黑洞社区

We鈥檙e speeding along one of the immaculate freeways that criss-cross Dubai when Ray O鈥橰ourke suddenly gets animated. 鈥淟ook at that. Would you just look at that? Now, what do you think of THAT?鈥� He is gesturing wildly towards a forest of tower cranes coming into view ahead of us. 鈥淏elieve me, you won鈥檛 have seen a site like this one before,鈥� he trills, rubbing his meaty hands together in anticipation.

Minutes later, O鈥橰ourke, his engineer son Cathal (pronounced Carl), Peter Rogers of developer Stanhope and I are standing at the edge of the biggest hole we鈥檝e ever seen. It鈥檚 about a kilometre in diameter: at a guess, it鈥檚 five times the size of Heathrow Terminal 5. There are 42 cranes around it. Flitting about between them is an army of 6000 operatives, most from India. They seem oblivious to the choking dust and 45掳 heat. This is one of Laing O鈥橰ourke鈥檚 most impressive projects 鈥� a 拢350m contract, in partnership with local outfit Al Naboodah Contracting, to deliver reinforced concrete structures for Dubai airport鈥檚 third terminal. O鈥橰ourke knew we鈥檇 be impressed, of course 鈥� especially Rogers, who is one of his most faithful clients. It鈥檚 why he brought us here.

I鈥檝e tagged along because I want an interview. I鈥檝e been chasing O鈥橰ourke since 2001, when he pulled off the extraordinary coup of buying Laing 鈥� the greatest name in British contracting 鈥� for 拢1. Unfortunately, my subject didn鈥檛 feel the need to be interviewed. He was quite happy to get on with business away from the prying eyes of the press. The business in question was the transformation Laing and his 23-year-old concrete business, O鈥橰ourke & Son, into one of the industry鈥檚 fastest-growing and most innovative companies. And he鈥檚 nervous of interviews because he doesn鈥檛 want to reveal his hand, or to tempt fate by predicting triumphs.

Now, finally, he has agreed to let 黑洞社区 in. There were two conditions, however: that Rogers be present, and that it would be conducted during a tour of his projects in Dubai, both fine by us. The trip includes the airport and, er, a giant Snow Dome. This is the crazy world of Dubai, remember. So here we all are, glazed in sweat, pursuing O鈥橰ourke from one jaw-dropping site to another under a remorseless July sun. As we stand there, O鈥橰ourke鈥檚 eyes gleam at the ambition of the place, which he visits every two months: 鈥淚f you don鈥檛 like the scale of the vision here, if the plan to build 100 towers doesn鈥檛 get you going, you鈥檒l never be excited by anything in construction.鈥�

From tiny acorns 鈥�
It鈥檚 been quite a journey for O鈥橰ourke, from the green fields of his County Mayo birthplace in western Ireland to Arabia鈥檚 field of dreams. But O鈥橰ourke is reluctant to say too much about his early life, or give away many personal details, such as his age. 鈥淥h, you鈥檙e not going to put in all that 鈥極鈥橰ourke, 57鈥� nonsense are you?鈥� Still, from what he does mention, there doesn鈥檛 seem anything remarkable about his early life 鈥� nothing to suggest he would become one of construction鈥檚 great entrepreneurs.

As a teenager, he worked as a labourer before taking an HND in civil engineering at what is now the University of East London. He spent three years at Kier, and 鈥� after a brief spell as a mini-cab driver 鈥� seven at Murphy鈥檚. In 1978, he quit his comfortable,

拢15,000-a-year job to set up O鈥橰ourke & Son with his brother Des. It was a gamble. He had just 拢11,000 of work, and the office was a utility room off his garage. On one occasion, his sidekick Bernard Dempsey, now deputy chairman, had to apologise to a client on the phone about the noise from a nearby JCB starting up. It was actually the family washing machine.

