Meeting national needs through people and innovation
Supply Chain Conference 2016
9th June 2016
Growing Our Businesses Together
Meeting national needs through people and innovation
• INSERT SUSTAINABILTIY MOVIE HERE
Growing Our Businesses Together
David Taylor
Group Commercial Director
Meeting national needs through people and innovation
Growing Our Businesses Together
SHE
Confrontation Collaboration
Efficiency & Innovation
Today’s Agenda
Welcome to event David Taylor
Business / Strategy update Andrew Wyllie
Breadth of Costain's offering Nigel Curry
A Customer's insight Gary Wright
Joining the Costain journey Aidan Franks
Growing together - Showcase 1 : Bridges and Costain Alex Olley & James McGee
Growing together - Showcase 2 : 4way Technology and Costain Chris Ellison
Networking /Coffee
Growing together - Showcase 3 : Bryden Wood and Costain Jim Mitchell & Renii Onadipe
Growing together - Showcase 4 : Prater and Costain Hazel Beecroft
Collaborative behaviours to enable value creation Alan Cheung
Recognition Richard Howell &
Dan Rennison
Panel Q & A Richard Howell
Official close David Taylor
Growing Our Businesses Together
Andrew Wyllie CBE Chief Executive Officer
Meeting national needs through people and innovation
Another strong trading performance
Notes:
1. Including share of joint ventures and associates
2. Before other items; amortisation of acquired intangible assets and employment related and other deferred consideration
• Revenue1 increased to £1,316.5m
• Underlying2 operating profit up 16% to £33.2m
• £108.2m year-end net cash balance
• Total dividend for 2015 up 16% to 11.0p
Unique customer-focused strategy
Infrastructure
Natural Resources
Securing a future energy
supply…
…maintaining a safe and
reliable water supply
…upgrading the
transport infrastructure
Why our major blue chip customers
choose Costain:
Positioning the business through innovation
and technology
32” LCD flat screen,
built in DVD,
built in Freeview box,
Cinema surround sound,
5 year guarantee
.. and all for less than
£1,000!
Stop Press: May 2016
Linsar LED HD 3000 John Lewis
£149.95!!
Staff Roadshow 2006
Customers will pay for innovative
product and service enhancement
Sony Bravia 75XD8505 HDR 4K Ultra HD Android TV 75" Youview/Freeview
HD/ Playstation Now
£3,999.00
Developing the best team in the industry
• 16% growth in headcount to over 4,100
• Broadening range of skills and capabilities
• Now have 1,000+ people in consulting, advisory and design service roles
• 218 graduates on award winning programme, a 69% increase over last 3 years
• 107 apprentices, up from 80 in prior year
• Rhead Group acquired in August 2015
• professional services consultancy providing a range of solutions across the lifecycle of
infrastructure, construction and asset management programmes
Costain’s PhD students: leading-edge thinking
Current Current PhDs understanding challenges & developing new services
Katie McCausland Oliver Teall Ibrahim Al-Ghraify Ioanna Papanikolaou Harrison O’Hara
Readin
g
Card
iff
Sheffie
ld
Cam
bridge
Loughboro
ugh
Advanced materials Welsh Gov. / N. Grid
Asset Maintenance Highways England
Future Infrastructure Thames Tideway / EDF / National Grid
Field BIM Crossrail / Thames Water
GIS: Biodiversity EDF / HE
New Technology enabled insights changing the industry business model
tbc Chris Mower Henrietta Winsor Adam Golden James Heaton
Readin
g
Edin
burg
h
UC
L
Cam
bridge
Robotics and Automation / TfL
Forensic Engineering COSHH
Engineering Business Models
Energy Systems Future Infrastructure
Edin
burg
h
Engineering Business Models
Driving innovation in our services
• Ability to develop and offer innovative solutions is essential and is a competitive advantage
• Numerous innovations in 2015 including:
• deployment of robotic drilling machinery and automated equipment: accelerating delivery at
Crossrail
• live-trialling ‘self-healing’ road materials: extending the life of strategic road infrastructure
