Remember that “joke” from the last recession? What’s the definition of an optimist? Answer: an architect/contractor/qs (delete as appropriate) who irons five shirts on Sunday night.
Roll on 20 years and the punchline could be: someone who leaves a secure and well-paid job in construction to start up their own business.
Yet that is what a number of high-profile project managers have done recently — among them Ian Eggers, Julian Daniel and Paul Chapman (see boxes on pages 13-17). And they’re not alone. Latest government figures show that nearly 27,000 new businesses started life in the construction industry last year — more than 7% of the total number of firms in the sector.
The figures also show that more than 45,000 construction firms went bust last year. And we’ve all heard that one in four, or maybe as many as one in three start-up firms (accounts differ) will fail in the first year, even in good times.
No budding entrepreneur can be under any illusion that low overheads or competitive pricing will see them through the economic storms. So why do it?
For Blackpool-based Graham Skeer, a regional building manager at United Utilities for 24 years until he left to set up his own environmental surveying firm last year, it was, as he puts it: “The chance to see if you’re really as good as you say you are.”
The possibility of early retirement had been on the table. “It made me think there must be much more to life than listening to a boss telling me how to do something that I could do far better than him in the first place.”
Skeer Environmental Surveying Solutions offers firms and householders a range of surveying services, including asbestos removal. Skeer is a one-man band, working from home with his wife
as company secretary and son and daughter assisting when they can. With his competitive prices, he’s had a good first year and enjoys the flexibility
Paul Robinson is another who felt the need to prove he could stand on his own feet. After working for many years as a building consultant for a local firm, he sensed that its dwindling workload was making him vulnerable. And working purely as a consultant, he was missing the building trade. “So I thought I’d make the decision to leave myself before it was made for me.”
An admirer of Richard Branson, he explains: “We’ve all got to take risks some time in life.”
Now running Hewitt-Robinson, a Chartered Building Company in Cheshire with two business partners, he’s working seven days a week and relishing his new life. For him, and for many others, there’s never been a better time to start up.
“I’d often thought about running my own company,” says Julian Daniel. “And last Christmas , I realised there was quite a lot I was not enjoying. I’d had a very good time at Lend Lease, but I’d got to the peak of what I could do best there — and I was having less and less day-to-day interaction with the industry.”
For someone who started in the business as a teenager with Wimpey in 1979 “banging pegs in the ground on a housing estate in Hull…” and who would “still be with them if they existed!”, contact again with the sharp end of construction seemed very appealing. “I love the trade and being on site and with clients and offering them added value.
It felt time to do other things,” says the two-time CMYA Gold medal winner.
He’s assembled a strong team, including ex-colleagues, and is focusing on consulting, offering a bespoke “front-end, strategic, project management service for informed clients in London”— clients who he, as a keen cyclist himself puts it, “are just a Boris Bike ride away from our office”. But the aim is very much to get into contracting within the next six-to-18 months, taking on lump-sum risk and management contracting work, not general contracting, but looking after clients’ pet projects.
Daniel is positioning Blue Sky as “a client’s candid friend, offering high-end contracting advice so they don’t have to employ a main contractor before there’s a done deal. And although I don’t like the expression, we’re offering ‘troubleshooting’ on existing projects — not litigious work, but just how to get the job done, asking the right questions and getting the right behaviour.”
As well as the UK, Blue Sky is targeting overseas markets including Egypt, Qatar, UAE, Kuwait and Mumbai.
“The timing in the market is not brilliant and it’s going to be tough,” acknowledges Daniel. “I’ve met some great sentiment in the market so far, but that doesn’t pay the bills.
“To get this moving, though, we don’t need a favourable macro economy; micro is fine for us. High-net-worth spending goes on, come what may. There are projects that ride above the economy, and we only need a small amount of that to get a foothold in the early days. At some time, the recession will have ended, and we’ll have established ourselves by then.” He adds, jokingly: “Starting in a boom is easy, even turkeys can fly in a hurricane!”
Blue Sky is most definitely no turkey. Daniel’s track record with Bovis and then Lend Lease on projects such as Sadler’s Wells Theatre and running PFIs with the Treasury and the Cabinet War Rooms speaks for itself.
His three fellow directors’ CVs are not too shabby either. Andy Winter, who he’s known for 15 years and lured out of retirement, was Daniel’s commercial director at Bovis for five years; Simon Cook, known to Daniel for more than 20 years, is ex-Wimpey, Multiplex and Bovis/Lend Lease too, and had also exited in search of a fresh challenge; and Tim Renwick, a former main board director at Mace who project managed the London Eye, and is an old colleague of Cook’s at Multiplex.
“It’s a strong proposition. Between us, we’ve over 120 years’ industry experience, and delivered some of the most renowned projects for some of the most prestigious clients,” says Daniel. “It all feels very different but I’m really enjoying it. When we’re together, we know all the answers are in the room. And we don’t have to answer to anyone else.”
All have skin in the game, but Daniel has stumped up the most and holds a majority stake. “It maybe sounds naive but profit is not my main motivation. I want another 15 years in the business and I want it on my own terms.”
