Sector spotlight: Construction

30 April 2015

Interim managers are finding favour in construction

The construction sector has always lagged behind other industries when it comes to realising the benefits of bringing in outside expertise, but current market conditions have forced its hand.

In retail, financial services and manufacturing, for example, the acceptance level of interim managers is at an all-time high.

In construction that has been less so, but times are changing.

The sector is in a state of flux and, while certain subsectors are doing very well, overall the much-mooted return to growth isn’t as strong as many people think.

There are a large number of firms chasing a limited pot of work, with inevitable downward pressure on margins.

The unfortunate upshot is that there will be many companies fighting for survival, which might mean right sizing, merging or diversifying into complementary service offerings.

When this kind of change management is needed then employing an interim manager can be a cost-effective way of upskilling a team in a very short time.

They can apply best practice experience from other sectors to make back office operations like finance, IT and HR leaner and lighter, so that when things pick up they can protect and grow their margins.

Interims can sit down with the executive leadership team to formulate and roll out a plan as to how the business needs to look. That could involve an organisational restructure and assessment of existing and new markets, acquisitions or disposals, or big projects like installing a new IT system.

These business transformation experts can work with a firm to support them in right sizing the business and preparing it for an upturn in the economy. On the positive side, they are able to provide support when growth opportunities appear, such as moving into new geographies or breaking into new vertical markets, and a specific strategy is required.

Managers with construction experience can also step in if a firm has lost a key employee and needs to replace them quickly because don’t have that skill set in house.

An average interim contract length is typically six months, with day rates ranging from £600 to £2,000 a day.

That may sound expensive, but if a multi-million pound project is derailed, then bringing in an interim manager to bring it back on track will more than pay for itself.

A good interim agency should be able to supply a short list for a senior high-calibre individual in as little as 24 hours and they can be starting in a week.

A note of caution, however. Interims are not a long term solution. Skills gaps need to be identified and addressed both through a comprehensive development programme to nurture talent internally and by maintaining a consistent and proactive recruitment policy.

On that note, it is important to be clear as to exactly what you want an interim to achieve. A management team needs to make sure that it is not crowding out an enthusiastic and talented member of staff who is able to step up to the plate.

That said, interim managers can provide a quick, effective way to bring in highly-experienced, very capable people with proven track records on a flexible basis. With the sector facing a challenging and uncertain future, it is no wonder the use of interims in construction is building.

Duncan Hoggett, Partner responsible for industrial practice at Odgers Interim.


Categories: Energy, Manufacturing & Infrastructure

Comments

Ian Heptinstall at 26/05/2015 18:48 said:

On the one hand, construction has had a long history of using interims. Companies dont have teams of staff sitting around waiting for a new contract to be signed. When they win a new job they immediately hire most of the project team for the duration of the contract, with a handful of long-term staff to oversea and control.

However when it come to innovation, I agree there is significant potential from outside input. The industry can be very insular, and ideas from outside, no matter how practical and beneficial, have a hard time!

The big issue for construction is the "way we do things round here". The fundamental processes used in the industry are broken, but I dont see any clients truly looking for the solution and being willing to drive change in the supply market. Nor do I see any of the larger construction firms willing to shift their own mindsets to do things better.

There is much more potential than just reorganising, divesting, acquiring or continually chasing a "better market". Delivering a construction project faster, for lower cost, and without cutting the scope or quality is possible, and how to do this has been demonstrated many times, all over the globe. It is easy to pilot and prove, and the risks are low. The problem is that it is different to the prevailing methods, and to change and sustain such a change, needs knowhow and longevity. And there are many vested interests in maintaining the status-quo

I wish someone would prove me wrong, but so far everyone backs up my pessimistic opinion!

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