CON' RPT '05 28/7/05 2:36 pm Page 2 ECA Electrical Industry … · commercial success out of change...

commercial successout of change

Report of the 2005 ECA Electrical Industry

Conference

Published by The Electrical Contractors’ Association, ESCA House, 34 Palace Court, London W2 4HY Tel: 020 7313 4800 www.eca.co.uk

July 2005

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C O M M E R C I A L S U C C E S S O U T O F C H A N G E

Acknowledgements

Many thanks to the following people andorganisations for their help and support inensuring the success of the 2005 Conference:

• The Electrical Contractors’ Association for hosting andbringing together a wide audience to this electricalindustry conference

• The Conference Working Party which managed this event:Peter Hughes - Chairman, George Ashcroft, Ray Bundock,Iain Cummings - ECA, Alan Birks - BEAMA Installation,Gordon Love - EDA, Nick Farraway, Ernest Magog - LIF.

• The following industry associations that gave their support:BEAMA Installation; Electrical Distributors Association(EDA); Lighting Industry Federation (LIF); and SELECT

• Steve Newbold and Frank Whitefoot of the ECA forconference organisation, Travel Lines Ltd for itsadministration and Capitol House Productions for theproduction.

• David Pollock of the ECA for the photography used inthis report.

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Contents

DAY ONE - SUNDAY 15TH MAYCommercial practice and building trust

Inaugural address

Bill Wright, President, ECA 3

ECA’s view of the impact of legislative and industry change

David Pollock, Director, ECA 4

How manufacturers are responding to the changing marketplace

Nick Farraway, Managing Director UK & Ireland, Thorn Lighting 4

What developments can specialist contractors expect?

Prof. Rudi Klein, Chief Executive, SEC Group 5

DAY TWO - MONDAY 16TH MAYChange driven by technological advance and regulation

Changes driven by Parts L & P of the Building Regulations

Dave Dossett, Director, BEAMA Installation 7

Implications for the industry resulting from the WEEE Directive

Dave Tilley, Sales and Marketing Director, GFE Electrical Wholesale 7

Achieving commercial success out of providing a safer working environment

Kevin Myers, Chief Inspector of Construction, Health & Safety Executive 8

DAY THREE - TUESDAY 17TH MAYDeveloping success out of change

Commercially acceptable ways to support sustainability

Charles Lever, Director, Building Services, Taylor Woodrow Construction 10

Building success out of change

Ray Foster and Paul Jordan, J.Brand 10

How to survive in the fast track and enjoy the view

David Seddon, Occupational Psychologist 11

Supported and sponsored by:

Abacus Lighting LtdECA North East Region Member Companies

Eaton Electric LtdEdmundson Electrical Ltd

Electrical & Mechanical ContractorElectrium Ltd

MK Electric LtdMita (UK) LtdNewey & Eyre

Rexel Senate Electrical Supplies LtdSchneider Electric Ltd

Thorn Lighting Ltd

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The ECA ElectricalIndustry Conference isa focal point that bringstogether leading figuresand players from allsectors of the industry.The conference allowstheir specific sectorknowledge andexpertise to be tappedinto and used to helppredict and plan for thefuture direction of theindustry as a whole.

For 2005, the theme of the conference was Commercial Success out of Change. The theme recognised that the industry isgoing through a prolonged period of change. However, despite the challenges and difficulties arising from this change thereare commercial opportunities to be realised and exploited.

The conference examined the main areas of change facing the sector including the development of new working andprocurement practices, the impact of new legislation, the increased role of sustainability and health and safety, newtechnology, and the ever-changing demands and requirements of clients.

It demonstrated that far from being a threat, if embraced correctly, change offers positive benefits for the electricalcontractor and for the electrical industry as a whole.

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DAY ONE - SUNDAY 15TH MAY Commercial practice and building trust

commercial successout of change

Commercial success out of changeBILL WRIGHT, PRESIDENT, ECA

There are four main key issues that need tobe taken into account when consideringcommercial success out of change. These are:

● Commercial practices and behaviours● Overcoming barriers and building trust

● Sustainability through energy use and waste management● Regulations that influence the pace and impact of change.