From the outset, O鈥橰ourke broke the subcontractor mould, offering a broad package of services that included flooring products and installation services. His big break came at the Broadgate office scheme in the City of London in the mid-1980s, where he first met Rogers, a forward-thinking client who enthused about his designs and precast concrete solutions. Rogers gave him the chance to take on greater responsibility. 鈥淲hy did we pick Ray 20 years ago?鈥� Rogers says. 鈥淏ecause he did things differently, and he was succeeding. He鈥檚 still doing it now.鈥�

Throughout the 1980s and 1990s, O鈥橰ourke took more work in-house, employing engineers, buyers, planners, surveyors, and adding M&E, fit-out and curtain-walling expertise. But once his turnover hit 拢300m there was, he says, 鈥渘o more we could achieve as a specialist鈥�. By 2001, it was time to broaden horizons; it was time to swoop on Laing.

The big deal
That deal gave O鈥橰ourke the most famous name in the industry. He not only bought for 拢1 Laing鈥檚 main construction business, which was shattered by its losses on Cardiff鈥檚 Millennium Stadium and the National Physical Laboratory, he was also paid 拢30m to cart it away. Since then, O鈥橰ourke has set the contracting arm on a path of renewal, ostensibly by taking it back to its 19th-century roots. 鈥淟aing started by building houses in Scotland. It didn鈥檛 start with a chief executive and a limo,鈥� O鈥橰ourke points out. Laing O鈥橰ourke鈥檚 growth has been remarkable. Turnover doubled between 2002 and 2003 and is now 拢1.7bn. Pre-tax profit is 拢70.4m. Earlier this year, it came 21st in 鈥淧rofit Track 100鈥�, a ranking of fast-moving companies compiled by Pricewaterhouse Coopers and published in The Sunday Times. 鈥淏y and large, we have so far achieved what we wanted to achieve,鈥� says O鈥橰ourke.

The merger of Laing and O鈥橰ourke & Son wasn鈥檛 a straightforward process in the early days. 鈥淚nitially, the people in O鈥橰ourke were quite fearful of Laing, and the people in Laing were quite fearful that we鈥檇 ask them to do things out of sync with what they were used to.鈥� The wariness subsided as the group grew.

If he鈥檚 won over the staff relatively quickly, winning the acceptance of other contractors may take a little longer. Close colleagues say O鈥橰ourke would love to be treated as an equal by the same majors who gave him such a hard time when he was a subcontractor, and the more they deride his achievements, the greater his pleasure in showing them he鈥檚 arrived. Publicly, O鈥橰ourke is unfailingly courteous towards his rivals. 鈥淚鈥檝e always enjoyed competition, and I respect our competition. We have worked for all of them. If the likes of Bovis and McAlpine ask us to tender now, I鈥檇 do it. We have no notions of grandeur. We are in business to do business. I do not spend any time worrying about being accepted. We will stand by our projects.鈥�

As for all the tales of buying work, he just looks at me for several seconds, before winking and gesturing towards a draft copy of his financial results, the strength of which suggest quite the opposite. Some contractors say they won鈥檛 tender for some jobs if Laing O鈥橰ourke is on the list. But as a client, Rogers is adamant that there鈥檚 nothing funny going on. 鈥淚 don鈥檛 think Ray鈥檚 cut margins. He鈥檚 picked projects carefully, and priced them carefully.鈥�

Doing unto others 鈥�
What about other specialists? Surely it must be tempting, now he鈥檚 a contractor, to dish out the same treatment as O鈥橰ourke & Son once received? Not at all, he says. 鈥淲e have great respect for our supply chain. If we have an argument, we get our heads together and get the problem resolved.鈥� Indeed, if O鈥橰ourke had his way, monikers such as 鈥渕ain contractor鈥� would disappear, to be replaced by the less adversarial-sounding 鈥渃onstructor鈥�. On his favourite projects, he says, 鈥渢he promoter and the deliverer become one鈥�, which give him a strong 鈥渆motional attachment鈥� to the job. He adds: 鈥淭erminal 5 is as much our project as it is Tony Douglas鈥� [T5鈥檚 managing director]. We live it, and believe in it, and have ambitions to deliver it ahead of our milestones.鈥�

