EP 137

The new way to tender and manage your supply chain: a Main Contractor’s story. (EP 137)



In the studio today, Paul is joined by Peter Jackson, the Managing Director of Seddon Housing Partnerships, a family-owned Main Contractor, now in its 125th year, operating across the Northwest.

Peter is a keen listener of the show and got in touch to talk about the supply chain, how main contractors should manage them and changes he’s made to how Seddon works off the back of listening to some of the shows.

In today’s conversation, Peter shares how he has recently pivoted the way he manages his subcontract supply chain, talks through a recent supply chain ‘conference’ he held inviting his subcontract partners in for a meeting and why he feels the need to update his approach to supply chain management.

If you are a Main Contractor, this show is a must-listen.

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Paul Heming: Hello and welcome to episode 137 of the Own the Build Podcast with me, Paul Heming. A big thank you to everyone who keeps on reaching out. And for those of you who are kind enough to subscribe, leave a rating. Leave a review. If you haven’t, I would love it if you did. And also feel free to reach out to help you go out and do that. I’m going to direct you right now to the show notes where you will find a free template which is a PQQ template I wrote a couple of years ago. You go and download that at C-Link. We know a lot about pre-qualifying contractors. We do it all day, every day. We’ve got an automated version ourselves, which I’d be happy to show you, but this is a simple word version. Hit the show notes, leave us a review and go there and download it. I hope you find that useful. In the studio today, I’m joined by Peter Jackson, who is the managing director of Seddon Housing Partnerships. They are a family owned main contractor, now in their hundred and 25th year as I understand it, they operate across the northwest. Peter is a listener of the show and got in touch because he wanted to talk about supply chain in response to some of the recent episodes we’ve done in response to a lot of work that Peter himself is championing internally in the business. And I am very much looking forward to talking to Peter today. Peter, I’ve been ing on as I usually do. How the devil are you?

Peter Jackson: Very good, thank you, Paul. Yeah. It’s interesting times to be in contracting and social housing, which we are at the moment, we’re social house builders and we do the refurbishment and retrofit and solar panels and air source heat pumps and all that kind of thing. So it’s an exciting time to be in that marketplace where there’s a massive demand and also a challenging time with everything that’s going on in the industry right now.

Paul Heming: Why is it an exciting time to be in that market out of interest? What’s your take on where we’re at?

Peter Jackson: Well, the cusp of something, I feel like we’re on the cusp of something. If people and the government sticks to its strategy of net zero and decarbonization and getting people out of fuel poverty and into decent homes and gives people a platform to build their lives from then and we are true to the strategy of building 250,000 new homes a year, then that’s quite exciting, isn’t it?

Paul Heming: It is very exciting. If we are true to that strategy of building a quarter of a million houses a year, because we’ve been trying and trying and trying in repeated governments, haven’t we? And are yet to crack that nut, which I find forever a bit astounding to be honest with you, for so long we haven’t been able to do it. But I love the optimism and I love the hopefulness in your outlook because that’s what we’re all about on this show. I’ve been talking to you for a while. You’re an own the builder, which is a big tick, but talk to us about your journey. I’ve said where you are now and what you are doing right now, but where did your career start and how did you arrive to this point?

Peter Jackson: Yeah, I mean, I started off by going to university and realized that I didn’t want to go to university when I got there and then came home at Christmas. So I started off as a, doing a degree in chemistry and physics at Reading University and at Christmas time I realized that wasn’t for me. Well, about two weeks in I realized it wasn’t for me, but I stuck it till Christmas and had a great time and then decided I need to do something else. And then I got a job working for a company was called Faircloth Building at the time in Swinton, Manchester. And they did what I kept call major projects. They did big factories and shopping centers and things like that. And I did that, but I did my degree part-time. And to be honest with you, I think it’s the best way to do a degree because you’ve got money in your pocket and you’re learning as you go along. And worked with some great people, did some great projects. Then I came to Seddon and did some work at Seddon for about six or seven years. And then I went off and joined Waits for five years and came back here in 2005, which had been since. And when I came back, we started writing frameworks in response to the large scale developments that people were doing in affordable housing. And that’s my real first taste of affordable housing was when I came back to seven. We started writing framework submissions and started building affordable housing slowly and small at start at the beginning. And now we’re about 80, 90 million pounds in that sector.