Electrical contractors feel distanced from strategic decision making and from the procurement process. This is due to thealmost total disappearance of the nominated sub-contractor and the changing role of the claims surveyor due to theincreased adversarial nature of this industry.

Clients are increasingly demanding ever-better value at ever-lower cost combined with reduced risk. Risk is increasinglybeing passed down the supply chain. However, parts of the public sector are leading the way to procurement for best valuerather than just lowest price. The private sector, with some notable exceptions, continues to run for cover and pass on asmuch risk as possible down the supply chain.

The issue of sustainability is now mainstream. It will have a huge impact on our industry, for example, through Part L of theBuilding Regulations and the WEEE Directive. If there is one single driver for integrating the project team, it is that ofsustainability and its related statutory requirements. Further regulations that will have a significant impact include Part P ofthe Building Regulations, the Disability Discrimination Act, and the Construction Act.

All of these issues should be assessed from a commercial point of view for potential opportunities. Yet, the industry isgoing through a prolonged period of change. It will be the fleet-of-foot who will exploit those opportunities to theirmaximum advantage.

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ECA’s view of the impact of legislativeand industry changeDAVID POLLOCK, DIRECTOR, ECA

Trade bodies collaborate in lobbyingto ensure that legislation supportsthe interests of their members. Thework of the SEC Group incampaigning for a review of The

Construction Act payment provisions and to end retention abuse is agood example of this collaboration.

Environmental legislation such as Part L of the Building Regulations, the WEEE Directive and the Energy Services Directive(currently at draft stage) will have considerable impact, especially in reinforcing best value, lifetime evaluation andresponsibility for environmental performance.

Employee-related legislation such as the proposed Services Directive, which willfacilitate cross-border employment, the draft Corporate Manslaughter Bill, Working atHeight Regulations, Agency Workers Directive and Working Time Directive will allimpact upon companies.

ECA research shows that its members are experiencing important market changes.

Collaboration with other organisations and, potentially, greater convergence,particularly with HVCA, is likely to be important in responding to these challenges.

Combining meetings and publications is a start. Key activities for the future will include a Joint Strategic IndustrialRelations Committee to address the complex differentiation between mechanical and electrical industry practices, whichcauses confusion to clients and inhibits increased productivity. We hope that SELECT may participate with ECA andHVCA in this.

A joint conference on the wider M&E vision will also be planned.

Trade associations need to set out for their members the challenges of the future and to determine how a united industrycan best meet those challenges.

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How manufacturers are respondingto the changing marketplaceNICK FARRAWAY, MANAGING DIRECTOR UK & IRELAND, THORN LIGHTING

The publication of the Egan report ‘Rethinkingconstruction’ introduced a new dynamic to theconstruction industry, the result of which has includednew types of contractual relationships andpartnerships. An example of this is the use of PFI

schemes as a new method of procuring major construction projects.

Some contractors have embraced the implications of the new dynamic. They have formed partnerships throughout thesupply chain to take advantage of other companies’ specialist capabilities and to reduce their own risk. As part of thatchain, this allows manufacturers to invest their experience, design capability and specialist product and applicationknowledge with other companies who share their goals.

The partnership approach being developed in the construction industry parallels that which occurred in the automotiveindustry in the 1970s and 1980s. Risks and information were shared. The benefit of specialist knowledge was realised. Theend product quality, cost and performance were improved.

Could we be about to experience a ‘Toyota’ moment in the construction industry? Should we change the way we procuregoods and services, by considering lifetime costs rather than lowest price? As a manufacturer, Thorn believes that thepartnership approach is worthy of investigation. Although there is no one single solution, partnership procurement has definitebenefits and is here to stay. As an industry we should consider how best to address the resultant impact and changes.

What developments can specialist contractors expect?PROF. RUDI KLEIN, CHIEF EXECUTIVE, SEC GROUP

The construction industry has to move into the 21st century. The need to change isunderlined by a range of business practices that have conspired to damage thecompetitiveness and productivity of specialist contractors. Radical change is necessary if thespecialist contractor is to meet the challenges of the future.

Changes would not only benefit specialist contractors but would be advantageous for clientsand the industry as a whole. The National Audit Office, in its report ‘Improving PublicServices though better construction’, estimated that over £1bn could be saved by the public

sector adopting the following:

● Early involvement of specialists in integrated design teams● Use of non-adversarial forms of contract● Use of project bank accounts● Project insurance.

Fair payment and an end to retention abuse is necessary if the principle of integrated teamworking and the motivation for specialist contractors to invest in innovation and capacity areto be encouraged. Project bank accounts are definitely the way forward and the expectationis that public sector clients will call for project bank accounts for all new projects.

An integrated engineering design team is essential if the following are to be achieved:

● Enhancement of whole life performance● Improved functionality● Beneficial environmental and social impact● Improved health and safety.

The major cause of defects is shortcomings in design, in so much that:

● The design simply did not work● The design was of low quality● The design was not coordinated.

The result of this is disputes, delays, disruption and inefficient solutions. The early involvement of all members of thesupply chain in the design process equals better design and better construction.

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DAY TWO - MONDAY 16TH MAY Change driven by technological advance & regulation

Building trust and success in times of commercial change: the contractors’ viewPRESENTED BY: GEOFF TEADER, AMALGAMATED LTD.

The public sector is providing an example of goodprocurement practice to the private sector. Someenlightened clients are actively examining changes totheir procurement processes but are unsure on how toproceed. Here, the contractor can play an active role indeveloping a process that looks for solutions, not blame,remembering that a better start means a better finish.Above all, contractors should not act as just a sub-contractor or they will be treated as such.

The ECA needs to be more proactive in communicatingthe benefits of partnering to clients. Continuedcollaboration with other organisations will assist this.

Building trust and success in timesof commercial change: themanufacturer / distributor viewPRESENTED BY: PHIL HUDSON, THORN LIGHTING LTD.

There are a number of barriers to building trust. Theseinclude: the protection of investment and research;selling on lowest price; and an adversarial businessapproach.

These issues need to be addressed if the industry is tomove forward. Ways in which progress can be madeinclude creating a whole-life cost model for the entireindustry and charging for added-value services. In

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addition, products should be designed for ease ofinstallation and not ease of manufacture. Above all,there should be collaboration throughout the supplychain to reduce labour and material costs andcontractors should choose clients who want partners andnot just suppliers.

How can industry players bestinfluence and benefit fromchanges in the market place?PRESENTED BY: ANDY HOPE, R.G.D. KING LTD.

There are a number of issues that have a negativeimpact on industry performance and profitability. Theserange from a low-cost mentality, self-interest andinefficient building sites to non-payment and lack ofunderstanding of the WEEE Directive.

In turn, these issues present challenges that includegetting a client to fully understand the ability and skillsof a company and ensuring an effective supply chain.Other challenges include the need for distributors to beinvolved in legislation implementation, the risks of usingimported and counterfeit products and determining howdistributors can be equally valued in the supply chain.

However, from these challenges there are distinctopportunities such as the development of project bankaccounts and a greater role for ECA members to assistclients to understand their legislative responsibilities,thereby allowing members to provide added value.

How can industry best influencechanges in the market place?PRESENTED BY: BOB HARRIS, R.T. HARRIS & SON (EC) LTD.

The electrical contracting sector must develop a clear,coherent voice. This involves bringing together differentelements and presenting a combined approach toGovernment. A good example of this is the SEC Group.The development of the Specialist Engineering Alliance willinclude the entire supply chain in this lobbying initiative.

A major barrier to our expertise, efficiency and designcapabilities in construction procurement is the domesticform of sub contract.

The proliferation of regulatory bodies means that theindustry needs to press for clearer structures and asingle point of contact with Government. Europe alsoneeds to be involved in our regulatory horizons.

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Changes driven by Parts L & P of the BuildingRegulationsDAVE DOSSETT, DIRECTOR,BEAMA INSTALLATION

There has been a 40 per centincrease in business relatedregulation since 2000. This is

a threat to business, particularly if the regulation is ill thought-out and inadequately enforced. Regulation is important but itmust be remembered that regulations are blunt instrumentsand should be a last resort. Also, if they are to work, their fullimpact must be researched, they must be properly policed andbe regularly assessed.

There are opportunities that arise from regulation, particularlyas the government is consulting industry more. This meansthat industry can ensure that the regulation proposed is theright regulation.

The Building Regulations will have an increasingly importantimpact. The government is using the Building Regulations todeliver its safety and environmental agenda, for example, PartP and Part L. This approach will have a growing influence onbuilding services.

Increased regulation is not all bad news. It can present business opportunities. For example, Part P will mean business forthose contractors who are certified as Competent Persons, whereas Part L will mean work for those contractors able toprovide innovative solutions.

Above all, the industry must be prepared for change and must play a full role in directing that change. It is better to workwith, rather than against, the regulator.

Implications for the industryresulting from the WEEEDirectiveDAVE TILLEY, SALES AND MARKETINGDIRECTOR, GFE ELECTRICAL WHOLESALE

The WEEE Directive has been around in otherforms since the 1990s. However, it has beenplagued by government indecision. Implementationwas due in 2005 but is now expected for March

2006, when it will be implemented throughout the EU at the same time.

Key considerations of the Directive are:

● For the distributor: Should he offer a full recycling service?

● For the contractor: He is responsible for the process where electrical wastewill in future be considered hazardous. This has implications fortransportation, storage, training and license documentation.

● End user: If recycling costs are included in the product cost then he willexpect recycling to be carried out. Will need to ensure that recycling costsare budgeted for.

The WEEE Directive offers sufficient opportunities for the contractor. For instance, with lamp recycling, the market could beas high as 100 million units per year. Currently just 20 per cent are recycled. The Directive is all about sustainability.Although it is ‘producer pays legislation’ it is something that the industry must take ownership of and fully understand theresponsibilities and implications.

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Achieving commercialsuccess out ofproviding a saferworking environmentKEVIN MYERS, CHIEFINSPECTOR OFCONSTRUCTION, HEALTH &SAFETY EXECUTIVE

Health and safety is a hallmark ofa civilised society. The people best placed to manage risk arethose people creating the risks, working with those who areexposed to them.

The Health and Safety Executive recognises that it is importantto work with industry. Engaging the industry is more effectivethan randomly checking sites. In this way you can change anindustry’s health and safety culture for the better. This can workwell with larger companies. For smaller companies, HSE works closely with trade associations such as ECA and isimpressed by the electrical contracting industry’s commitment to health and safety, as demonstrated by the ZAP initiative.Some people change because they see the light, others because they feel the heat. ZAP shows that electrical contractorsare in the light.

Definite business opportunities result from an improved health and safety culture. These include:

● A reduction in minor reported injuries● A reduction in recruitment costs and downtime● A reduction in insurance premiums● Clients are increasingly using health and safety as an indicator of a contractor’s performance● Increased health and safety performance equates to more work actually done on site.

There is a growing awareness throughout the construction industry of these benefits. This is proven by a recent survey of500 contractors carried out by the HSE, which found that 60 per cent felt implementation of health and safety proceduressaved time and money. Above all, the realisation is that a poor health and safety performance can reflect badly on acompany’s business reputation.

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DAY THREE - TUESDAY 17TH MAY Developing success out of change

Managing the impact of morelegislation - opportunities forcommercial gain from Parts L and PPRESENTED BY: HARVEY DUNHAM, SCHNEIDER ELECTRIC LTD.

Managing the impact of more legislation involves two mainparties: the regulator who puts the legislation together andthe contractor who has to apply it. We need tocommunicate fully with the regulator with a single consistentvoice. The contractor should be provided with easy to useguides on how the legislation should be implemented.