All this talk of harmony doesn鈥檛 exactly square with the traditional image of O鈥橰ourke as a pugnacious, even ruthless, operator. There鈥檚 a thin line, though, between aggression and simply straight-talking, which O鈥橰ourke readily admits is his style, particularly when dealing with clients. 鈥淣egotiations have to be a two-way street. You have to demonstrate clarity and integrity, and you have to know when to walk away 鈥� when there鈥檚 no empathy.鈥�

Laing O鈥橰ourke is certainly a company built in its leader鈥檚 image. O鈥橰ourke keeps it that way with a daily routine that would break men with less drive and ambition. One of his favourite Irish sayings is 鈥渆ating鈥檚 cheating; sleeping鈥檚 cheating鈥�. On that score, he gets away with nothing. His day starts at 5am. He has a quick breakfast at 5.30 before his driver takes him to a project, the office, or to see a client. He says: 鈥淚 don鈥檛 believe in email; it鈥檚 too impersonal and allows you to wriggle out of problems. I don鈥檛 believe in lengthy reports or proposals. I鈥檓 available for the business unit leaders on the mobile from 5am to 10pm and we talk and make decisions. That鈥檚 lean and agile. I鈥檓 comfortable discussing strategic or site issues. I like Jack Welch,鈥� he says, referring to the legendary General Electrics boss, whom he resembles in more ways than one, 鈥淚 like being able to go deep down [into a business] and having a look.鈥�

Even with a 17-hour day, though, O鈥橰ourke can鈥檛 do it all, and, since he obviously dotes on his wife and three children, he wouldn鈥檛 want to. It鈥檚 vital to have a circle of like-minded colleagues around him. These are the people he calls 鈥渕y guys鈥� 鈥� with whom he shares professional ambition and personal affinity. Denise Kingsmill, for example, the former Competition Commission deputy chair, told 黑洞社区 last week that she loves rugby, which is also one of her boss鈥� passions. O鈥橰ourke recruited her personally, and that鈥檚 typical of his approach 鈥� in this case, one gleaned from Bill Gates. Never be fooled by his self-deprecating blarney about being an 鈥渦neducated Irish subbie鈥�: O鈥橰ourke includes the Harvard Business Review among his bedtime reading.

Staying close to the ground
One of the unique features of Laing O鈥橰ourke is its management structure, which is partly a legacy of the problems O鈥橰ourke inherited after the takeover. 鈥淲ithin Laing there was an under-led, over-managed group of people,鈥� he says. 鈥淭hey had been rewarded with titles rather than proper financial remuneration. We have created a very flat structure. The engine room is not the boardroom, it鈥檚 in the projects.鈥�

At Laing O鈥橰ourke, there are just four grades of project leader, and the top tier of business-unit leaders report directly to the client. These managers are also responsible for the wellbeing of the staff: despite having nearly 17,000 people on the payroll, Laing O鈥橰ourke鈥檚 human resources department is tiny. And there鈥檚 no main board. 鈥淏oards don鈥檛 do very much鈥�, says O鈥橰ourke. 鈥淲e are not into hierarchy. It鈥檚 not allowed.鈥� When he throws a party, which is often 鈥� such as the annual company bash for 1600 staff at the Grosvenor House Hotel 鈥� there is, pointedly, no top table.

One consequence of this horizontal structure is that O鈥橰ourke himself, as chairman, never loses the ability to influence events on site. He feels that too many construction bosses are chateau generals. 鈥淢ost contractors are probably not run by the right people. They are not engaged in the process and what鈥檚 going on. The premier business schools will say that you can teach management techniques. But if you look at people like Lord Weinstock at GEC, he came through the ranks and created a huge business 鈥� and you saw what happened when he left.

鈥淚 would not find it difficult to run a project. That would be an exciting thing to do. Just because you have the title of chief executive doesn鈥檛 mean you shouldn鈥檛 go near the front.鈥� He also expects his employees to be equally flexible, able to move upwards, downwards and sideways within the organisation at any time.