Paul Heming: Just a small little portion of revenue there then, Peter. So there’s a couple of things because I also did a part-time university and I think that it’s a great way to learn and it’s a great way to educate yourself alongside actually getting it on the field experience so that really resonates. Tell me, you’re now managing director of the social housing sector of the business. Are you a, I’m sure you’re going to get offended when I say this. Are you a QS by qualification or are you operations side by, what did you study in that part-time university?

Peter Jackson: I think everybody who goes to senior positions as a quantity surveyor, aren’t they? And that’s where I started off. I looked around the table and we’re all QSs. I think.

Paul Heming: I knew there was a reason why I liked you so much, Peter. But I didn’t know you were a QS, but there we go. Well done. Happy with that mate.

Peter Jackson: Reform QS, I think reform.

Paul Heming: Yeah, exactly. Actually I’ve fall into exactly the same boat. So two reform QSs talking. So brace yourselves guys for what we’re about to discuss. But we came into contact after you reached out to me having listened to the episode. We did, I think its episode 112, 113 with Mike Wharton, who is the CEO of the Allied Roofing Group, effectively roofing specialist. And that episode was called Inside the Mind of a Subcontractor, really, really popular episode. And really why I wanted to do that specific episode was so many main contractors are listening to the show and I wanted them to get a taster, a feel for what it is like in the office of a subcontractor when their tender hits and how it could be, how understanding how the subcontractor feels might change some of the process and just help there be more empathy when main contractors are doing their procurement. It was a bit of a hit honestly, that episode and Mike himself is a great person to talk to. And you reached out to me after that and wanted to chat a few months on. Here we are about to record an episode. Tell me what are your reflections on that episode and kind of why we’re sat here today?

Peter Jackson: Yeah, I mean, Mike and I chat. We had a supply chain event. Mike was there and we had a chat afterwards. And sometimes when you sit down talking with people, you realize you are really aligned. You’ve got the same outcomes in mind and the same approach. And I think sometimes supply chain subcontractors, all this thing sounds like you’re part, you’re further down the pecking order. We really want to be a team that’s collaborating to one common goal. And that’s our mission, isn’t it really to finish a project?

Paul Heming: It is, yeah. But so often that from the subcontractor’s perspective, I think just culturally in the industry, it feels that that isn’t necessarily the way a cookie crumbles and that it is quite a separated, disparate relationship when if it was a lot closer, if it was a lot more structured, and I don’t know, collaborative, I hate to use that word because it is, everyone bans it around in the sector, I think, and it doesn’t get used appropriately, but if it was an integrated team, there would be so much more success. So that’s what my conclusion was on that episode, and that was what my conclusion is from a lot of my experience in the industry. Now, why I wanted to talk to you today is you told me, and you’ve just mentioned it there, that you recently held a supply chain event. And it strikes me that that event was a bit different to some of the events that I know go on in the industry. Talk to me first about why you chose to do an event.

