In our last annual review I described how we had transformed our business to face what we knew were going to be tough market conditions in the year ahead. But I am not sure that anyone in the industry could have predicted quite what lay ahead. To say the past year has been very challenging for property and construction, in the UK at least, is probably still an understatement. