want your water-treatment plant to fall over and stop working – but others are a bit more progressive.”

He adds: “I think there’s a debate that has to happen across the industry about standards and innovation. […] we’ve got to unleash innovation through the supply chain, through the big suppliers, the big manufacturers, the tier twos. We’ve got to push the envelope.”

Marjorie McClure special needs school

Galliford Try will use low-carbon technologies at Marjorie McClure special needs school

Handling inflation

Spiralling inflation has forced Galliford Try to limit the validity of bigger tenders to about a month. “Clients, so far, have been understanding,” Hocking says.

But he explains that the impact of inflation is not felt equally across all projects: “We’ve got 200 to 250 projects – some were bid two years ago and are 90 per cent finished, and some were bid last week and haven’t started yet. So, actually, we’ve got 250 micro-inflationary cycles going on, [which] tends to flatten the curve.”

Galliford Try has also employed its cash reserves to ease supply constraints. Hocking cites the contractor’s Monk Bridge project, a 665-unit scheme in Leeds: “We bought every single brick for that job pretty much on day one and rented a field next door [to store them].”

Hocking also notes the importance of paying suppliers quickly. “We pay our supply chain in an average of 25 days now. When the going gets tough and you’re scrabbling around for people or materials, you want people on side.

”What goes around comes around, he asserts: “It’s the right thing to do, which is a phrase I use a lot, but [paying promptly] has business benefits, for sure.”

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