Peter Jackson: Well, I’d recently taken the role of managing director for the housing partnerships business. And there was a few things that I wanted to understand more about the business and a few things that I didn’t understand and wanted us to focus on. I had a series of one-to-ones with about 20 members of our team, our staff at seven and tried to understand what their challenges was and everybody had a challenge with supply chain. Now, some of these supply chain members been working with for many years. So it can’t be just a recent thing and it can’t just be, could it be a COVID thing? And he just wanted to understand what the issues was. And I wanted to align everybody to a sense of purpose around, I want just to be famous for delivery service delivery. I think our product’s good, but I wanted us to be famous for how we did it and the service we give to our customers. And I see that in our sites, some of our sites in pockets. It’s wonderful and it wants it to be consistent and the message to the sites is and the site teams is our sites or our showroom. So it should be able to take any customer I want, any supply chain member I want to any site and say, this is how we do it and this is what you’ll get from us. And I wanted a commitment from our people and our supply chain to that journey. So I started to understand why try to find out and investigate why be curious about, why they wanted to improve supply chain. So then we did some feedback with supply chain. We asked them what did they think and they said, well, communication isn’t good and we need to be better involved in understanding what you’re pricing, when you’re pricing getting involved earlier and that kind of thing. So that took me down a path of just delving a little bit deeper and a little bit deeper. And then you started to look at how do you have this, fulfill this mission of being famous for service delivery and our sites being our showrooms. And there’s a critical, I think there’s a critical path to performance that goes through design and specification and having the right information to build very early and translating that into a decent tender pack for people to price and then to get the right price, you’ve got to be talking to people and they’ve got to understand the job and the challenge of it and be able to contribute to that. And when you get the right price, you stand the chance of getting the right service. So I wanted to take it right back to those roots and that was the real purpose of the supply chain event, to just go, listen, we, I think we’ve got some things wrong, but if it’s wrong for us, it’s wrong for you. And how do we improve because me blaming you and you blaming me isn’t going to contribute to this mission and purpose that we set about for ourselves. So we just went to the meeting and said, I think I’ve got certain things wrong and I think you can help me more. And we set out those things and talked about the business plan, the close range pipeline of work, and we actually went slide by slide with the projects that we got through our development plan, the site layouts, the volume, the start dates, that kind of things and technical challenges on those sites. And I set out a high level expectations exchange or service level agreement where I said, my commitment to you is I’m going to share the business plan and the pipeline. We’re going to communicate regularly with you around workload. There’s going to be limited competition around this. So no more than three trades per, three subcontractors per trade. And the people that price at bid are the people get the work if they do it. Because part of the feedback from the supply chain before that was, I only price for you when you’ve won the job because you’re going to mess me about in pre-construction and then in that service level…

Paul Heming: Agreement, which is fair enough, right?

Peter Jackson: It is, it happens. And I understand that I’ve been a quantity surveyor. How do you make money? Well, I have to go out again, but that isn’t the way we fulfill our objectives and purpose right now. So it’s about getting the price right at the beginning and then the commitment from them is commitment.

Paul Heming: I guess the question just, I was going to say just the question on that though, right? Because the way you work at estimator or Precon stage versus QS stage is, it’s a different energy in terms of the depth of detail. That’s not to say that estimating level, you don’t go into detail, but it’s a different level of detail. You’ve got better information generally as well when you’re at construction stage, right? So you’ve got to engage the subcontractor in a way at estimate stage that you’re getting depth, right? So you’re getting that real clarity. So how did that actually, how is that at the moment or before there was a period where you were going out to tender, you’d get some tenders back and then maybe when the job, maybe not, if you won the job, the QSs would go out again. Whereas now it sounds like you are not doing that. You’re saying, we want three prices and we want you to work with us during pre-con stage and we’re not going to go out again. We’ll work with those three prices and then we’ll negotiate through. Is that changing the way the estimators work? Is it actually getting them an even richer estimate? Like do they understand a lot better rather than it’s almost a bit of a punt, isn’t it, when you’re going out and trying to get a few estimates?

Peter Jackson: Well, I think there’s lots of things because you’re right, one of the things that we have been doing is going out too early and pricing on the wrong level of information and all our risk, if you’re building affordable housing, all our risk is in the ground. The house is usually very similar to the house. So you can keep that. We do have our own house types and we build them a lot of the time, but not all the time. But the cost of above DPC is usually fairly static except for in times of high inflation. But you can factor that in cost planning. So what we said we was going to do was, we’ll do cost planning at the early stage of our process but before we commit to giving our client a tender price or a negotiated price, we take the design to stage four. Now, how we get to stage four is dependent on the scheme, but we want to be with our supply chain very early doors with all the third party design supply chain involved. So with Partel now and being able to compliant with building regs around the energy efficiency of a building, it’s getting the M and E people and the timber frame people and the building fabric people working together in a coordinative manner to make sure that we’ve got the most cost effective way of it in part L, not tendering and finding out, piecing together loads of cheap components that don’t work, but getting people to work on a solid plan to it there. And getting your ground workers and muck shifters too and remediation contractors to work together as to the best way to remediate and parcel the site up and at the program and your piles and your precast concrete flooring people to work together to make sure that we have got the right line loads through the timber frame to get the right foundation designed to get the right slab design. So we’ve taken a lot of the guesswork away and that’s really important because lump sum, D&B contracts, we remain contractors has been fatal and it’s killed the industry. So when you are pricing design and build contracts on stage two and three design, it’s basically, it’s self-harming. We need to stop. So we’ve said we’re not going to do that. We’re going to go to stage four and get our supply chain to help us.

