Profile: Mark Perkins, CEO of SES

Shepherd Engineering Services is confidently predicting growth in spite of the economic climate. Its new chief executive officer, Mark Perkins, tells John Leitch that its trading agreement with Costain, a model it intends to reproduce, is paying dividends.

Where have you been taking SES since taking over the reins last summer?

Into fewer relationships, into deeper relationships, and into a better defined sector focus.

Deeper relationships with whom?

Companies that have a more strategic approach to what they are doing with their business and the part we should be playing in that. Organisations such as Costain, Carillion, LOR and BAM.

We have moved away from being a reactive tendering service. We sit down with a company's business development people and look at its future pipeline three or four years on.

Take a Costain example. We have just done the first phase of a Building Schools for the Future (BSF) project in Bradford - Tong School - and we now have the second phase to prepare - Grange and Hanson schools. These have been in development for some time.

When Andrew Wylie arrived as chief executive of Costain, he talked about changing its supply chain. You seem to have emerged successfully from that process.

M&E typically represents 30% of the total build cost, yet Costain had too many M&E suppliers and no real business-to-business relationships with any of them.

The fact is that through the old-fashioned tendering process, the M&E element of a project was costing Costain 30% more than it could recover over and above a client's variations. The process was not working and it recognised that.

So Costain moved forward with its Partners for Progress initiative and as a result selected just three M&E partners - SES, Lorne Steward and NG Bailey.

We like this way of working. It is very different from tendering on an ill-defined brief where the client will end up paying more at the out-turn than was anticipated at the point of order. But if anyone thinks it is the easy option, then think again. More pressure comes from being in a real 'warts and all' partnership than there has ever been from a contract: pressure to drive down real cost; pressure to be really honest with your partners every step of the way. It is a culture challenge for the industry.

Are you are also looking at this sort of partnership with other main contractors? Can you say what this entails?

We are in early dialogue with two other companies, and I can be more specific when things have been formalised, but yes we are looking to commit to strategically agile organisations, particularly developing our sector specialisms. We have signed a trading agreement with Carillion that starts to set out how we specifically work to support it. It sees us getting involved in projects earlier. It is quite heartening to have the more mature dialogue.

SES's joint team approach, one which you have called an adult way of operating, has given you what sort of strike rate?

Around one-in-two to one-in-three. If we control our bidding to this pattern we can better invest in more specifically bringing something different to the table for our clients. It is common sense really. It also means that we can extend the model downstream to our key supply chain members.

This all goes to the definition of SES being a 'thinking business' rather than a 'pipes and wires commodity business'. It means we can plan what we do and more effectively engage.

Has this put SES in a stronger position to weather the downturn?

If we had still simply been tendering, I would already be talking of survival. Instead we believe we have growth ahead of us, even in this climate.

What is helping is our unfashionable policy of having a strong in-house design capability. This continues to be an area of development for us.

SES has three elements: M&E, accounting for £140m per year; FM, accounting for £10m per year; and Prism, an in-house manufacturing element that is helping SES to expand its off-site capabilities.

We have a team of more than 30 in our technical services section and we are still recruiting. For example, we have just taken on a new technical services director, Jim O'Neil. There is a real push to innovate still going on. A sequence that starts in design, moves to CAD, then to 3D modelling, and finally to manufacture off-site.

When your margin is agreed up front, do you find yourselves working open-book?

I prefer to work that way. Take material prices - they might have come down recently, but for 12-18 months they have fluctuated wildly and we have not been able to go to some clients to explain this.

So do you load risk money into your bid?

I would rather be open-book, talking to an enlightened client, one who wants to move away from risk dumping, one who invites everyone in the team to come to a collective decision on who is the right person to take the risk. The beauty of that is that between you all you then don't overprice the contingency and blow the cost plan at day one.

What range of contract sizes do you undertake?

The majority are in the £10m-£15m band, but our wider range runs from £5m to £30m.

Long term, what new territories would you like to see SES operating in?

We are starting to look more at prisons and further out we would expect to put a SES foothold into nuclear, transport infrastructure and major hubs - Crossrail is an example that comes to mind.

Mark Perkins CV
2008-present: chief executive, SES
2006-2008: divisional managing director, SES
2002-2006: regional director south, SES
1991-2002: design manager to regional operations manager, Haden Young
1990-1991: design and construct manager, Knights Warner
1979-1990: student engineer to senior design and contracts engineer, MJN

 

3 things you didn't know about Mark Perkins

• His ideal vacation would be to explore Africa on horseback
• He dislikes traffic jams and 'tick-boxes'
• He plays the drums and rides horses