• combining advanced analytics and manufacturing principles: halving the cost of critical water
infrastructure
• Collaboration between customers, supply chain and partners including researchers and universities
• R&D initiatives with eleven leading universities including progressing a number of patent applications
People and innovation delivering leading
market positions
• As an example, we are a leading supplier of services in
Highways across England and Wales
• Comprehensive capability to meet all customer
requirements
• Examples of current contracts across the asset life-cycle
include:
• Advisory and concept development: A14, M4
Newport, Preston Distributor
• Specialist design: ESDAL
• Complex delivery: A556, M1, Heysham M6 link
• Technology integration: All Wales Framework,
Smart Motorways
• Programme management: Smart Motorways
• Asset optimisation: ASCs, East Sussex, MACs
Record order book and increased visibility
0 500 1,000 1,500 2,000
2016 (Dec ‘15)
2015 (Dec ‘14)
2017 (Dec ‘15)
2016 (Dec ‘14)
2018+ (Dec ‘15)
2017+ (Dec ‘14)
Dec ‘15
Dec ‘14
Preferred bidder
£m
Group Order Book Dec 2015
Group Order Book Dec 2014
• Forward order book up 11% to £3.9bn (December
2014: £3.5bn)
• Over 90% repeat orders
• Over £1.1bn of work already secured for 2016
Record, high quality order book
£3.5bn
December 2014 December 2015
£3.9bn
Great opportunity for supply chain partners
Orders of c. £3.0bn!
Summary and outlook
• Strong trading performance
• Unique customer-focused strategy
• Record forward order book
• Continuing to accelerate growth
• Great opportunity for supply chain partners
Growing Our Businesses Together
Nigel Curry Consultancy & Advisory Services Director
Meeting national needs through people and innovation
Introduction
• Introduction to Rhead Group (now rebranded Costain).
• Successful integration creating additional bandwidth to our six
service lines.
• How we are using the acquisition as a catalyst for promoting and
growing high value Consultancy services providing opportunities for
Costain and its supply chain.
Introduction to Rhead Group
Established business with 30 years experience
becoming one of the largest private Programme
Management Consultancies
Sectors – High growth, capital intensive sectors
with government sponsored, non discretionary
programmes benefitting from long-term investment
cycles.
Services – Supported our customer needs across
the entire asset lifecycle including strategic
programme advisory, managed services and
professional services.
Revenue model – Vast majority of contracts are
fully reimbursable (95% of revenue) with a strong
cash conversion.
Customer focus in four Sectors
Defence Infrastructure
Power Energy
Electricity Transmission &
Distribution
Nuclear
Renewables
Ministry of Defence
Naval assets
Rail
Underground
Gas transmission /
distribution
Oil pipelines
Liquefied Natural Gas
Carbon Capture Storage
Integration with Costain
Programme Advisory
Engineering Services
Technology
Wate
r
Oil &
Gas
Po
wer
Hig
hw
ays
Rail
Nu
cle
ar
Consultancy Services • Successful integration of Rhead
• Established an integrated consultancy offering via
three main capabilities:
• Programme Advisory: Cameron Tonkin
• Engineering Services: Fiona Ware
• Technology: Phil White
• Consultancy Operating Model maintains the
successful single customer interface via the
established sectors.
• Increasing our addressable market by offering new
services across a broader range of the asset
lifecycle.
Catalyst for growth for Costain and supply
chain
• Consultancy & Advisory seeded into
each Sector.
• Working with our customers to
improve the assurance,
predictability and efficiency of their
projects earlier in the life cycle.
• Already secured £20m of high margin
consultancy sales in Q1 for 2016FY.
• Recent Programme Management wins
include:
• Feeder 9 PMO
• Submarine OC
• Eager to work with our supply chain to
extend these opportunities
collaboratively.