Paul Heming: Yeah, I completely agree, that resonates completely with what you’re saying. Going back to the subbies, you talked there about some of the feedback that they gave you was comms hasn’t been very good, we’d like to know more about your pipeline, et cetera. What’s the reaction to, because I think this is really interesting, the old way is don’t necessarily tell subbies what you’re, well, tell them what you’re pricing. Don’t tell them what you’re earmarking them for if things turn out competitively tender and get the best package deal, right. Versus the new ways your, I think you said was projects come up. We guarantee that there’s only three of our partnered subcontractors pricing on that. We have an expectation that they’re going to work closely and collaboratively with us through the tender stage. If we secure, they will then be the only, we won’t wrong them, they’ll be the only people that we continue to speak with and we’ll professionally engage them through that next stage. And I’m guessing you’re doing that on maybe two or three projects with different subcontractors, which gives them the real feeling that they’re likely to win one of them, right? What has been the change or the reaction to that process, that new approach with the supply chain?

Peter Jackson: Been surprisingly mixed. I thought it’d be like, woo-hoo. But I think there’s a cynicism to what people say, and there’s a say, do gap isn’t in supply chain management, I think. And I think the only way we’re going to get past that is by actually people seeing the outcome. So from that event where we said, look, we’re going to have a brand new approach to this. Now we want to do something differently. We held an open day and we took, we’ve got a room at the back of the offices. We opened up, we set up like a church fate, really, where we had three long tables with three projects, was pricing at the time with all the drawings out.

Paul Heming: Decent cakes, sausage rolls, cocktails, sausages…

Peter Jackson: Ebola, all that kind of stuff. No, we set it up with the three tables, with the three pre-con teams, all the drawings and invited the subbies to come in one at a time or in groups. And we had sessions, they booked slots and they talked through the design and the approach with the team, and most people expressed an interest in price in all three jobs. Some said two, some said one’s better for us, but we got a clear indication that there was going to price. But we also got stuff like little gems like the window subcontractor came and said, he said to me, do you know how much that door handle is? And you should be doing this and you can’t afford that, and if we change the way that we glaze this, I’ll save you. Lovely man. He said, I’ll save you 300 pound a plot and can I have my retention paid up front because of that? And you’re going, well, 300 pound of plot’s, not a lot, but times that by a thousand houses. And you’d take that all day long, wouldn’t you?

Paul Heming: Yeah. Shock horror, shock horror, Peter, you speak to the subbies, you speak to the specialist and they want to impart their knowledge with you, and then good things come from it, right? I’m being a bit facetious, don’t get me wrong. But going back to that conversation with Mike, I genuinely feel so many subcontractors, so many specialists, subcontractors want to share that knowledge with main contractors, that little gem that’s in every single specialist contractor’s mind at tender stage. And I know from conversations that I’ve had where they are scared to share that because they think that’s almost a little freebie and then not you, but the main contractor runs off and I’ve lost it and they’ve taken that benefit. And I honestly believe there is money left on the table on almost every project because a lot of the specialists feel they can’t do that or don’t feel totally confident in doing it, maybe is a better way of putting it.

Peter Jackson: And we experienced a little bit of that too, where people came to the open days, went through the drawings with the team, saw all the contractors subcontractors there that they’d seen even at the communications event and decided that we was cheating on them by inviting other people to look at drawings with us. So there is a little bit is mixed.

Paul Heming: You can’t win, can you?

Peter Jackson: But it’s mixed, isn’t it? And people, everybody’s different and everybody has a different outlook, but the majority of it has been quite fruitful. And there’s been things where one of the schemes had a complicated envelope and we sat down with a couple of the contractors and talked about how we would coordinate that and which was best in which package and how we would coordinate. We had a couple of extra meetings afterwards. We’re programmed with a scaffolder and them, and how we’re going to do it, how’s it going to work together, which is the best way of doing things, do we need to do some alterations of the design? And it was just like, people are really engaged. They want to build it on the piece of paper. And the good thing about this is that when these sites do actually start, people have known about them and involved in them for six to nine months and it in the ground running and which is really important.