As for all the tales of buying work, he just looks at me for several seconds, before winking and gesturing towards a draft copy of his financial results

Global ambitions
Laing O鈥橰ourke is a strange mixture of a sophisticated international business 鈥� encapsulated in MOVE, the mind-boggling visionary mission statement on its website 鈥� and the old family firm, with its distaste for anything that smacks of corporate pretentiousness. Horrified at the vast sums that some contractors had paid to design their logos, O鈥橰ourke did the Laing O鈥橰ourke one himself 鈥� 鈥渋n about 10 minutes鈥�. It looks good too, particularly illuminated on the giant cranes standing proudly on the Dubai skyline.

As Rogers points out, it is by retaining many of the features of his original business philosophy that he been able to grow his business so successfully. 鈥淚t鈥檚 just a matter of scale,鈥� he says. 鈥淩ay was basically 鈥榤an with wheelbarrow, will place concrete鈥�. Now he鈥檚 translated that on to an absolutely enormous scale. People say he鈥檚 an upstart, and he鈥檚 got too big for his boots. But all he鈥檚 done is focused on the product, on health and safety and investing in the right equipment for the job. And it works.鈥�

O鈥橰ourke trumpets the global nature of his strategy. 鈥淭here鈥檚 a myth that international businesses are different,鈥� he argues. 鈥淲e certainly have to break that down. If we have ambitions, we have to be global. We have to be where the opportunities are.鈥� O鈥橰ourke has been helped by inheriting Laing鈥檚 international arm, and he favours fast-moving but immature markets such as India, China and, of course, Dubai. Whatever the project, he insists that 鈥渨e should have a common culture anywhere in the world鈥�.

This was apparent from our tour of the Dubai sites, especially the airport job. At 4.30 on Saturday afternoon, we watched about 30 Indian workers begin a marathon, 10-hour session pouring 4500 m³ of concrete, with only a flimsy canopy to shield them from the pitiless sun. As the concrete began to flow, the putrid smell of the cement fumes was almost unbearable in the heat. But the workers 鈥� on just 拢6 a day 鈥� toiled on, without a murmur of complaint, supervised with a light touch by UK managers, who appreciate their methodical, if somewhat slow and inflexible, nature.

Surveying his kingdom, O鈥橰ourke ponders a question about the strength of his global ambition. 鈥淚f you don鈥檛 have high ambitions you won鈥檛 achieve anything,鈥� he replies. 鈥淲hen you look at Bechtel, you think it鈥檚 a worldwide business. That has to be what you measure yourself against.鈥�

Not mean, just lean
Another of O鈥橰ourke鈥檚 favourite refrains is that 鈥渋t鈥檚 all about the people鈥�. Everyone says that, of course. But O鈥橰ourke has put his money where he mouth is. It was his operatives at Terminal 5 who hit the headlines last year with that legendary 拢55,000 pay deal. One rival contractor reckons the pay of Laing O鈥橰ourke staff is, on average, 10% higher than the norm. And the company shares a third of its pre-tax profit with employees. The pay of new recruits will have to improve too, O鈥橰ourke says, if firms are to attract the brightest and the best. 鈥淲e鈥檙e our own worst enemy. We bring a bright person out of university and pay them 拢7000. Yet they can join a bank on 拢35,000. It鈥檚 a joke.鈥�

Better training and safer site conditions will also be needed to persuade people that construction is a viable career. O鈥橰ourke is committed to create what he calls 鈥渁 learning environment鈥�. He has set up Laing O鈥橰ourke Learning World. This will provide everyone from joiners to engineers with the opportunity to improve their business skills by, for example, taking an MBA at a leading university. O鈥橰ourke is in the process of establishing framework agreements with a number of institutions.

There is much that O鈥橰ourke would change about construction. Safety, for example. 鈥淭he problem is that the labour force is not required to take the responsibility for safety that they should.鈥� The company has numerous schemes including one on the Dubai sites in which one member of the safest teams wins 拢1500 鈥� a lot of money for workers on 拢6 a day.

