Costain: Growing Capability
When Costain acquired Rhead Group earlier this year it improved its position in the energy market and strengthened its programme management offering.
Tim Bowen ought to know a thing or two about Costain’s £36M acquisition of Rhead Group in August of this year. As the contractor’s corporate development director he played a significant role in the decision to purchase the professional services consultancy.
Speaking to him you get the sense that it was Rhead’s reputation for providing a full range of services across a project lifecycle that most attracted Costain to one of the largest remaining independent companies in the sector.
“They do a lot of programme management and commercial- type advisory work for many blue chip customers like National Grid, Rolls Royce and BAE systems,” he says. “And what we’ve found is customers across our organisation are increasingly looking for this integrated range of services.”
Listening to that list of client names roll off Bowen’s tongue you might also suspect that Costain sought a foot in the door with some of these blue chip clients when the two companies came together. But he says that this wasn’t foremost in its thinking.
“We’re already working for the majority,” he argues.
“The acquisition has deepened and broadened our relationship with a lot of these firms and helped us to enhance further our insight about what they want from us.”
“Customer satisfaction” is an oft-repeated phrase from Bowen as he talks about the rationale for the acquisition. More than anything you get the impression that Rhead’s systems and people will be in-line with the contractor’s “One Costain” vision –its mission to deliver a full range of design, construction, project management and maintenance skills under one company banner.
“They’ve got a number of best-in-class team members that have really helped to build our capabilities,” he says. “For example, yesterday I was with the project management office team on some work for Rolls Royce and the systems and processes and the people being employed are exemplary to my mind.”
When asked to elaborate, he talks about the way Rhead monitors project outcomes to make sure they are aligned with customer requirements – again returning to the theme of customer service.
“There’s a very careful tracking of why the programmes of work are being undertaken in the first place to ensure that the client’s business rationale and the business case is being supported by the activities in the project,” he says.
Clearly he thinks such systems and Rhead’s workforce will be of significant help to Costain when bidding for work. “Each of their 550 people is eminently sellable across any of our sectors at any given time,” he says.
Without doubt Nigel Curry, Rhead’s dynamic and inspirational chief executive, fits this description having led the firm to a Queen’s Award for Enterprise and 20% growth in the international business before the takeover.
So what does Costain have in mind for him now? “We’re very excited about Nigel joining and he’s joined the team as a key player,” says Bowen. “He’s now going to lead our power sector and grow that proposition – it’s a key role and he’s integrated really well.”
Curry was of course instrumental in the policy of recruiting people from the military and former rugby players to work at Rhead because of the belief that they often have many of the raw materials needed to make effective programme managers. When Bowen is asked whether Costain will embrace this strategy, he suggests that the larger group will continue to cast its net wider.
“We have a group wide recruitment policy associated with getting the best people we can,” he says. “We don’t target one area. Provided the person was able to fit the specifications and was the best person available, we’re agnostic as to where they come from.”
He agrees when it is put to him that Rhead’s strength in the energy sectors helps to augment Costain’s position in these markets. But again, he is keen to put the emphasis on the company’s integrated and whole lifecycle approach.
“They do a lot of commercial advisory in the oil and gas and power sectors,” he says. “There are examples currently underway in oil and gas where they are helping customers to integrate not only the design of a particular facility but also the programme management of the delivery of it.”
Interestingly, Costain also seems to have spotted potential in the carbon capture and storage projects Rhead is working on. These include the first facility of this kind in the United Arab Emirates situated near a steel works in Mussafah, Abu Dhabi.
Thermal oxiders at the facility will compress the captured emissions from the steelworks to a supercritical state and then dehydrate them so that they can be transported and used for enhanced oil recovery. “It’s certainly one of the first carbon capture projects that I’ve ever seen that’s been constructed and we are doing not only the detailed design but we are the onsite client representative of the programme management works,” he says.
“Certainly there is potential there, the capability is highly transferrable into the oil and gas sector, but also the water sector.”
Again, however, Bowen wants to emphasise that the acquisition has reinforced existing capabilities rather than plugged egregious gaps in its offering.
“Yes, they have a position in power, oil and gas, which is complimentary to what we’re doing already,” he says. “But the thing we liked most of all is the fact that the capability they have is exactly the same as what our other customers are looking to acquire from us.”
Tapping into a popular theme, and reflecting NCE editor Mark Hansford’s recent Comment on the subject, Bowen says Costain will increasingly look to provide design services to its clients (NCE 12 November).
“You will see that there’s commentary now with regard to contracting organisations undertaking more design because there’s a view that things are being missed with regard to innovations,” he says. “We’re very much designing our organisation to carry all of the range of capabilities that customers want so they can decide to procure with fewer interfaces.”
He thinks this will expose clients to less risk although there are limits to how far such a trend can go.
“I think that there’s a balance of degrees here,” he says. “We probably won’t get to a position whereby absolutely all of the design will be done in-house, but nor will we be on the other end of the continuum where none of it is done in-house.”
This article first appeared in NCE