Paul Heming: Yeah. No, I completely agree with you, I preaching to the choir here, I can assure you of that, Peter. So there’s a lot more I want to go into actually about this event and about the open day, I think more interestingly. But we will do that right after this break.
What I am interested, well, not, it’s not the only thing I’m interested in Peter, but honestly I came into this thinking that you’d come from an operational background and not a QSing background. So as a QS myself, I’m interested now, and there’s loads of QSs listening. So you are now MD, how did you get there, I guess is a question I’m interested to ask because you said almost everyone in your particular boardroom has a QSE background, right? I think you’re bit, you’re joking a bit, but what do you see as the journey for a QS from, I’m guessing trainee through assistant, blah, blah, blah, all the way to where you are now? And how did you do it?

Peter Jackson: I think you have to, it is timing and luck I think is part of it all and being with the right people and learning off the right people and being in the right place when opportunity comes. But I think also my approach has always been to be a quantity surveyor from an operational point of view is think about how the job’s going to be run. Thinking about if we’re doing things efficiently, how things should be parceled together, how we should be working on design and all that kind of thing. And I always went through the design point of view, first is that if it’s drawn badly or we can’t afford it, then we’re not going to make money at the end. And that’s quantity surveying, isn’t it? So I always looked at things from an operational point of view, which is a good starter and I always did more than was being asked. I always thought, I can do that, I can do this, I can do that. And so I worked with a great contract manager at seven.

Paul Heming: Look what for example.

Peter Jackson: So I worked with a great contract manager at seven called Jack Davis. He was a contract director actually. God rest his soul. He’s no longer with us, but he would let you take on board responsibility 42, and be in the background to support you and pick you up. So I get involved in more the construction with the construction teams and the site managers, and he would let me run the client meetings and things like that and managed the design team. And he just encouraged us all the time. He was a real gentleman. And I’ve had the pleasure of working with great people and I think that always helps. I think really the change came when I was at Waits and the MD there chap called Dave Smith at the time, must have seen something in me because he put me on a leadership course at Henley and he gave me the opportunity to move from commercial into general management in looking after the business in the northeast which took over in about 2001, 2002. And I did that for about three years before coming back from seven. So I got a chance to look after something operationally, commercially and managing the customer. And that was a real combined with going to Henley and him taking time to mentor and explain things to me and give me advice was invaluable. I came back to Sadden and Christopher Sadden and Jonathan Sadden did the very much the same things and it was just very, very lucky man. Really?

Paul Heming: Yeah. No, that’s a great, great story. I think, what you’re saying will resonate a lot with people because it resonates with me. I, in my career, obviously gone on a completely different path now with ceiling, but progressed in a way that I didn’t perceive when I was training. I thought, when you’re young, you’re trying to gauge where you would be in terms of position and salary. And I made great steps and it was all, not all, but largely to do with the fact that I was managed by amazing people who wanted me to succeed. It’s such an important part of the process, isn’t it? You want to get somewhere, you’ve really got to have people that are, a, giving you that knowledge, but b, giving you the opportunity to move forward. And it’s half the battle, isn’t it?

Peter Jackson: I got given a great piece of advice by a chap called Martin Shepherd who was a group commercial director at Waits once. He said, if you have a career plan and you’re just focused on it, you’ll turn down some great opportunities to keep an open mind, which I thought was really good.

Paul Heming: Did you want to be, when you were young, did you want to be MD when you were younger? I should say, did you want to always get to MD or were you focused on the commercial director role? That’s where I saw myself headed was, you know, that was the ambition, if that makes sense. Was it the same for you or did you think MD that’s what I want to do?

Peter Jackson: No, I really thought I’d be a guitarist in the Stone Roses cover band or something. I don’t know. When I was really young for the first, and this is really true, for the first three or four years of my career, I wasn’t really focused on work. I just studied wash over me and I just did my job and I picked things up and I thought, oh, I’m going to be in a band. But then when I listened to tapes when I was in a band, I should have really focused on my career…

Paul Heming: Better, just listening to the Stone Roses originally, right?

Peter Jackson: So I wasn’t really that focused at that point. I think it was only when I got to Sadden in 1990, four or five, something like that, that I thought, this is what I want to do. This is I’d like to be managing director of a company like this or this company. And I remember actually thinking that and spoke to somebody about it and they went, yeah, really? And I went, yeah. So at that point I thought I really need to start focusing on my career and knuckling down. So I always have an open mind on young people because I didn’t know what I wanted to do until I was 25, 26. Really.

