Knowles eyes partnering

by John Leitch



James R Knowles, the consultancy firm offering contractual advice, wants a leading role in the rapidly expanding partnering market. "We see partnering as a growth area for us," said finance director Patrick Lineen.

Knowles had a turnover of £500,000 in the past six months from partnering work: 75% of this coming from assignments where it was asked to provide initial facilitation and 25% from clients who wanted Knowles to be involved for the duration of the project. Knowles has taken on Jim Marler to head up its partnering division. He was previously with ABB.

Lineen was speaking as Knowles announced its interim results (six months to 31 January 2000). Turnover climbed to £12.5m (£11m) and the group moved out of the red, having reported a loss of £120,000 in the same period last year, and notched a pre-tax profit of £560,000.

Last year's loss was a blip, said Lineen, brought on by the "dash for growth" following the group's flotation. Brokers forecast a full-year pre-tax profit of £1.2m followed by £1.5m in 2001.

"When partnering works well it can be a roaring success," said Lineen, "but unrealistic expectations can sometimes be placed on it. We're trying to be brought in right at the start, which means we can have a role in agreeing such things as incentives. When the partners set a target price and work to an open-book policy, then if the scheme comes in below the target cost, we urge the partners to share the savings."

Partnering is not totally problem-free, Lineen added. Some cynical contractors are nice to the client but still think they can "beat the subcontractors to death".

There are still "a few raging disputes" between clients and contractors, but proportionately fewer of them compared with traditional contracting methods, he added.

In its push for a world presence, five overseas offices have been opened in the past 18 months in Munich, Paris, Madrid, Shanghai and Brunei. "We are now in the phase of building up our client base," Lineen said.

"Germany holds incredible potential. Once the Munich office is full we will open in Berlin and look to open a third base in Germany after that."

Overseas markets are changing: they have been less confrontational than in the UK because margins have been better. "But their margins are now coming down to UK levels," Lineen said.

"In South Korea, for instance, we have a client who wouldn't have pursued claims in the past, but now feels he has to."

In the UK, adjudication is taking off. Lineen said: "It's because courts are enforcing the adjudicator's decisions. Of the 22 cases taken to court to see if an adjudication award was enforceable, in 19 of them the answer was 'yes', while the other three involved special circumstances. More use is being made of adjudication, especially by subcontractors."



BOXTEXT: jr knowles

Interim results (6 months to 31/01/00)

2000 1999

Pre-tax profit/loss £560k t£120k

Turnover £12.5m s £11m