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Sun 3 Apr 2011 12:00 AM

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Order of excellence

Last October, Mark Andrews was hired to run the MEP business of arguably the Gulf’s most ambitious company of its kind, Drake & Scull International. Here he describes the plans for further growth

Order of excellence
More design-and-build contracts will emerge, he says

Despite regional unrest, Drake & Scull International is
forging ahead with its Middle Eastern expansion. At the helm of its core MEP
service is the division’s managing director, Mark Andrews, who received an OBE
in 2010.

Andrews says he has hit the ground running since accepting
the position in October last year, undertaking a whirlwind tour of the
company’s major projects and clients in the region. As the chief executive of
NG Bailey, the largest MEP contractor in the UK, for six years, Andrews is used
to dealing with companies on the scale of DSI. It is a challenge he relishes.

Andrews has been involved in a wide range of industries and
activities in a 30-year career. “For me, that is one of the things that make it
exciting and interesting. I have certainly enjoyed being involved in oil and gas,
major civil projects and also MEP and heavy electrical work. There are
similarities, but there are also differences.”

It is this rich experience that attracted Andrews to DSI.
“You look at what DSI is doing – I am talking not just about the MEP business,
but the end-to-end integrated contracting. It is involved with civil,
infrastructure and water and power. I would like to think my background is a
good fit with that.” Andrews says one of the major challenges facing the MEP
sector is aligning itself with the rest of the construction delivery programme.

However, Andrews is not new to the Middle
East. “I spent six to seven years in the Middle
East in the early part of my career, so I knew something about the
region and the differences. This was during the 1980s, so it was very much a
formative part of my career.” During this period Andrews worked for Chicago
Bridge & Iron Company, a major EPC contractor from the US. “My first
job as a project manager was in the Middle East; my first deal and big job were
in the Middle East. So I feel in some ways
that it has gone full circle.”

Andrews seems to have a special affinity with the region as
a result. “There are a lot of things to like about this region. One of the
things is that you get to work with just about every nationality under the sun.
There is an opportunity to be innovative in this market, as it is fast-moving
and dynamic. That can be hairy at times, but it can also be a very positive
experience.”

He accepted the latest challenge partly due to the opportunity
it presented, as well as the prevailing circumstances. “Certainly over the last
few years in the UK,
the market has been extremely challenging. The arrangement I had with NG Bailey
was the option to get out at a certain point. Given what was going on in the
market, and I guess given where I was personally in life, I was looking for a
change. What DSI had to offer was an exciting challenge, because here it is
about growing the business. We are moving into new territories, and there are a
lot of capabilities that have to be expanded.

“For me as MD, it is the type of work I want to do. I spent
my last year in the UK
laying people off and winding the turnover down, so it was pretty grim. Okay,
that is part of the job, that is what you have got to do at times, but it does
not mean you have got to like it, and it does not mean you want to stick with
it either. I certainly envisaged that the UK market would be fairly flat for
some time, and I do not think anything has happened since I have left that
would suggest otherwise.”

Andrews is hesitant to draw comparisons between the downturn
in the UK and in the Middle East. “I think it is very difficult to draw
comparisons, because it is a very different market, but there is no doubt that
if you look at most of the building services contractors in the UK, most of
them took a big hit in 2009, on the order of magnitude of 20% of the volume
falling out of the market. For some of the main building contractors, the hit
came later, because they tend to have a backlog that takes longer to unwind
than the MEP guys.

“And that, of course, was a time leading into a series of
significant cuts in public-sector expenditure, which were only going to make it
worse. There are very few signs in the UK that it is pulling out. It is
almost as if it has been reset at a new level. It is equally difficult to see
what is going to push that market back towards positive growth.”

Middle Eastern growth is bolstered by infrastructure
spending, says Andrews. “There is major expenditure by several countries in the
region, for different reasons, but nevertheless there is very encouraging signs
of significant growth in some of the markets here.”

Unlike DSI, Andrews says NG Bailey’s core business was
mechanical and electrical. “In many ways, DSI is a much more integrated
company, as it is involved with so many other aspects of construction. We have
civil capability, water and power and MEP. This is something that underpins
some of the real competitive strengths of DSI.”

And unlike DSI, NG Bailey also focuses almost exclusively on
a single market. This means Andrews has significant experience with some of the
highest construction standards in the world.

“Some of the work here is no doubt as good as anything you
see in the world; it really is world-class. But I think there is more variation
in standards than you would see in a typical European market. There are some
fairly ragbag projects around, but then there are some absolutely outstanding
ones. In terms of the MEP sector, I would say that in the UK at the
moment, probably over 90% of the market is design-and-build, whereas that is
only really starting over here.”

Andrews says design-and-build contracts, where a contractor
typically has a closer link with the consultant and the project’s design, is
different in terms of delivery requirements and capabilities, as well as a
company’s ability to influence a
building’s energy use and sustainability. “I do believe that as we go forward, this is something we will
inevitably see more of, and I think it is a great opportunity for the capable
MEP contractors.”

A clear challenge for DSI’s position is maintaining uniform
standards across a company that has seen swift organic growth and acquisitions.
Andrews says it is a question of consolidation and consistency.

“We have several newly-acquired companies that have come
from elsewhere, and that need to be brought to the same standards as the rest
of the group. We have got to get consistency into the processes, and try to get
all of them up to the same level of best practice. Given the diversity, I think
it is fair to say there is still work to do.

Different territories are likely to demand modifications and
flexibility to the company’s operations, ideally showing the kind of benefits
that result from being both a local and multinational operator. But that is not
to suggest that this will deviate from the company’s overall goal.

“There is still
considerable ambition in the company, and we have not stopped looking at new
territories. There is still very much a growth agenda, but perhaps with a
balance on making sure that what we have got is working properly and is going
to deliver the results we expect.”

Infrastructure projects - which have dominated new building
plans throughout the Gulf, are in the sights of the company  and Andrews. “It sounds almost trite, but in
countries where there is projected to be significant expenditure on
infrastructure projects, well - we are going to take a look at these. Obviously
there are competitive dynamics and issues about working in different places,
but I think that there are still opportunities out there.

“I think in times like these, with some of the issues in the
region and what has just happened in Japan, it is very easy for
everybody to be very negative and risk averse. But it is a time I think when
companies like DSI can stand up and be counted, because we are prepared to take
risks, albeit selective risks. We are used to expanding, and we will probably
look at some territories that others might not consider. We will continue to do
that.”

Andrews acknowledges that “there are risks inherent with
such a rate of expansion”, combined with more orthodox industry risks such as
meeting construction deadlines and securing payments.

Price cutting has been another consequence of the downturn.
“We have certainly seen some of our markets become more competitive,” he says.
“As a progressive company we have to keep our pencils sharp. We have to make
sure we have got the right supply chain, are using our people as efficiently as
possible, and ensure that we come from a productive low-cost base.

“But really heavy price-cutting is a game we are not
prepared to play. One of the things that DSI did well over the last couple of
years was to almost recognise the downturn in Dubai at the time it was expanding into these
other territories, so it was able to redeploy a considerable number of people.”

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