He鈥檚 passionate, too, about harnessing technology. 鈥淲e have to take the snobbery out of IT and get to the meat and potatoes. If we can get three- and four-dimensional modelling, we鈥檒l get a product that鈥檚 right first time. That will take us to the level of the automotive and shipbuilding industries.鈥�

The level of waste incurs his ire: 鈥淐urrent processes are responsible for waste in excess of 20%. That鈥檚 everyone from the promoter, his legal team, institutional investors, financial houses, cost consultants, designers and constructors. We are all in this together; but everyone thinks it鈥檚 someone else鈥檚 fault.鈥�

In particular, this adversarial culture pervades the design process, O鈥橰ourke feels. He would like responsibilities between designers and contractors to be more clearly delineated. 鈥淭he designers are too protective of their position in the process, and most people on the design side are rather poorly paid. If we can get designers to provide concept drawings 鈥� like fashion houses do 鈥� and pass the design development on to constructors, we can reduce a lot of conflict.鈥� At Dubai Airport, the amount of steel rebar was plainly excessive, but as Laing O鈥橰ourke was obliged to stick to the architects鈥� designs, he had little scope to explore alternatives.

Laing O'Rourke
Laing O'Rourke's human resources department is tiny. And there's no main board. When he throws a party, which is often 鈥� such as the annual company bash for 1600 staff at the Grosvenor House Hotel 鈥� there is no top table

The age of empire
It鈥檚 easy to see where all this is leading. Just as O鈥橰ourke & Son expanded 20 years ago by taking the concrete package in-house, O鈥橰ourke is itching to do the same thing as a general contractor.

In the past year, he has enhanced Laing O鈥橰ourke鈥檚 core project management and framing expertise by snapping up two firms from Carillion, Crown House Engineering and Expanded Piling.

It would not be a huge surprise to see Laing O鈥橰ourke broaden its range of specialist services through further acquisitions. Possessing all the major contracting disciplines would certainly help meet the demands of his mission statement, included in a handbook to Terminal 5 staff, to 鈥渕ake Laing O鈥橰ourke the worldwide contractor of choice鈥�.

O鈥橰ourke won鈥檛 comment on rumours that his ultimate goal is to create a 拢5bn business, but says: 鈥淲e will continue to have ambitious plans for the group. Where we鈥檒l be in five years, I couldn鈥檛 tell you.鈥� But expansion is a given: 鈥淚f a company does not grow, it dies,鈥� he says. 鈥淚t has to have ambitious plans. In growing you create career paths for young people and diversify. Growth is nothing to be afraid of.鈥�

O鈥橰ourke himself can鈥檛 go on forever 鈥� although he looked as fit as a butcher鈥檚 dog in Dubai and showed no signs of slowing down. One option is to float the business, but he has a visceral aversion to the pomposity of stock market life. 鈥淚 don鈥檛 think the City is a great place for a construction company,鈥� he says. He could sell up, although Rogers is convinced that he鈥檚 in it for the long haul.

More likely, he will groom a successor. There are already a number of candidates within the group. And if he does have an eye on forming a great construction dynasty, like Laing, he must consider his 27-year-old son Cathal, who is an engineer at Terminal 5.

Not that O鈥橰ourke is ready to hang up the gloves yet. 鈥淩ay can take Laing O鈥橰ourke to great heights as long as he doesn鈥檛 get sidetracked,鈥� says Rogers. 鈥淎s long as he keeps visiting the sites and as long as he keeps spreading the message. He鈥檒l need a professional team around him 鈥� good people who can stand up to him. I wouldn鈥檛 bet against him.鈥�

One of O鈥橰ourke鈥檚 passions is flying. He loves jetting around the world, and has a pilot鈥檚 licence to fly twin-engine King Air light aircraft. Flying, like construction, is a test. 鈥淲hen you鈥檙e flying a plane,鈥� he says, 鈥渋t鈥檚 fine while you鈥檙e going along smoothly. But what do you do when you encounter some turbulence? Do you keep going? Or bail out?鈥� A tough decision for some, but there鈥檚 no question what Ray O鈥橰ourke would do.