interview

15 May 2006

Alfred McAlpine Business Services MD, CraigMcGilvray, talks to Jane Fenwick about recent successes and future prospects

From the beginning of this month, Alfred McAlpine will start its largest ever facilities and building management services contract to provide Mapeley with management services across its UK property portfolio.

Over a year ago Mapeley announced that it was nolonger interested in owning property and delivering services in a combined package.

According the Craig McGilvray, managing director of Alfred McAlpine Business Services, “Mapeley’s model had focussed on owning, acquiring and disposing of properties, but they no longer wanted to self deliver FM services. They were thinking about their future strategy when we approached them to develop ideas and models.”

Initially Alfred McAlpine will provide management information about the properties Mapeley manages but within two years this contract will have expanded to cover the provision of total FM services and H&S compliance across the Mapeley portfolio.

Alfred McAlpine has taken on Mapeley’s help desk staff and built a separate service help desk at Milton Keynes that Alfred McAlpine has taken on Mapeley’s help desk staff and built a separate service help desk at Milton Keynes that is linked to its main help desk for disaster recovery purposes. In addition, it has signed a £7m contract to handle the IT outsourcing contract for Mapeley as a whole, and to provide its IT help desk and networking support for its other FM contracts. The relationship with Mapeley has been strengthened further by a joint bid for the contract for FM and property services at the UK Passports Agency for which it has secured preferred bidder status, and for the government offices in Northern Ireland. In both cases, Mapeley leads on the property while Alfred McAlpine takes on delivery of FM services.

“All this has arisen from the initial contact and Mapeley’s decision not to self deliver FM as a managing agent using its own supply chain,” explained McGilvray. “It is an interesting and growing business in which we are concentrating on delivering services. We have a close relationship at board level. It is not a formal arrangement that we will do everything together but we have a mutual trust and understanding. They want to own property and take property risk, and we want to manage property and takemanagement risk.”

Alfred McAlpine has only 25 per cent of its business in the public sector, but it is the sector in which it has scored some of most of its most recent successes. In February this year, it won a £23m contract from the Scottish Courts Services for total FM at 52 High Courts and Sheriff Courts. It is also preferred bidder as part of the Arden Partnership for Three Shires Batched healthcare PFI in the East Midlands.

However, it is in the MoD’s Prime contracts that Alfred McAlpine has emerged as a key service provider with Babcock and Bovis Lend Lease for the Regional Prime (South West) and with Babcock Dyncorp, the JV preferred bidder for the Regional Prime Contract (East). As McGilvray explained, key to Alfred McAlpine's interest in the MoD sector was its acquisition of Inframan in 2002. “Inframan was in the successful consortia that won the MoD Prime contract for the south west. It was a £60m turnover business that needed sorting out, but through this acquisition we entered the Defence and Government business. We are now involved in two of the five MoD Prime contracts which is a healthy position to be in.”

Although McGilvray says that the public sector is not his key focus, he admits that the opportunities are there to be taken. “The public sector has real issues to face, in particular the quality of their assets is driving their day to day running costs. Much of the public estate has reached the end of its useful life but it has neither the money to start again nor the asset information to improve property maintenance and to reinvest in its useful life but it has neither the money to start again nor the asset information to improve property maintenance and to reinvest in its assets. We keep a watchful eye on the public sector but our core business is the corporate sector.”

McGilvray, a language graduate and qualified accountant, joined Stiell as Group Accountant, taking on the post of Finance Director after its acquisition by Alfred McAlpine in 2003. He has been intimately involved in transforming this former Scottish M&E company into a UK wide support services business and is a natural successor to Billy Allan, Stiell’s long-standing and much respected MD.

The FM partnership with Abbey National in Scotland, and subsequently south of the border, brought Stiell Facilities national recognition when it won the overall PFM Award in 2000, and to the notice of Alfred McAlpine which was moving away from dependence on the construction sector. By 2001 Alfred McAlpine had been re-shaped, and the sale of its housing operations in the same year helped to finance acquisitions in the FM and utility services markets. Now two-thirds of its activities are about management and maintenance rather than construction. It was reclassified to the FTSE Support Services sub sector, and then last January, it was moved to the sub sector, Business Support Services. The FM business is now the company’s most profitable of its three services – Business Services, Services Projects and Infrastructure
Services.

“From an investor point of view, the reclassification reflected the change in our business. From the customer point of view, it is part of the long road taken to get the market to understand what Alfred McAlpine is about now. We are still thought of as a home builder even though that business was sold in 2001. The Alfred McAlpine brand certainly gets up through the door but we still need to educate the market that we are a leading FM player in the UK. Of Alfred McAlpine's £1bn turnover, two thirds is derived from its support services activities.”

McGilvrey is optimistic that the current business environment will generate more opportunities for the company’s skillset which is rooted in ‘hard’ services delivery and management. It is managing the business risk associated with high tech facilities that McGilvray sees Alfred McAlpine making most impact. It has built a significant business presence in the management of data centres where the management of power supplies and HVAC facilities is critical. It runs some 70 data centres for EDS, the leading global technology services company.

McGilvrey is optimistic that the current business environment will generate more opportunities for the company’s skillset which is rooted in ‘hard’ services delivery and management. It is managing the business risk associated with high tech facilities that McGilvray sees Alfred McAlpine making most impact. It has built a significant business presence in the management of data centres where the management of power supplies and HVAC facilities is critical. It runs some 70 data centres for EDS, the leading global technology services company.

He sees Aflred McAlpine’s differentiation in the FM market as being its expertise in managing data centres in the ffirst instance, and supporting corporate offices and the retail branch network of its banking and finance clients. These include HBoS, Nationwide, National Australian Bank, the Clydesdale and Yorkshire Banks, and most recently the Bank of Ireland.

Delivering excellent customer service is one of McGilvray's key objectives for Alfred McAlpine. The fact that the company has endowed a chair of Customer Management at Manchester Business School is testament to the importance that is placed on its customer service effort at all levels. “Our FM skills are a given, and we have a health & safety record that is unrivalled. We have a culture of working safely and an accident rate across the whole group in 2005, that about a third safer that other FM companies have achieved.”

As part of his understanding of what makes services companies excellent, he recently studied customer service cultures in US airlines and Ritz Carlton in New York . “I have seen what they do, and the way they treat people and communicate with them regularly. They align people’s individual daily goals with the objectives of the business. FM is not world class in customer service as an industry but the opportunity is there. It is about giving people the freedom to work when they need to work, and the imagination to work.”

He proudly cited the real story of an Alfred McAlpine engineer on the Nationwide contract, who was unable to get to work due to heavy snow. Instead, he went to his nearest Nationwide branch to clear the snow from outside the branch office. “The customer was bowled over,” exclaimed McGilvery, “Our engineer had thought, ‘what can I do to help the customer?’.”

“We are now involved in two of the five MoD Prime contracts which is a healthy position to be in.”

“FM is not world class in customer service as an industry but the opportunity is there. It is about giving people the freedom to work when they need to work, and the imagination to work.”