Paul Heming: Well you’re talking to someone who absolutely adores music from the northwest, particularly the Stone Rose. They’re one of my favorite bands. So if you’re a fellow Stone Roses fan, you have my absolute respect. We should probably try and talk, I mean, we could have a different title for this episode. We can talk about Manchester music for a lot longer, but we probably shouldn’t. Right? So going back sadly to quantities surveying supply chain management, one of the things that you said when we were talking before about supply chain management and this open day, and you said to me, I wanted to do this open day. And some of the QSs in the organization or some of the people in the organization were like, what are we doing in open day? What are we going to get out of this open day? And I think it’s important to have these candid conversations, right? Because is that’s kind of how, this is where I feel there’s a bit of a disconnect. Because as a subbie, those open days were the main contractor. To me, I think are a really great opportunity. Am I correct in saying that your takeaways as a business and probably the QSs is in tow considering they’ve just saved 300 pound a plot or whatever it is, is that it’s really positive. Like how do you reflect on that initial, why are we doing this when it ended up being good?

Peter Jackson: To make sure we don’t have a mass exodus of quantity surveyors. It wasn’t just the quantity surveyors who thought that. I think it was across the piece. I don’t think the reason why people were skeptical was it’s something else to do. It’s something else to do. And I’m really, really busy and I completely get that. But I do think, and we’ve got a mixed outcome, to be honest with you. It is change management and we have to see the benefits. So I think we’re going to have a lag and it’s not going to be a magic wand of beta said something and now we’re going to do it and it’s going to be smashing and we all belong. We all believe in it and it’s going to be great. And I think that not only from our people but from the supply chain because they’re cynical as well, and everybody’s, one of the supply chain feedbacks was I’m glad you’ve done this, I’m glad you’re trying, but we’ve heard it all before kind of thing. So we have to overcome that cynicism, both sides. And we have to overcome it both sides. From my team’s point of view, it is something else to do. But if we get it right, then we spend a week in preparation and chatting about it. When we get the quotes in, we have less queries and less things to chase up. So it’s that leap of faith that takes us to, I’m going to invest this time now to save me time later. And that was mixed. It did happen and work with some trades, but it didn’t happen with others. So we have to keep on pushing on, we have to keep on reflecting and learning and we have to keep on understanding a little bit more about why things worked well and why things didn’t. So we’re still on that path. I’m completely, in my mind, I think it’s the right thing for us to do and we need to keep going there, but we do have to influence others. And we do have to make sure that, because I’ve said things twice, it isn’t going to stick. It’s got to stick by action and seeing benefits. So we’ve got a long way to go yet. And I think from where we are now is that we, those three jobs that we launched, they’re still, because of inflation and client budgets, they’re still stuck with a decision to proceed or not. So it’d be great if those that have hit the ground straight away, but in my view we’ve got the right price. It’s just that the client’s budget doesn’t match it in every instance. So we’ve just got to work through that. And that’s important.

Paul Heming: To be honest with you. I think you’ve hit the nail on the head with regards to it being changed management, right? And so we’re a construction software company and whenever we are going into a new business, we are doing change management. And one of the leading reasons why construction has been so hard to change and it takes, there’s so much cynicism and it takes so much time. It’s not like other industries where tech has just, you’ve had this hockey stick effect, there’s been products and people have just jumped on it. And one of those reasons is because a, there’s a lot of cynicism and b, the proof is in the pudding actually takes quite a lot of time, doesn’t it? So it’s exactly what you are saying. You’ve got to get through the lifecycle of the process. You’ve got projects take, if not months, they take years and if not years, they take a couple of years, right? And to go through those cycles, you have to spend years to really see the impact of that change. And I believe, well, I know that’s exactly why construction technology, there’s such an opportunity, but generally the pace of change is slower because to really evidence change takes time, doesn’t it? And I can totally understand why on both sides, your side and your subby side, that there is still that cynicism. How are you going to stay true to it though? Because like you say, it’s not going to be click of the fingers and it happens overnight, the proof is in the pudding over time, but naturally it can become less and less front and center. So how are you going to stay true to it?

