.. regarding the sale of Bovis Lend Lease, presented by Adrian Chamberlain, chief executive officer for development and construction in the UK, Europe, Middle East and Africa 


“IT’S ALL A LOAD OF BOLLOCKS.”

So there you have it.

Actually it’s easy to understand Chamberlain’s frustration. He has been with Lend Lease for a little longer than a year, and for much of that time the firm has been infested by rumours of an imminent sale of its construction arm.

On the other hand, it is easy to understand how those rumours started. Bovis’ parent, the Australian developer Lend Lease, has had mixed fortunes recently – last year it made a pre-tax loss of £235m, and last month its £3bn merger with Australian rival General Property Trust suffered a spectacular defeat at the hands of GPT’s shareholders. Before the deal collapsed, the talk was that Bovis would be disposed of because it would not fit into an enlarged group. After it failed, Australian analysts predicted that Bovis would be sold as part of a takeover of Lend Lease itself.

Adrian Chamberlain
Adrian Chamberlain

Chamberlain may be in the position of a man trying to destroy hundreds of tiny rubber mice with a hammer, but he is still swinging. “I’m glad you raised this point about the sale because I’m really keen to emphasise this. I do not want rumours going round any more; it just upsets people. There is not a hope in hell of the company being broken up.”

He argues that the divestment of Bovis has never been an option, before or after the GPT bid: for one thing, the contractor contributed more than half of its parent’s profit over the past financial year. He also points to a rise in Lend Lease’s share price since the GPT merger failed; proof, he says, that the Australian investment community is convinced by Lend Lease’s business model of development allied with construction. “I have a broker’s report today that says we are worth £5-6 per share [the current price a little under £5]. That’s a huge endorsement of confidence in the company, with or without GPT.”

Chamberlain is a confident man – remarkably so given his lack of experience in construction or development. Before he took his present job he had spent most of his 25-year career in the telecoms and retail sectors. While he was at Cable & Wireless in the late 1990s he had a colleague called Greg Clarke, now Lend Lease chief executive. A few years later they got in touch again. “Greg said: ‘You don’t want to work in telecoms any more, you want to work for a real company.’”

Chamberlain was aware that many would be sceptical about the appointment. “There was a lot of that, of course – you know, ‘there’s bloody Greg’s mate come in’. To overcome that I tried doing a lot of listening.”

The recent history of outsiders taking over the helm of construction firms has been a mixed one – think of the short-lived tenure of BAE marketing man Robin Southwell at Atkins – but that doesn’t seem to have dampened the enthusiasm of the bright and breezy Chamberlain. He explains that Clarke was looking for “general management skills” rather than sector-specific ones. “I have had confidence moving between sectors before. It’s daunting, but the prospect is less frightening than for someone who had been all their life in one industry. Also, this company is so sophisticated – it’s not just construction but PFI, urban regeneration and retail development. Even within the industry it’s difficult to define anyone who could comfortably straddle all of that.”

We never threatened to up sticks [from the scottish parliament], never took them by the lapels or slapped them round a bit to create a crisis. Possibly with hindsight we should have done

Naturally, Chamberlain is at pains to stress the quality of Bovis. “It’s a company that’s going places” and “it is indeed a fantastic company” are two of his favourite phrases. But he has identified one area that needs to be worked on – that of human resources, which he feels is better catered for in the telecoms sector. Flexible benefits need to introduced, he says. These would allow staff to choose to take more or fewer holidays and design their own health insurance. “If we don’t bring in benefits that make the industry look more attractive, we are going to lose out.”

The lack of women and ethnic minorities is the “curse of the industry”, says Chamberlain, and he talks about the need to attract more of them. In the case of women, he wants to back up the PR with more flexible working hours. Then there is the “employee of choice exercise”, which he plans to launch across the firm in the UK next March. This will introduce clear grade and pay structures for staff. “People love working at Bovis but I’m not sure they clearly know how to get on in the company,” he says. “There’s a lot of who-you-know in this industry, which could be described as patriarchal. That means there is huge loyalty and looking after people. I would keep that but blend it with more objectivity about how you are appraised and what you have to do to get on.”

The consistent treatment of staff fits Chamberlain’s strategic goal of integrating Bovis and Lend Lease. The fact that he is from neither camp is, he says, an advantage. “What I’m interested in is making all elements of the company work more effectively together. I think we are progressing with making the company comfortable with itself.”

