Shift comes as Australian parent confirms Bovis name will be dropped

Daniel Labbad, Lend Lease’s European chief executive, is positioning its UK construction business to tackle smaller projects in the absence of a market recovery.

The move comes as Lend Lease confirmed it is to drop the Bovis brand from its UK construction arm, as revealed in Building last month.

The move, which was due to be announced in Sydney yesterday alongside the company’s annual results, is part of a strategy that will spell the end for all individual branding across the Australian company’s global operations.

Labbad, head of Europe, the Middle East and Africa, is in the final stages of carrying out a strategic review of operations in the region, including the UK construction arm.

He said that following the review, the business would continue to target its “core areas” of commercial, education, residential and waste, but would need to go for smaller projects.

He said: “The size of contracts is going to be relatively smaller for some time, and so therefore we need to ensure the organisation, the overhead structure and our systems and processes are geared to smaller sized contracts.

“So moving from £200-£300m contracts to £70m-£110m and even lower than that.”

He conceded that he had “not been happy with Bovis’ win rate rate over the last 18 months”, and wanted it to improve.

Despite some significant wins, including the Scottish Arena and £150m North East Quadrant for British Land, the company has failed to make the cut on projects including the £370m Cheesegrater.

Labbad said: “We know our partners hold us in a high regard and what I’m going to be focusing on is showing those partners that we can be trusted, we can deliver quality and when you work with us you get the best of the organisation.

“That’s a key thing for us, because in the past we have lost parts of that.”

However, although he said the business was “not perfect”, he stressed: “I like what I see, and the business is ready to move on.

“The market in the UK is big enough, even with the financial crisis, and when you look at our turnover relative to that there’s still a lot more we can be doing in the sector.”

He confirmed that the company was still in consultation over potential redundancies with 150 employees on the Athletes’ Village project, and would not rule out further consultations.

He said: “It’s very difficult to replace a £1bn project.

“We made some big cuts last year, and as to whether we need more - we’ll be looking at that over the coming months. It depends how much work we win during that time.”

Labbad said that the UK market was looking worse than he had hoped three months ago.

He said: “We’re seeing some signs of life in the core commercial markets, but the banks still aren’t lending, and I think it’s going to be another 12-18 months before things improve.”

Labbad on rebranding

We want to recapture a business that draws on its history but looks to the future. The renaming doesn’t take away from the history of the business, but it takes the opportunity to underline what we can offer.

The decision follows extensive research which showed that the market found our multiple branding confusing. What people want is a contractor that can deliver and a partner they can trust, with demonstrable balance sheet strength.

I understand that some developers may have issues with the Lend Lease name, but we are also having a lot of discussions about working together with developers, and are doing this already at Greenwich and Stratford.

I addressed Bovis’ governors club - which is fundamentally about friendship and camaraderie - a few weeks ago.

In that speech, I said those values won’t be lost on my watch. But it’s about getting the balance between that foundation and the need to adapt.

 

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