Contractors need to consider how to use the newlegislation to drive out the cowboys and to provide valueadded service. Here, the new legislation strengthens thelegitimate contractor’s position and offers newopportunities in terms of advising on buildings’ energyefficiency, potential alternative forms of power, andenhancement of a building’s life cycle against capitalexpenditure. The opportunities are there to be grasped andthese opportunities could be even greater if the contractoris involved with the process of developing new legislation.

Managing the impact of morelegislation: opportunities for commercialgain from the WEEE DirectivePRESENTED BY: SIMON BARKES, BEMCO

Contractors have a number of concerns with the impactof the WEEE Directive. There is a lack of information andambiguity with regards to its implementation and to itsfinancial impact on the supply chain. The classificationof electrical waste as ‘hazardous materials’ raises theissue of increased insurance liabilities and the levels ofproducer responsibility and contractor duty of care.

Recycling products is a new market for electricalcontractors and so represents new commercialopportunities. However, those opportunities may alsoattract companies already in the recycling market intothe electrical sector. Another challenge is the logisticalimplication of storing and handling products to berecycled. Furthermore, there must be a level playing fieldto ensure that all are playing by the same rules.

As with other new legislation, the new directive offerscontractors the opportunity to offer value added services,in the shape of advice and consultation, to clients. Closerco-operation between ECA and related tradeorganisations will determine how best those potentialopportunities can be realised.

Using technology and regulation to commercialadvantage: health and safety PRESENTED BY: TREVORHURSTHOUSE, GOODMARRIOTT& HURSTHOUSE LTD.

Points of concern on the way that health and safetylegislation impacts on business include poor informationand guidance on what the legislation actually means andrequires, poor local accident reporting by local authorities,poor awareness by clients of their responsibilities and thecosts associated with implementation.

However, the legislation does present the opportunity forthe contractor to become more closely involved in thedesign process, as his knowledge and input is necessaryfor the integration of health and safety into the designand construction process. Fully integrated teams candesign in safety design costs. Furthermore, rather thanincreasing costs, health and safety can reduce operatingcosts. Accidents cost money. Safe sites are moreefficient. A high level of health and safety awareness andperformance is the sign of a professional firm; one thatclients should be looking to do business with.

Using technology and regulation to commercial advantage: industryexamplesPRESENTED BY: DAVID DENNISON, D.M. ENGINEERING (NI) LTD.

Technology and regulation both offer commercial opportunities.New technology offers the chance to increase skills, developa better client interface and better rates, reduce labourinput and the dependence on construction and increasethe level of turnover. Regulation also offers commercialbenefits. These include guaranteed business prospectsfor work that must by law be carried out, client advice andconsultation and the chance to widen the range of services.

If members are to realise these opportunities they mustovercome any reluctance to change, be ready to addressoutside specialist companies entering their sector, beready to react quickly and be able to educate others inthe supply chain. The industry must be ready to worktogether in order to achieve the very real opportunitiespossible from new technology and regulation. Only thencan we all win through to a more profitable future.

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Commercially acceptableways to supportsustainabilityCHARLES LEVER, DIRECTOR,BUILDING SERVICES, TAYLORWOODROW CONSTRUCTION

The construction industry currently doesnot have the right business environment todeliver sustainability. This is because of:

● Commercial pressures dictating solutions● Contractual environments preventing collaboration● Old fashioned methods and materials● Lack of social and environmental responsibility● Minimal performance monitoring and reporting● Limited regulation delivering sustainability.

However, the industry must change. Legislation and client demands will force this change. Increasingly, contractors will bechallenged to demonstrate their sustainability credentials.

These credentials include the impact and influence that activities have on:

All of these areas can benefit from practical sustainability guidance that includes ongoing monitoring and improving targets.The latter is essential for continuous improvement.

Business to business relationships must change if sustainable construction solutions are to be developed and achieved.Collaboration and team work are key components for these new relationships. Sustainability must become an integral part ofour working lives and this can be achieved through practical initiatives such as:

For those who say sustainability does not matter, be tough with them. We must all take responsibility and work together todeliver sustainable solutions.

● Health and well-being● Materials● Water

● Pollution● Transport● Energy

● Waste● Community● Whole-life costing.