Peter Jackson: I think two or three things. I mean, I went to one of our projects a couple of weeks ago and I came back and I said to all the design managers, go to that job and look at that job the way it’s being run, the way that we’ve managed the design and the way the subcontracts performing is how we want every job to go. And that’s our plan. So we need to have people that will endorse that the strategy is right and things are working and that is the way and they need to see it. We need to go and touch it and look at it. And we need to be able to see the fruits of the work from the supply chain’s point of view, where we say we’re only going to use three so we are going to get three prices back consistently. And that there’s an excitement or any motivation or an enjoyment from having these events where people are talking through the jobs well before, like my dad does the decorating. He used to say, Sheila, it’s all in the preparation. And it’d be a week with a tape measure. And then we’d get a decorator in, no, it’d be. So it’s all about if we can spend, if we spend that time upfront with the supply chain and the designers and we’re going through stuff and we’ve got it programmed and we know how we’re coordinating, then we have a better program, we have a better prelim book, we have a better price, and it’s robust and it stands scrutiny and then it goes to the park and it finishes on time more really. That’s the kind of, so we’re looking at an 18 month, two year, three year plan here of embedding behaviors really.

Paul Heming: Yeah, exactly. It does. It takes time, doesn’t it? And it’s a change. It’s a cultural change more than anything. The reason why I was so keen to have this conversation with you is I think the entire industry wants it and needs the cultural change. That doesn’t mean that there isn’t going to be some people who are like, yeah, I don’t buy it or I don’t want to come along to the party. Because that’s just part and parcel of change management, isn’t it? Can I ask you, I ask you this because it is interesting that you chose the number three for tenders because I’ll tell you why, so late last year we did some research at C-link and we asked main contractors how many quotes they thought was fair to get. And we also asked the same question to subcontractors. And the average was, and it was a difference between 1, 2, 3, I think it was two quotes, three quotes, four quotes, five quotes or more than five. And for main contractors, the average result was four. They wanted four quotes. And actually, if I’m being honest, I think four is a good number because I always feel like one may drop out. So I always thought four was a good number. For subcontractors, the average was actually three. So you’ve actually chosen the number three, which I think as a manufacturer is actually even better, that you’ve chosen that number. Why did you decide the number three, particularly given your accused?

Peter Jackson: It’s an interesting one. Well then there’s a high, a middle and a low quote, isn’t it? So it makes it very simple, but no more importantly I think…

Paul Heming: Or just high, high and high…

Peter Jackson: Well, if there’s three, the same we’re in trouble. But it was to try and make sure that we did get three. If we aim for six, people know because they speak to the suppliers and they go, well, we’ve already had a certain inquiry for that pipe from such and such body. So they know how many’s on the list anyway, well we can’t be naive about that. Our customers, when we negotiating work with them, usually want to see three quotes. I think that the easiest way of getting three quotes is to ask for three quotes and people understand why that is the case. And there’s a commitment then because you’ve got a one in three chance and we’re doing 30, 30 jobs a year, so you’re going to get some work unless there’s something wrong with your pricing. And if that is the case, then we’ll rotate and change and we’ll do that. But I think it just needs to be, it could be any number, but I think three is going to get the outcome we want.

Paul Heming: Yeah, no, I mean I agree with you. Can I ask, when you are tendering with your clients, what is the maximum that you would want to be up against? What is your expectation? Is it also three?

Peter Jackson: It depends what we’re tendering. So we don’t really like tendering in that respect. So if it’s single stage design and build, don’t really like it, but if it’s simple, we’ll have a go. I think customers find it difficult to get more than three on a list anyway. I think the cost of pricing a job now is so expensive from a contractor’s point of view. And you compare the cost of pricing to margins people are making, it really restricts number of jobs. You can speculatively price. You have to be laser focused on something if you’re going to price it. You don’t price it for the sake of pricing. It’s got to be for the purpose of winning the job. So from our point of view, if we’re pricing something, there’s lots of things we want to understand about our customer. So we need to know the customer really well or the customer to be somebody of importance to us because business plan reasons or something that’s around arose in their business, they’ve got a massive budget or a massive strategy to spend money. We’ve got a relationship with them, we’ve got to understand the consultants and the consultants also understand them from a point of view, the quality of the information they’re going to provide to us. And then we need to understand the project in terms of its complexity and really our capacity to be able to deliver the works. Its laser focus and fine margins. Otherwise you end up in a world of pain and so it’s all about focus for us. So if we’re going to price this, it’s because we have the intention of winning.

