Building services clients are just at the crux putting real value on energy efficiency, according to Shepherd Engineering Services chief operating officer Peter Lewis, and contractors that can differentiate themselves in providing solutions will find real success.
The big opportunity is for retrofitting existing building stock where companies can provide a complete solution covering heating, lighting, air conditioning and other areas.
He says when the Carbon Reduction Commitment regime moves from shadow form to heavily penalising heavy carbon production “the market will suddenly become vast. Although one of the challenges for us is to think about managing a large number of very small jobs. That would be different for us.”
“It’s just round the corner – it might be a year or two but it’s not much more than that. The bid developers are sophisticated and I think they are almost ready to go – when CRC kicks in, they will move quickly and drag the others.”
Mr Lewis also says this kind of work will push SES into taking a larger project management role, doing not just M&E but managing work traditionally done by a main contractor.
SES is the 18th biggest contractor in the HVACR Index run by HVN and part of the £700m Shepherd Group – it won two categories in this year’s HVN Awards.
The big challenge he says is to keep clients focused on valuing differentiation and the ability to add value through innovation – as opposed as just the lowest price. “There are some clients who are holding onto partnerships and even when they are also focused on cost that’s fine because you are doing it together. It’s absolutely in our interest to add value for a client even if it reduces volume for us.” The company puts a lot of store by its PRISM off-site manufacturing capability.
“On the other hand you have clients where you are back to the bad old days of 17 or 18 contractors bidding for a project. That’s just wrong – it’s immoral and is driving huge amounts of waste into the industry, if only because of the cost of bidding.”
Looking at SES as a whole, he says the company will report a “small reduction in turnover” for the year finishing in June 2010 but says he expects the next 12 months to show growth against 2008/2009.
Mr Lewis says one of the company’s biggest priorities is to shift the company’s focus away from a large reliance on public sector work, a position it developed in the last few years of the last decade.