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"It's crazy; it's like London in the 1980s," says Jose Rodriguez, project manager for Heery in Madrid. The whole country is booming, with Madrid and Barcelona undergoing particularly feverish activity. "Madrid is just incredible," says Rodriguez. "The sky is full of tower cranes. If you want to get a crane it's impossible."

The Spanish boom was partly fuelled by an unprecedented demand for houses and flats as Spaniards frantically converted their hoards of black-market pesetas into real estate in advance of the introduction of the euro. "People are rushing to get it all out from under their beds," says one Madrid-based economist, who predicts a housing slump in 2002 as owners try to convert their assets into euros. Office and leisure work could also tail off as Spain feels the effects of the global downturn, but investment is expected to continue pouring into tourism-related projects the coastal regions.

For the time being, British firms, particularly consultants, are doing well in Spain. But contractors are steering clear: Heery, for example, provides services such as project management and due diligence but not contracting. Lessons have been learned from the boom of the early 1990s, when contractors rushed into the country, only to retreat in disarray shortly afterwards.

"They all went home with their tails between their legs," recalls Nick Hodson, country manager for EC Harris. The problem was that UK firms were too squeaky clean to survive in Spain's macho adversarial culture, where cost and time overruns are the norm. "The Brits were too straightforward in the tender lists," Hodson says, pointing out that local contractors make most of their margin on claims. "UK contractors can't compete with that; they have an image to maintain."

The big contractors, such as FCC and Dragados, are fantastically powerful. Under Spanish law, they have possession of the site and the client needs a court order – which can take three or four months to process – to get them off. This works as a powerful bargaining tool in the event of a claim.

To counter this, clients are increasingly moving towards construction management, which breaks project risk into smaller risk packages and prevents any one firm holding the whole job to ransom. British construction managers such as EC Harris and Bovis Lend Lease are doing well out of this move to CM.

Even more powerful than the contractors are the banks, which own large chunks of the leading firms. Santander Central Hispano bank, for example, has a 22% stake in Dragados, Spain's second biggest builder. Such is the bank's influence that it was recently able to sack the Dragados board.

Spain on the UK
Here in Spain, architects are still much more atelier-like. There’s much more contact with artisans at every level. In the UK, it’s more organised and industrial. The Spanish design a lot more. In the UK, you produce

Benedetta Tagliabue, EMBT Arquitectes, Barcelona

Spanish contractors have their fingers in all kinds of pies besides construction; Dragados, which has a turnover of £3.26bn, is also involved in rubbish collection and treatment, and seaport logistics. This diversification is partly intended to see them through leaner times ahead.

PFI is slowly catching on, particularly in road building, which has opened up opportunities for UK firms. But in general, procurement is somewhat traditional and frustrating. "The architect is king," says Heery's Rodriguez, although he adds that their importance is diminishing. Local knowledge is essential to navigate the multiple layers of bureaucracy: building licences take a long time to acquire and each layer of M&E drawings (plumbing, electrics and so on) requires government approval. To get things done, you need a strong network of "enchufes" – connections – in government and industry. To add to the headaches, each of Spain's semi-autonomous regions has different by-laws.

Concepts such as supply-chain management and off-site fabrication are practically unknown here. Instead, designs are altered as work progresses and site workers adapt steelwork and other materials as they go along. "They'll adapt anything to fit site conditions," says Rodriguez.

Traditional materials still dominate, with brick facades and blockwork internal partitions still the norm. "Plasterboard is seen as a cheap alternative," says Rodriguez. Sites are unsophisticated compared with those in the UK. Spanish builders who come to the UK are amazed at the scaffolding and plastic sheeting that encloses each site. "People ask how can you afford it," Rodriguez says.

Culturally, Spain is a great place to work.

EC Harris' Hodson describes it as "fun and tough", with long hours (9am to 7pm with a two-hour lunch) compensated for by the Spaniards' gregariousness and hospitality. Many male expats end up marrying local women, Hodson adds, and become assimilated into the Spanish culture.