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When Bovis Lend Lease UK鈥檚 staff logged onto their email on the morning of Friday 4 June, they found a corporate announcement that Nick Pollard, the chief executive, was to leave the business. This was greeted by less surprise than might have been expected, given his numbers had been fine, and he鈥檇 only been doing the job for 18 months. In fact, there was a strong sense of d茅j脿 vu among those staff who鈥檇 been there for the past four years: they鈥檇 received other such emails. It also created a sense of weary resignation: here comes another restructuring 鈥�

Bovis has long been regarded as one of UK contracting鈥檚 elite firms: the builder of choice for projects such as the refurbishing of the BBC鈥檚 Broadcasting House and the Scottish parliament. But when Pollard goes, probably later this year, it will have lost three chief executives in just over four years. Each switch has been followed by a string of other management changes - for example the embarrassing decision to pay off Rod Holdsworth a week before he was to become finance director in April 2007. And alongside these, long-serving and long-suffering staff have watched as its Australian parent separates out parts of the business, only to bring them back together a few years later.

But it seems the contractor is more troubled than even this managerial merry-go-round suggests. 好色先生TV can reveal that in an attempt to assert its control over its UK construction subsidiary, Lend Lease has imposed measures on the business that many feel are damaging its competitiveness. On top of that, rivalries between Bovis and other parts of Lend Lease mean that the vision of 鈥渙ne company鈥� is far from becoming reality.

The hit

Bovis鈥� problems broke surface in summer 2006 with the departure of Jason Millett, its UK chief executive. His resignation after 18 months was reportedly the result of a disagreement with Bob Johnston, Bovis鈥� global chief executive, over the restructuring of the UK business - shortly after Millett鈥檚 departure, it was split into construction and PFI units.

But in reality, the contractor had bigger problems than ordering new stationery, as was made clear the following spring. In early 2007, the company, now led by Australian Murray Coleman, was forced to make a 拢48m writedown. The hit was attributed principally to the Manchester joint hospitals PFI scheme and the Bridgewater Place office development in Leeds. Lend Lease鈥檚 global construction business announced a 拢4.7m loss when it reported its results that March.

At the time, Johnston implied that the buck stopped with Millett. He said the company had taken on 鈥渉igh-risk projects it didn鈥檛 understand鈥�. And just in case there was any misunderstanding, he added that the situation had improved under the new management team.

Coleman came with a brief to make Bovis鈥� operations easier for Lend Lease to understand, and by implication, influence. He said: 鈥淥ne of the reasons I was brought over was to position the business for the future and develop the level of transparency across operations.鈥� Within months, he had got rid of the roles of chief operating officer and the head of regions; from now on, the heads of Bovis鈥� northern and southern UK businesses would report directly to him. At the time, he warned that profit growth would be suppressed for 鈥渦p to two years鈥�.

About a year later, however, Coleman put the chief operating officer鈥檚 job back on the firm鈥檚 table of organisation and recruited Nick Pollard from Skanska to do it. He then became chief executive in waiting - Coleman was widely expected to return to Australia once the business was back on an even keel. In December 2008, this was what happened.

Why did Pollard go?

At first glance, the move seems to suggest a dissatisfaction with Bovis鈥� strategy during the recession. It has suffered as long standing clients such as Stanhope and Land Securities wound down their operations. But so have many others, and Bovis 2010 is in better shape than Bovis 2007. Much better: when its full-year results come out in August, it is understood that last year鈥檚 拢17m pre-tax profit will be bettered.

One senior Bovis source says that result reflects Pollard鈥檚 planning: 鈥淏ack in December 2008 we were planning for a three-year recession and we took a stack of overheads out of the business. I think there鈥檚 a year to go, and this will be the hardest, but we鈥檙e in pretty good shape to tackle it.鈥�

Despite the company鈥檚 relative success, there was growing speculation within Bovis that Pollard鈥檚 control was being eroded by Lend Lease. One senior source, during a conversation in late 2009, said Pollard was having to run major decisions past Dan Labbad, then the head of Lend Lease鈥檚 development arm in the UK. He was viewed as a rising star in the business and had the ear of the Australian board. Several sources attributed this to nervousness about a repeat of the 2007 loss. But although the drive to have more control could be seen as prudent, particularly in a recession, some Bovis staff believe Lend Lease has stifled the business.

Several managers point to the requirement to fill out an approval document running to more than 130 pages when bidding for work, which must be signed off by Lend Lease. One said: 鈥淚t鈥檚 beyond a joke. It takes them six weeks to process it, and most of our competitors are bidding on a four-week turnaround. We can鈥檛 respond fast enough.鈥�

Lend Lease is also understood to have agreed with Bovis鈥� management that, in most cases, the contractor must not bid on margins of less than 5%, even though the average for contractors is between 2% and 3% (and many will take work for much less). The same manager said he had been aware of instances when this policy froze Bovis out of projects being tendered by Lend Lease.