Nearly five years after Lend Lease swallowed Bovis from P&O, Chamberlain accepts it has taken time for the two to coalesce. “The hearts and minds of people take a lot longer to change. With two such distinct cultures, it takes years to get the two sides to work together.” In other words, there has been tension between Bovis and its Australian parent – more so than with P&O, the conglomerate that owned Bovis up to 1999. “Lend Lease sees Bovis as core and it’s ambitious for construction, especially when related to development. I suppose some would think that at least with P&O, it left Bovis alone. Lend Lease is hands-on and I think in the long term it’s good. It’s driving Bovis – not always wisely – and it’s ambitious for the Bovis side.”

This hands-on approach has led to a change in the kind of work that Bovis does over the past five years. It has taken on more PFI work and design-and-build fixed-price contracts, rather than fee-based management contracts. Chamberlain acknowledges that present market conditions are “very vibrant” and that a decrease in competition for large main contractor jobs has led to a rise in margins. This rise, he says, is ultimately in the client’s interests. “It’s reasonable given that the risk–reward balance has previously favoured the customer to the long-term detriment of the client. That’s a healthy development.”

Chamberlain is aware that such healthy developments can be dangerous. “Bovis needs to become more sensitive to the competition and to be seen to be more responsive to customers than perhaps it may have been in the past,” he says. He knows that Bovis has a reputation for arrogance, and he wants to dispel it. “I’m not sure it’s necessarily fair. I think it’s a bit of a myth rather than reality but I am aware of that as perception.”

Given his experience in the disaster-prone telecoms sector, Chamberlain is painfully aware that market conditions can change. “I’m 47 and I know that up cycles don’t last forever. You have an eye for the fact that benign markets don’t last forever when you build in costs and take risks. That may seem arrogant but I think it’s making sure we are around for our customers in the down times as well as the up ones. If you assume conditions go on forever you may be exposed.”

It’s hard not to get the impression that Chamberlain is enjoying the challenge. He also believes that his more relaxed management style – “some managers run through fear, but that’s not my style” – has gone down well with Bovis’ bosses. “Some of the tradition in this industry is very much command and control. Mine is a different style 
 and I think a number of executives have grown more comfortable with that.”

For Chamberlain, getting results is the key to his enjoyment. “There’s nothing so great as having good results and nothing so awful as having a bad one. Some people get turned on by deals, but I’m more an operational man. If you get things done and see the results, either financial and operation, that’s hugely rewarding 
 that’s what turns me on.”

Chamberlain on ...

... the Scottish parliament
"We strongly believe we have delivered a building that will be an iconic building for the future when the short-term controversy subsides. It exemplified the reason why Bovis gets these kinds of jobs. We managed a process that was a very challenging and very political one. I don't want to sit here saying 'it's not our fault, it was their fault'. That's not terribly helpful. We were in the middle of it.

We were under massive strain and unprecedented media scrutiny that we neither welcomed nor deserved, particularly in the Scottish press. I think in those circumstances the team did a fantastic job and we need to do everything to support them in the future.

A lesson in hindsight is that there were times when we could have been tougher than we were. We repeatedly told people that the cost estimates were in jeopardy and that the constant changes by the client were threatening the integrity of the scheme. We never threatened to up sticks, never took them by the lapels or slapped them round a bit to create a crisis. Possibly with hindsight we should have done.

The lesson is if we take on that type of job again – and inevitable as a company we will be looking at such prestigious jobs, we shouldn't be shy of them – we need more aggressive intervention earlier. That's not criticism at all of the management on the ground but a criticism of us generally in assessing what we were doing and supporting people on the ground. We did everything you would reasonably expect us to do but we should have done something unreasonable."

... Sir Frank Lampl
"I like to have lunch with him every three months. I ask him for a score sheet on what he thinks I'm doing right and what he thinks I'm doing wrong. He's far too gentlemanly to say it like that. [If he did so] I think he would give me better than evens. I think he thinks I am doing all right.

"He recognises the market has moved on. The nice thing about Sir Frank is he's not completely 'in my day we did it this way'. I say to him, 'I think we should do that' and he says, 'I think you're right. I wouldn't have done it then but it's right for these times'."

... military history
"I did history at university, which got me interested in military history. I can bore you rigid on the Battle of Waterloo if you want. I'm particularly interested in the Peninsular war. War is a very naked form of what we do – capitalism is about competition and figuring out strengths and weaknesses compared to the competition in relation to end result and making sure you win. I derive lessons from history that generally apply. Examples like Hernando Cortez burning his boats and going for it, which you have to do sometimes, not to do something halfheartedly. The best introduction to military history is Clausewitz' On War."