A boy’s night out in town with two industry friends last year was the catalyst for Ian Eggers to leave his job as construction director at Mace, the project management outfit he’d been with since it started 18 years ago.
“Leaving Mace wasn’t something I’d been thinking about for ages,” says Eggers. “But three of us had a few beers and started discussing it. Then we had a few more serious meetings. And then you realise, it’s on.”
By all accounts, including his own, Eggers left Mace on reasonable terms. “Mace is a great company, and I’ll continue to support them. But when you’ve done 18 years working for other people, you start to feel you’d prefer to be master of your own destiny.
“Mace was a very entrepreneurial business when it set up, and that ethos never left me. You realise also that you want to do different things, and with different people.”
The two other friends on that night out in London were similarly high-powered construction figures — Bob White, ex-Bovis and a former Mace chairman who’d left three years previously, and Gareth Stapleton, an architect who’d been managing director at PDCM. Together now in Rise Management Consulting, they offer a range of complementary skills as a boutique client-focused consultancy. Operating from an office in Chancery Lane, the aim is to be employing up to 60 people within two years.
“Picking your people is important,” says Eggers, who was overall CMYA winner in 2000. “You’ve got to pick people who share the same vision and values, and who you can trust.”
Self-funding from all three partners meant there was no need to put the house on the line or seek bank support.
Eggers says a London office was a must — “you have to be in town, not 90 minutes away where I live in Winchester” — though much of the time he’s out and about meeting prospective clients or working in a coffee bar. “Most days, I’m a Nero nomad,” he confesses.
What about the timing? “There are tough years ahead, that’s for sure. But Mace was started in tricky times too, in the early 1990s. And our lower overheads make us quite competitive.”
He’s convinced there’s a gap in the market: “Our service is very different from firms like Mace. We’re much smaller so we can bring an intimacy to clients, in the way Mace used to. We’re much more fleet of foot.”
Work is being sought across several sectors — commercial, social housing, hotels, public offices and universities. And Eggers believes there’s much Rise can offer clients in these recessionary times. “There’s still too much waste and double effort on site, too many things still happening that shouldn’t. We’re aiming to create value, and find leaner ways of delivering projects. And we want to collaborate with other like-minded companies, like cost planners and designers, and offer a range of diverse services.”
It’s tough work. “You work twice as hard as you used to, for half the reward to start with. But you don’t have to answer to anyone. And it’s far more satisfying.”
Paul Chapman, a one-time EC Harris partner, has made his name over the past 15 years as project manager of some of the UK’s biggest transportation schemes, including the high speed rail route HS1, for which he became managing director, and latterly the “Yes to HS2” campaign, which he helped to launch.
But one evening he got chatting with long-term entrepreneur David Evans MBE at the school their kids attend in Leighton Buzzard, and they started doodling business plans on napkins together. Within a short time, Chapman had taken up the offer to become chief executive of Evans’s recently created company Matilda’s Planet, a fledgling, environmentally-focused manufacturer offering green business solutions.
He came on board in April last year and since then he’s been reviewing and refining the products that Matilda’s Planet offers for clients keen to reduce their energy usage and carbon footprint, and substantially reduce their utility costs. These include pre-fabricated modular heated walls that operate with no pipes or hot water; LED lights that use up to 80% less electricity than conventional lighting; solar thermal systems; and a wind generation device called a Windrum that rotates on a vertical axis, which means the turbine spins whichever way the wind blows.
The business plan is not underpinned by public subsidy on any of their products. “We deliberately avoided that route,” says Chapman. The government’s recent change of tack in halving the tariff on micro-generation through products such as solar panels has therefore had no impact on Matilda’s Planet’s business plans. Housing associations like the fact that the slimline heated wall is an internal product that requires no planning permissions. It’s good for capital allowances calculations too.
Yet given his glittering CV, what was the attraction of coming aboard a small start-up?
“I just had a desire to see if we could really deliver something with Matilda’s Planet. We need to tackle the issue of energy reduction. There’s quite a few people in this space, but we’re the first brand.”
The economy’s plight is, naturally, of concern to Chapman. “The recession is making things extremely tough. We’re looking to sell to people who don’t want to spend money. So we have to be very clear about what we offer, and we have to produce a very lean product. And it’s also true that in a recession, helping people put money on the bottom line is very valuable to them. We’ve just put £300,000 of LED equipment in a warehouse which will produce energy bill savings of £1.2m over five years.
“There’s also a huge pool of talent available, so you can find extremely good people to work with.”
Reasons not to start
1 People are spending less money
2 It’s harder to raise money
3 It’s risky at a time when everyone’s scared of risk
Reasons to start
1 It’s cheaper to start now than at any other time
2 It needs less cash to start than at any other time
3 Your opportunity cost is small
4 People and businesses will consider new options
5 Creative non-cash deals are easier to do
6 It’s easier to hire great staff
7 Your positive energy will stand out amid a sea of depression
8 Acquisitions can be cheaper