Perhaps the most obvious example of Lend Lease鈥檚 heavy hand is the wrangle over nuclear policy. A big part of Pollard鈥檚 task when he took over as chief executive was to reposition the business in new markets to help it cope with the failure of its traditional feeding grounds. The markets he identified were rail, waste-to-energy and nuclear. After two years of repositioning, earlier this year Bovis looked as though it was finally going to make a breakthrough into nuclear with a consultancy deal for EDF energy - until Lend Lease vetoed its involvement in nuclear work. According to one source, Lend Lease鈥檚 diktat was pronounced 鈥渧irtually as pen was to be put to paper鈥� on the EDF deal.

It is currently unclear whether Lend Lease鈥檚 stance will result in redundancies at Bovis, but it is widely recognised that the nuclear sector is one of the few predicted growth areas in UK construction in the foreseeable future. And now, as a result of Lend Lease鈥檚 intervention, it is one from which Bovis is excluded.

No integration

The nuclear fiasco illustrates another trend: despite Lend Lease鈥檚 attempts to direct its UK construction business, there is in fact a lack of rapport between them. Despite the fact that Pollard鈥檚 business strategy was signed off two years ago and widely publicised, Lend Lease apparently did not inform Bovis until the eleventh-hour about its ethical position on nuclear power.

A lack of integration is also apparent between the developer鈥檚 other operations in the UK, where, according to several Lend Lease staff, relationships are often poor. Some examples may seem petty: for example, when Catalyst, Lend Lease鈥檚 PFI arm, was awarded the 拢2.4bn Birmingham 好色先生TV Schools for the Future (BSF) project in February 2009, it is understood that there was an internal wrangle between Catalyst and Bovis, the contractor for the scheme, over which would send out the press release. Others may be more damaging: one Bovis director said he would rather not work with Vita Lend Lease, the company鈥檚 facilities management arm, because 鈥渇rankly, I can get better terms elsewhere for less hassle鈥�. Certainly, Vita is not used on as many of Lend Lease鈥檚 developments as you would expect from an integrated offering.

There also seems to be a confusion of responsibility between Bovis UK鈥檚 southern and northern businesses. The running of the 拢2.4bn Birmingham BSF has just been transferred from the north to south: depending on who you talk to, the reasons vary - but it has left the north with an unexpected hole in its order book.

A problem without a solution?

Perhaps even more worrying than the impact of such disunity is the failure of Lend Lease鈥檚 efforts to sort it out. The announcement in April that all of Lend Lease鈥檚 UK and European businesses would be united under Labbad - a pattern Lend Lease is replicating across the globe - is a recognition that the company鈥檚 strategy still isn鈥檛 working as it should. Announcing the appointments, Steve McCann, the global chief executive, said: 鈥淚t will enable a more focused and co-ordinated approach to our growth strategy and the execution of major projects. This will enable us to achieve the best outcomes for us and our customers, investors and partners.鈥�

It is understood that the move was the outcome of a series of meetings held since the start of the year, aimed at integrating the firm鈥檚 offering. 鈥淚t is something they should have done when they bought Bovis,鈥� said one source in the contractor鈥檚 supply chain.

The choice of Labbad as chief executive is understandable - despite his background as an engineer, the 38 year old comes from the development side of Lend Lease鈥檚 business. Of course his appointment meant that Pollard was surplus to requirements - even before the nuclear issue arose.

But the move, after so many years of unrest, also has the air of a final throw of he dice, and has led some to question whether Bovis has a long-term future with Lend Lease. Labbad鈥檚 appointment has fuelled such rumours. One source close to the company said: 鈥淎t the end of the day, Lend Lease is a property developer and it has brought in a property development man to run the construction business. If you look at it like that, it doesn鈥檛 look like construction is a priority.鈥� The fact that Pollard is to remain with the business for up to nine months has also led to speculation that Lend Lease is leaving the door open for buyout.

For the company to demonstrate its value to Lend Lease, Bovis will need to adapt quickly to the new UK market, from which public sector spending is being subtracted. With nuclear ruled out, and the private sector still shaky, there are already question marks over the sustainability of its order books. One director says: 鈥淥bviously we鈥檇 love them to be bigger, but I think everyone鈥檚 like that. Until we come through recession there aren鈥檛 going to be any great growth areas in the sectors we鈥檙e in.鈥�

Once markets do start coming back, much of Bovis鈥� success will depend on how quickly the new management system can bed down. The first test will be the recruitment of Pollard鈥檚 replacement, which is expected to be at managing director level. An obvious candidate is Julian Daniel, head of UK south, although it is thought that Lend Lease will also cast an eye outside the business.

But one thing is certain: if Bovis is not to be left behind, the organisation cannot afford to wait for a new arrival before it starts sorting out its problems.