Building on growth

Last year, VINCI’s order book stood at an impressive $27 billion – enough to make it the world’s largest concession and construction company. And, as Senior Editor Ben Thompson found out, the Middle East is an important area of focus for the firm.

“We are a business of choice for customers. They’ll come to us because we are a benchmark for major project capabilities around the world”
-John Stanion, VINCI

John Stanion is not one to mince his words. In fact, the CEO of the construction arm of the world’s largest engineering firm has a no-nonsense approach to interviews that is completely appropriate given that the projects his company are involved in are fundamental to the way modern society operates. Transport, energy, waste disposal, sanitation: providing such infrastructural building blocks is second nature to a firm such as VINCI, and something the company’s business-like chief executive is passionate about developing. 

And despite the downturn, business is booming. “Our order book is the highest it’s ever been,” he acknowledges. Revenue results for 2007 show growth of 16.8 percent to $39.4 billion, with a large proportion of that growth coming from international business, which increased by 21 percent. “We are a business of choice for customers. They’ll come to us because we are a benchmark for major project capabilities around the world.”

One of those projects is the design and construction of the so-called ' causeway between Qatar and Bahrain that consists of 44km of road over water, the longest stretch of bridge in the world. Elsewhere in the Middle East, VINCI is involved in the building of two huge dams – the Naga Hammadi dam in Egypt, and the Wadi Dayqah dam in the Sultanate of Oman – that aim to make a significant contribution to better management of the region’s water resources. The company is also involved in the compaction works on the Palm Jebel Ali in Dubai.

“Projects like this are hugely complex,” he says. “Not only do you have to build them, you have to design them, you have to work out the impact on the environment, you have to finance them and you have to do it all within a framework that’s agreed upon upfront. So they’re very, very complex.”

One of the ways the industry, and VINCI in particular, is addressing this concern is through so-called early contractor involvement. Rather than going through the traditional process of designing everything upfront with a designer, getting a series of contractors to put a price on the work, awarding the contract, having someone build it and then somebody else operate and maintain the finished build, early contractor involvement uses a system whereby a number of preferred contractors are ‘pre-qualified’ for participation. “This pre-qualification process allows project managers to identify and choose a preferred contractor who then becomes involved in the concept development right at the beginning, long before anything gets designed – the idea being that as a team you design it more efficiently so you can build it more efficiently,” explains Stanion.

Another challenge is the sheer size of the projects currently being undertaken. The Qatar-Bahrain causeway project, for instance, is worth over $2.57 billion – a sizeable piece of business. “The Middle East is really exciting because there’s a huge amount of money being spent, and there are almost no limits to what those countries are prepared to do from a construction perspective,” he says. “Many of these projects are now being managed as a single contract, where if you go back a few years there would be countless contracts involved. And so it’s not just the financial size but the actual scope of the construction work itself that is growing. The projects are getting bigger, we’re getting involved earlier and we’re taking greater responsibility for the financial side of things as well.”

In terms of advantages, Stanion sees this offering a number of key business benefits from a project management perspective. “I think it brings the opportunity to better manage risk,” he says. “The greatest issue is when you have the whole project divided up between different parties and something goes wrong in one section and it has a knock-on effect on everything else. That’s the way these projects used to be run, with no real sense of control, whereas now we can hold all the different elements in one hand – coming up with a concept, designing it, working out how to construct it, industrialising the process to improve the productivity, building in lifecycle costs to the design process, and working out what the best ways are to ensure that the costs of the use are minimised.

“I think having that managed as a single contract brings greater certainty to the process,” he continues. “It gives you an opportunity to manage risk better, and I think customers at large institutions realise that. It does bring complexity, and it does mean you have to have a very high level of skill, but at least you are able to trust to your own competencies.”

And it is here that Stanion’s real passion shines through – his belief in the importance of doing things right. Stanion himself oversaw the production of the company’s first corporate social responsibility report earlier this year, and the value of sustainable development that encompasses environmental and social considerations as well as economic and engineering ones remains a subject close to his heart. “This is a huge area for us,” he says. “VINCI already has a policy of sustainability that measures all sorts of areas of activity. We’re measuring our waste production, we’re measuring our power consumption, our fuel consumption, and we’re setting targets to reduce in every area.”

For Stanion, such an approach is critical given the societal impact of the projects his firm undertakes. “I think this whole question of infrastructure in the wider sense – not just the construction of it, but the funding of it, the operation of it, the choices of what we do – involves big issues that concern everyone, not just the construction industry,” he concludes. “They impact the man on the street. They’re going to have a dramatic effect on the way people live in the future, and the revolution we face today is just as great as the revolution they faced 200 years ago with the invention of the steam engine. Now we have to re-engineer our whole infrastructure for the future and get away from our dependence on fossil fuels. I think it’s really fundamental. I think it’s the most important issue we face as a race.”

In his own words

John Stanion provides his thoughts on current industry hot topics.
On the downturn: “I don’t think it is going to have a long-term effect on the funding of infrastructure. However, I do think that a world economic downturn will affect everybody. It doesn’t matter what industry you are in. But we’re not that susceptible to market sentiments. Our projects are long-term so we’re pretty robust.”

On responsible development: “There are economic benefits, and there are human benefits. CSR is not just about the environment. It’s about the whole social agenda – health and safety, human resources and training. It’s about the environment. It’s about energy use, carbon footprints. There’s a whole series of things.”

On climate change: “Industrialisation is about power production and energy, and the key to solving the carbon dioxide problem is the way that we use our energy. That’s the thing that we have to change. We are going in the right direction – the question is whether we’re going in the right direction quickly enough.”

On talent recruitment: “As an industry we have not attracted enough of the best graduate talent to construction, and there’s a general shortage of young people coming forward in technical disciplines such as civil engineering. It’s important to raise the profile of the industry, because it’s actually a really exciting industry to work in.”