UK contractors are falling behind their global competitors and must refocus on profitable growth and in-house self delivery skills to survive, says Bouygues UK chief executive Medani Sow.

UK contractors are lagging behind in terms of size and capability and must to focus on generating profits to reinvest in skills and innovation, according to Medani Sow, UK chief executive and chairman of French contractor Bouygues.

Speaking at the Construction Industry Summit last week, Sow, who joined the Government’s revamped Construction Leadership Council in July, said that improving their cash position was “paramount” to UK contractors future success.

“We believe that contractors should self-deliver some part of the contract,” Medani Sow

“UK contractors are taking huge risks for profit which just isn’t there,” he said. “A contractor should have at least 30% of turnover in the bank as cash. It is impossible to innovate, to train or to invest in growing a business without cash.”

However, Sow said that, in contrast, the UK still had “very strong” consultants which led the rest of the world for delivering quality designs.

In particular, he said, major UK contractors had to spend more time and resource developing in house skills to give them a greater ability  to self-deliver projects rather than just subcontracting and managing the work. 

“We believe that contractors should self-deliver some part of the contract,” he said. “We also need skills in house to be able to challenge designs,” he added highlighted that early contractor engagement relied on contractors having the skills.

“If they are not making profit then they have zero ability to invest in anything,”

Sow’s comments came during his presentation to the annual Construction Industry Summit, organised by the Construction Industry Council. Speaking after his delivery to assembled industry leaders, Sow reiterated that UK contractors had to focus on boosting profitability to enable reinvestment in their businesses. 

“If they are not making profit then they have zero ability to invest in anything,” he said, highlighting that this remained true regardless of ownership structure.

Commenting on government’s latest push to boost UK apprenticeships, he said it remained the responsibility of individual companies, not government, to invest in talent.

“I would say that contractors should sometimes take the lead and build their own schools,” he said. 

“In Paris we have our school where we help students to become a carpenter or a plumber and in London we have a small school in Walthamstow to help people to use our form work before bringing them to site,” he explained. “I don’t really care so much about what the government wants us to do about it – we do it because we need it.”

“I don’t really care so much about what the government wants us to do about it – we do it because we need it.” Medani Sow

In his conference delivery Sow said that he quality of work delivered by UK consultants remained world leading but pointed out that the complexity of the UK delivery supply chain meant that solution were often overdesigned. 

He explained afterwards that as a contractor it as important to work with the right designers pointing out that the right partner was not a function of their size.

“Everything is not about size – if they are too big they won’t be able to provide the right service to their clients,” he said.“

“On our housing projects we use consultants that are very small and it works perfectly because they understand our methodology – we get a better service that we could get from a bigger company,” he explained. “But there is not one answer. If we have to work on a project in say Nigeria on a huge project then maybe we had better work with a firm like AECOM.”

The UK invented PFI but sometimes it is now poorly run – it takes too long. I will not name the projects but we have been bidding on a PFI project for four year and right now we don’t know where it is. But there are two bidders and we have spent £3M each and we don’t yet know where the project is.