Paul Heming: Yeah, exactly. And so your process is quite meticulous in terms of who they are, what they have communicated, how they’ve communicated, et cetera. Does that, then you talked about communication at the very top of the show with how you then manage your supply chain. Is that exactly the feedback that the Subbies gave you, that’s what kind of they want as well?

Peter Jackson: Oh yeah. It’s a perfect mirror. Yeah, absolutely. That they want the same. And if you think about it from their point of view, it’s usually the, it’s an owner business. They’re not massive subcontractors that we’re using. It’s used for the people that are own the business themselves. It’s their money. They want to have a relationship with us. They want to understand the job and they want to understand what capacity they can get out of us going forward. So are we a one job opportunity to them or is there an opportunity for them to work for us for a long time? And we’ve got examples. I mean, somebody said to me our supply chain’s tougher to crack than getting into the houses of parliament. But when people do work for us, they work for us for a long time if they’re performing. And we’ve got examples of people working with us for 30 years. So generations and we had a demolition contractor whose grandfather worked with us and he worked with us. It’s just the longevity of supply chain. If people are performing and if they’re aligned to our values, then the ability to work with us can be, there’s great longevity with it, but those things are important. The alignment of values is important.

Paul Heming: Yeah, absolutely. How does the statement main contractors are absolutely nothing without subcontractors make you feel?

Peter Jackson: Well, it’s an interesting one, isn’t it? Because we we’re all in it together. So I don’t dispute that, but we do have our own direct workforce, which makes us a little bit of a more complicated proposition for supply chain. So we have bricklayers, joiners, plasterers, plumbers and electricians and painters. So we have all those trades. We used to have ground workers as well, but that becomes more and more complicated relationships with tips and size of plant and everything. So we have our own workforce, but it’s not just main contractors rely upon subcontractors. We all reply that all really depend upon a good design team and a good customer. So that paper constructing the team, it needs dusting off, doesn’t it? And relooking at, so we relearn a lot in construction.

Paul Heming: Yeah. So tell me, I mean, we’re coming towards the end of the show and I’m really enjoying talking to you because I think that view on the way project should be run is very similar. And I have these conversations and some people react to them and say, you’re looking, you’re making it sound perfect and the world is imperfect and you can’t, like you said earlier, some people will push back on things, whether internally, whether you’re supply chain, whoever, because change is difficult, but it generally, everything that you’re saying really, really resonates. If you were to, and I know you don’t want to give away all of your secrets here, but if you were to give advice right now to main contractors listening to this about how they should change the way that they are approaching supply chain management for the better, how would you frame it?

Peter Jackson: Well, I don’t think I can give advice to other contractors, but I can say that we have a very clear strategy and purpose and we want to stick to that. So if you’ve got that clarity of purpose and a strategy and direction you want to travel in and you’re going to stick to it. Everybody has to come with you and everybody has to behave to it. And you don’t get it right in one go. So stick at it. If the strategy’s right, if the compass points point in the right direction, keep going. And I talk about things because I’m a father of two daughters and I’ve seen all the Tinkerbell, Pixie Hollow films is, we call them Tinkerbell moments where when somebody doesn’t believe a fairy dies. So we’ve people, we’ve got to create believers, we’ve got create believers in this. And when you have believers, things happen, good things happen.

Paul Heming: Well, you have created a believer here in the studio today, if that counts for anything you should be happy about. All joking aside, I’m sure people listening will be thinking about and reflecting on how they’re doing things and how they can do things differently. Because I’m a firm believer that the Tinkerbell moments that you are having and what you are trying to achieve, I think you are definitely moving in the right direction and the compass is pointed in the right spot. So kudos for that. And thank you so much for coming on the show. It’s been an absolute pleasure, Peter.

Peter Jackson: Thank you very much. Great to be here. Thank you.

Paul Heming: No worries at all. And guys, as always, I’ll be back next week. Don’t forget that. It’s great. If you leave a review and a rating, go and download that PQQ template. I’ll be back next week, Peter. Have a good one, mate.

Peter Jackson: Thank you. Bye-Bye.

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