Asset Lifecycle
Development Build O&M
Growing Our Businesses Together
Gary Wright
Rowsell Wright
Meeting national needs through people and innovation
Agenda
• Background to Rowsell Wright Ltd
• Major UK Infrastructure Clients:
• The Challenge
• Approach to Procurement
• How are Clients changing?
• How can Suppliers respond?
Background to Rowsell Wright Ltd
• Established in 2006, services focus on:
• Procurement Strategies (over £40 billion of investment)
• Operational Procurement (over 50 major contracts)
• Procurement Assurance (all HS2 procurement, LUL procurement)
• Our customers:
• Crossrail Ltd
• High Speed 2 Ltd
• Highways England
• London Underground Ltd
• Department for Transport
• Crossrail 2
The Client Challenge
• National Infrastructure Delivery Plan 2016-2021
• Public capital investment of over £100 billion to 2020-21
• £483 billion project pipeline
• Strongly focused on economic growth
• Five key elements of procurement all major clients will be considering:
Packaging Strategies
Route to Market
Market Engagement
Contracting Strategies
Requirements Definition
Approach to Procurement
Benefits and Outcome
• Scheme benefits
• road, rail, power generation, etc.
• sustained growth of the economy
• Project outcome:
• Safe
• Within budget
• On time
• High quality
Requirements Definition
Packaging Strategies
Route to Market
Market Engagement
Contracting Strategies
Approach to Procurement
Supplier’s Approach
• Alignment with Client vision and values – understand their business
• Skills and Employment – jobs, apprenticeships, SME growth
• Innovation
• Collaboration
• ‘Next generation methods’ – increased use of technology such as BIM
• Off-site fabrication and standardisation
Requirements Definition
Packaging Strategies
Route to Market
Market Engagement
Contracting Strategies
Approach to Procurement
Requirements Definition
Packaging Strategies
Route to Market
Market Engagement
Contracting Strategies
Aims Supporting Activities
INFORM - Create a market place
that can effectively plan and compete
for opportunities at all levels of the
supply chain.
LISTEN - Develop a clear
understanding of the supply chain
to effectively plan procurement and
manage supply chain risks and
opportunities.
• Develop strong links with industry
• Supply chain mapping
• Active supply chain monitoring
• Regular consultation / soundings with the market
• Improved websites
• Clearer pipelines of opportunities
• More conferences
• Greater access to senior staff
Approach to Procurement
• Contract packages that the market can deliver
• Attractive to the market – Clients want the best suppliers
• Maintains healthy competition
• Capable of being managed by the client’s available resources
• Interface risks between packages are minimised
• = LARGE CONTRACT PACKAGES
Requirements Definition
Packaging Strategies
Route to Market
Market Engagement
Contracting Strategies
Approach to Procurement
• NEC3
• Integration of design and construction
• Design and build (Traditional)
• Two stage design and build (or Early Contractor Involvement)
• Fair payment
• Incentives – contract and programme
Requirements Definition
Packaging Strategies
Route to Market
Market Engagement
Contracting Strategies
Approach to Procurement
Tier-1 Direct Contracts
• Procurement is regulated
• Give opportunities to the most capable, aligned suppliers
• Award contracts on the basis of quality and price
• Significant and growing emphasis on behaviours
Requirements Definition
Packaging Strategies
Route to Market
Market Engagement
Contracting Strategies
Approach to Procurement
Supply Chain Contracts (Tier-2, 3, etc.)
• Transparency of supply chain opportunities
• Maximise opportunities for SMEs
• Use of CompeteFor
• Meet the Contractor events
• Cascade NEC3 terms
• Fair payment
Requirements Definition
Packaging Strategies
Route to Market
Market Engagement
Contracting Strategies
How are Clients Changing?
Direction of travel:
• Early creation of the delivery team
• Long-term relationships
• Integrated design and construction
• Selection of suppliers with emphasis on behaviours
• Incentives
• Performance management
How can Suppliers respond?