● Reduce packaging waste● Maximise off-site

manufacture● Reduce transportation

● Explore new innovativeideas

● Recycle and reducematerial waste

● Save energy and naturalresources

● Reduce non-value-addedand duplicated paperwork.

Building success out of changeRAY FOSTER AND PAUL JORDAN (PICTURED), J.BRAND

Despite change often incorporating danger and uncertainty, a business needs to changein order to progress. It is a question of managing that change as planned evolutionrather than as radical revolution. If managed correctly, change can have positivebenefits. These include:

● Maximising the business opportunities of existing customers● Keeping other companies away from your customers● Moving away from being dependent on a single service or skill● Building and developing the existing skill-sets within the company.

Beneficial change can result from realising the potential of:

However, success through change is not always guaranteed. A number of factors can negate the potential benefits ofchange, such as slower take-up of technology than anticipated or general economic factors. In order to minimise thepotential impact of these factors, all change should be monitored and assessed. Projects should be evaluated regularly andmonitored against pre-defined targets. Do this and success out of change can be developed and the opportunities presentedcan be realised.

● Technology ● Partnership ● Target sectors.

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How to survive in the fasttrack and enjoy the viewDAVID SNEDDON, OCCUPATIONALPSYCHOLOGIST

Stress is a growing problem. More andmore employees are taking time off dueto stress and depression. This can havea significant impact on a company’sperformance. The level of stress is

increased by the demands and pace of modern life. These include:

● The need to be competitive● The need to be macho● The need to be instantly available - by e-mail or telephone● Chance to sleep less● The need to fit in changing social conventions● The need to be increasingly mobile, both socially and physically● More sedentary life style and less fresh air.

All of this puts more stress on the function of the pineal gland. The pineal gland sets the diurnal rhythm and producesserotonin. Together they regulate sleep, emotional stability and mood. Serotonin in particular plays an important role inmood, energy, well being, sleep/wake cycles and self-esteem.

It stands to reason, therefore, that the more stress placed on the pineal gland, the poorer the production of serotonin.It is important to reduce stress levels in order to improve the functionality of the pineal gland. Effective stressreducers include:

● Exercising three times a week● Getting 7-8 hours of sleep a night● Using relaxation techniques● Decreasing alcohol and caffeine intake● Increasing water intake● Eating regular and balanced meals● Practising yoga and tai chi● Laughter and sex.

The effects of better stress management include:

● Increased energy● Increased creativity● Better mood● Increased immunity● Blood sugar control● Lowered body fat● Increased life expectancy.

Further information on this report can be obtained from Frank Whitefoot at the address below

Electrical Contractors’ Association, ESCA House, 34 Palace Court, London W2 4HY

Telephone 020 7313 4832 Fax 020 7221 7344 E-mail: [email protected]

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Organised by

Electrical Contractors’ Association, ESCA House, 34 Palace Court, London W2 4HYT 020 7313 4800 F 020 7221 7344 E [email protected] www.eca.co.uk

The ECA Electrical Industry Conference 2006 is the year’s must attend event. In a series of presentations by leadingindustry figures the conference business programme will address a range of issues likely to affect all sectors of ourindustry in the future including; The Environment, The Application of New Technologies and The Future Shape of the

Marketplace - looking at M & E convergence and the role of the medium size contractor.

In addition to providing delegates with avaluable business insight, and the opportunity toparticipate in lively workshop sessions, theconference will offer some serious networkingopportunities plus a fabulous social programme.

Join us in Tenerife - an idyllic climate, dramatic scenery and easy communications make this the ideal conference setting. Ourvenue the five star Sheraton La Caleta Resort & Spa, situated in the south-west of the island, offers high standards plus a rangeof fabulous facilities.

If you haven’t attended before, make 2006 the year to find out how much you’ve been missing.

Book early to ensure youdon’t miss out!

For more information of the attractive conference package, including accommodation, full social programme and Gala Dinner,contact ECA Marketing Department at the address below.

ENERGYTECHNOLOGYBUSINESS

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BOOK EARLY TO BE SURE OF YOUR PLACE AND SAVE MONEY!

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