Laing O’Rourke’s relationship with the government has been enhanced because Whitehall “understands” its offsite capabilities give it a competitive advantage, the contractor’s chief financial officer has claimed.
The company, which was officially recognised as a government strategic supplier this week, has invested more than £100m in its Design for Manufacturing and Assembly (DfMA) offsite approach over the past 11 years. CFO Rowan Baker (pictued) told Construction News this was paying dividends in the public sector. “This [offsite capability] is coming to the forefront and indeed is well understood by government as to the kind of competitive edge that we have, and the differentiation that we have, and that’s probably part of the reason that we are on that strategic supplier list,” she said.
The contractor’s designation as a strategic supplier earlier this week means it will now get a crown representative to manage all work between the government and the firm, acting as a single point of contact.
In the government’s recently published Construction Playbook, modern methods of construction were cited as an increasingly important element of public sector procurement in the coming years. Combined with an expected increase in government construction projects, Baker said the company was well placed to benefit. “It will depend on exactly where we end up in terms of the work winning, but schools and hospitals, they really lend themselves to being produced there [offsite],” she said.
Laing O’Rourke is now supplying other contractors from its offsite facility, the CFO confirmed. CN revealed last year that the company was planning the move. Baker could not confirm the value of work the factory has done for other firms, and emphasised the priority of the facility was to fulfil O’Rourke’s needs on its own projects. “Primarily we would want to use it for the step up in our own activity if that is what is required, for example, by government contracts,” she said.
In 2019 the company revealed £35m of revenue was generated from work at the facility in Steetley, Nottinghamshire. The company has not revealed the equivalent value for 2020 and Baker said it was hard to break out as a standalone item. “It isn’t really thought of as being a separate standalone item, it is part of what we do,” she said. Baker added that the firm’s DfMA offering was now part of “almost every bid that we put in”.
MMC and offsite construction of the type Laing O’Rourke has invested in has been touted as means through which contractors will be able to cut emissions in the coming years. O’Rourke claims that its use of offsite manufacturing on its Liverpool Street Crossrail project reduced embodied carbon by 30 per cent and eliminated seven tonnes of wood waste.
O’Rourke has not issued a net zero carbon pledge, unlike peers such as Balfour Beatty, Mace and Kier. Baker said the company would unveil its sustainability targets soon. “We’re really quite engrossed in this process at the moment of finalizing our sustainability strategy,” she said. “So it would be too early for me to say something on it, but we are really focused on it as a business.”
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Laing O’Rourke CFO: Whitehall ‘gets’ our offsite edge – David Price – 2020-12-17 14:55:22