• Be visible - engage with Clients
• Be aligned - understand major Clients and align with them
• Be the first - continue to innovate, particularly with technology
• Be enthusiastic - how can you help? They need you!
• Be collaborative - commit to collaborating and be able to demonstrate it
• Be able to evidence success – key driver in client confidence
Growing Our Businesses Together
Aidan Franks
Supply Chain Manager
Meeting national needs through people and innovation
Why is our supply chain important?
“Not only have business leaders come to understand that their supply chain is the backbone of their business, it is also considered as an enabler for their business strategy”
Deloittes, Supply Chain & Operations (2014)
Where do we award work?
• Our supply chain partners are the backbone of our
business
• We categorise our partners into 3 levels
Strategic
Preferred
Verified
The Statistics The Statistics
Strategic Partner selection
Data Source Questions 1 2 3 4
Achilles 1 Are they Achilles accredited? No Yes
E1 2 Are they a core or business critical trade / service No Yes
E1 3 Current PR Score (if applicable) 0-249 250-499 500-799 800-1000
E1 4 Order values placed in last 36 months <500k 500k-999k 1m-2m >£2m
E1 5 Orders placed in last 36 months 0 1-3 4-6 >6
Top Service 6 Finanacial status of company 0-15 16-35 36-75 76-100
SCM 7 Probability of work award in next 12 months 0%-24% 25%-49% 50%-74% 75%-100%
SCM 8 Tender support / Work Winning No Yes
Innovation Portal 9 Innovation / Value Creation submitted 0 1-2 3-4 >4
HSE Web* 10 Risk- Prosecutions in last 2 years 0 1-2 3-4 >4
Achilles BC 11 AFR Score <0.1 0.1 - 0.19 0.2 - 0.3 >0.3
Scoring Criteria
Safety performance
Capturing Innovations
160 Trials in live testing
571 Innovations
Demonstrating value
• Why is it important?
• Standardised process
Measuring performance
- Mature performance review process
- Costain Blue is the highest standard
- Room for improvement?
Question
How do you view Costain’s performance reporting system?
1. Above industry standard
2. Industry standard
3. Below industry standard
Supply chain academy
Supply chain development
Summary
• Increasing spend with our Strategic Partners including
SME’s
• A scientific selection process:
• Safety
• Innovation
• Value Capture
• Overall performance ratings
• Supply chain development
Growing Our Businesses Together
Alex Olley Process Design Engineer
Meeting national needs through people and innovation
James McGee Site Manager
Bridges & Costain
Growing Our Businesses Together
• Standard components & products
• Collaborative Planning
• Production Control
• Maximised off site fabrication
• Factory Thinking
• Reduced time on site
Haslemere UV
• 18 months not in operation
• Fed by 2 shallow spring
sources susceptible to
bacteria - Cryptosporidium
• Back into supply to hit Peak
Summer Demand Period
• Costain trusted Bridges
• We work better as a team
Collaborative working
• Bridges engaged - collaboratively developed 3D model
• Off Site Build & Standard products
• Removed hazard, reduced risk & time
• Site Install complete on time by July
Design – 6 Weeks Off Site Fabrication - 6 Weeks Install - 4 Weeks
Build quality guaranteed
• Quality assured
• FAT completed before delivery
• Inspection and test plans in place
• Minimised installation programme
• Right first time
Haslemere efficiencies
UV kiosk Plinth Available
FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN
KG
/co
2
Project Life
Carbon Footprint of Vehicle Movements
Factory Thinking
FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN
Factory Thinking 'v' Conventional
Factory Thinking
Man
We
eks
Factory Thinking Actual Install Date Conventional Thinking Install Date
Key benefits delivered
• No lost time accidents
• Water quality improved
• Reduced on site time
• Reduced impact on
neighbouring Water Works
• £3,000,000 saving
Growing Our Businesses Together
4Way Consulting
Chris Ellison
Technical Director
Meeting national needs through people and innovation
Growing Our Businesses Together
Background
Development
• New technology role for MAC
• Potential knowledge gap
• Renewals e.g. VMS replacements
• Improvements e.g. CCTV infill
Benefits realisation
£1,298,143.50
£11,722,998.35
£1,744,382.30
£1,000,000.00
• £1m Consultancy / Studies
• £1.7m Design
• £1.3m Renewal Schemes
• £11.7m Improvement Schemes
• Improved operational capability
• Safer, more reliable journeys
• Asset Led Delivery Model
Delivering value
• BS11000 relationship
• Single business approach
• Collaboration throughout delivery team
• Innovation in scheme identification
• Driving efficiency
• Operational performance
• Roads Investment Strategy
• Business growth
Growing together
• Continued growth in highways
• New sectors
Growing Our Businesses Together
Jim Mitchell Associate
Meeting national needs through people and innovation
Renii Onadipe Graduate Design Manager
Brydenwood & Costain
• visualisation
visualisation
How do you grow from being an SME designer
to a technology led professional services
provider?
