Profile: NG Bailey chief executive Mark Andrews

Mark Andrews, chief executive of NG Bailey, argues that you can get the best of both worlds in a family-owned, privately-run business: there’s the opportunity to copy best city practice without having to bend to the whims of shareholders who can’t see beyond the next few months.

“The group here is run professionally, taking best practices from our plc counterparts,” he points out.

“However, construction is a cyclical industry and it’s an advantage to have the backing of a supportive family who take a longer-term view. NG Bailey not being quoted means that I’m not beaten over the head by analysts every three months."

The company is 100%-owned by the Bailey family. Now into the fourth generation since the company was founded that means a total of 15 family members, though only four of them are directors. The make up of the 10-strong board is: Andrews; finance director Chris Newton; four independent non-executives; and the foursome from the family.

Andrews was head-hunted three years ago. NG Bailey was looking for a new chief executive and he was looking to return from north America where he had been working as president and chief executive officer of Pirelli Cable and Systems, a business whose two operations were manufacturing cables and installation work. Prior to that, Andrews headed Power Networks, one of Balfour Beatty’s operating divisions. It works in overhead transmission lines and submarine cabling.

NJ Bailey’s turnover runs to £500m, which comes from six operating divisions. The largest is the M&E business, simply called Bailey, which contributes 70% of the group’s turnover.

Well connected

The bulk of the workload – four-fifths in all – comes from working for a main contractor. NG Bailey has links with most of the big players, such as Taylor Woodrow, HBG and Sir Robert McAlpine.

And are there still any horror partners out there? Andrews nods by way of confirmation. “We avoid them like the plague,” he says, but declines to offer any names. He’s a polite man.

But Andrews does have some good words about main contractors. He reports that NG Bailey is being brought on to projects much earlier, something specialist contractors have long campaigned for.

“It’s right to do this,” Andrews says. “More and more large projects take on a quasi-PFI approach, even if they are not PFI, and that’s good. The main contractor and the M&E specialist need to work upfront. That way you can maximise off-site construction. Also, the wet trades and the M&E co-ordinate better.”

The changes in construction are certainly not putting the squeeze on Bailey. “Just the opposite, our role is increasing,” says Andrews, “because what is more and more important to the owner of a structure is what is inside his building. So yes, that means that architects are under threat.”
As the importance of the design of the M&E element within the overall scope rises, Bailey has found itself bolstering the size and capability of its design team. The M&E element within a project’s overall cost can run from a low figure of 20% to 30% on a school up to 60% on pharmaceutical buildings.

Getting the M&E design right is particularly important on hospital projects and by way of example, Andrews cites St Helen’s hospital, a PFI scheme won by the NewHospitals consortium, which contains Taylor Woodrow. Bailey’s contract is worth £120m, representing 48% of the £250m capital spend.

PFI equity

NJ Bailey has been offered opportunities to take PFI equity in the past but has turned them down, seeing them as being too risky. But that might be about to change. “There are a lot of players making more from their PFI equity stake than from their construction work,” Andrews notes.

“It would mean us going into the consortium. Hopefully, that would mean we got more say at the top table. But having said that, we have such a good relationship with Taylor Woodrow that it’s not making much difference whether we are actually in the consortium or not.”

But despite the greater emphasis PFI is putting on forward design and planning, this is “not resulting in better M&E”, according to Andrews.

“There is still a lot of work to do to get some people’s heads round whole life costing,” he explains. “Generally, the deliverer of most schemes is not the same person as the end user and the guy who cares most about maintenance costs is the finance director of the occupier.

“And does the occupier have an influence on the build costs, on items that will affect the size of his maintenance costs? No, he does not, because on the ‘developer model’ of project procurement he’s not even at the table at that stage.”

Whole life costing is a fraught area anyway, reckons Andrews. “How can it be precise?” he asks. “Fuel costs have recently jumped by 20%. Part L changed the dynamics further again. So how can anyone price all the possible influences over a 25- year period with any accuracy?”

Back to the business. The M&E part of Bailey might well be the group’s largest division, but the other five are growing at a healthy rate of knots.

Johnson Brothers, a ceiling specialist, was bought last year and it now trades as Bailey Johnson. It specialises in the design and installation of suspended ceilings, fibrous plasterwork, firelinings and fire protection work.

The background to the move was that Bailey and Johnson Brothers had both worked for Morrison on a string of supermarket jobs. Andrews saw that there was a good fit.

The combination’s first award, worth £9.8m, working for Balfour Beatty, is on a project for York College. Here, Bailey has taken on both the £7.3m M&E package and the ceilings package, worth a further £2.5m.

“It’s working well,” says Andrews. “The combination eliminates interface problems – remember that most M&E is inside the ceiling void.”
Andrews has also seen growth in Bailey Teswaine, which offers a range of ICT services, including voice, data and cabling.

Approach to training

NG Bailey is a big player in an industry with a skills shortage, so you might expect to find Andrews beset with the near-impossible task of maintaining his skilled workforce. But nothing could be further from the truth, and that is a reflection of the major effort put into the group’s apprentice scheme.

“We take on 100 apprentices every year, for electrical and mechanical skills, and we get 5,000 applicants, “Andrews reveals. “That’s a higher applicants-to-available-places ratio than either Oxford or Cambridge universities achieve. We like that.

“The apprentice scheme is seen as the best in the industry, we get a massive application and that means we can be choosey.

 “The priority we give to training is part of our family ethos. Our apprentice training school is in Leeds and we spent a further £500,000 on it 18 months ago.”

“We’re expanding the model to include commercial apprentices, in other words we will be training our own future QSs.”

Andrews says this training strategy is driven by “frustration” with the system out there.

“You see the people working in McDonalds, for example, and what have they got?” he asks. “A media studies degree. What happens when you go out and search for a qs? You can’t find them for love or money.

“What’s happened to degree courses for surveyors? The entire construction industry needs to get closer to the establishment so that we get the courses and skills that we need.

“Yes, we’ve taken on some east Europeans. But the construction industry has used the availability of east Europeans as an excuse to not develop
sufficient people here at home. It covers the fact that we have a bigger skills crisis than some would own up to.”