• Data and Technology
• Projects
• Highways
Growing Our Businesses Together
Technology enabled growth
Deliver safely and more efficiently through
innovation
Be more profitable
Growing Our Businesses Together
Growing Our Businesses Together
Prater
Hazel Beecroft Quantity Surveyor
Meeting national needs through people and innovation
Introduction
Project Brief – London Bridge
• Victorian station built in 1836
• Complex & Iconic Design Concept
• Challenging Programme
• Remains Fully Operational
One project team
• Collaborative Enterprise
• One Goal & Shared Vision
• ECI Procurement Strategy
• Innovative Design
Off site solution
• Sections of Complete Canopy Modules constructed off site
• Incorporating Steelwork & Containment into Roof & Soffit system
• Collaborative Solution
• Cost, Time & Quality Benefits
Constructability prototype
• Investment in a Full Scale Section of Canopy constructed off site
• Critical Testing Mechanism
• Ensured all Client Needs Met
• Instilled Confidence in Team
The journey so far……….
• Project is nearing Completion
• Original Team remains Intact
• Prater awarded BS11000
• Improved Business Culture
Thank you
Growing Our Businesses Together
Collaborative Behaviours to enable value creation
Alan Cheung Director Of Behavioural Management
Meeting national needs through people and innovation
I have heard of
Costain Behavioural Safety (CBS)
Yes
No
55%45%
1. Yes
2. No
Have you ever…
Thawing the permafrost
Collaboration is a behaviour
Agr
ee
Disa
gree
27%
73%
1. Agree
2. Disagree
Collaboration – what do we really mean?
Barriers
Are we asking for the right things?
I know what my
critical collaborative behaviours are
Yes
No
64%
36%
1. Yes
2. No
Critical collaborative behaviours
1. Do what you said you were going to do
2. Tell them you’ve done it
3. Pinpoint the problem / need / objective
4. Demonstrate you have listened to other viewpoints /
objectives / feedback
5. Develop solutions which incorporate the best combination of
suggestions & viewpoints to achieve the objective
6. Let people finish before you start talking
7. Speak up when you see a problem
Collaboration
Collaborative relationships
Collaborative relationships
Next steps
Growing Our Businesses Together
Richard Howell Group Head of
Supply Chain
Meeting national needs through people and innovation
Dan Rennison Head of Design
Management
Recognition
Recognition
• Design Services
• Value Creation
• Innovation Portal
• Collaboration
• Supplier Performance
Recognition
• Design Services
Recognition
• Value Creation
Recognition
• Innovation Portal
Recognition
• Collaboration
Growing Our Businesses Together
Growing Our Businesses Together
The Vital Ingredients
• SHE
• Collaboration
• Innovation & Efficiency
Growing Our Businesses Together
Those that embrace them will succeed with us as partners
Growing Our Businesses Together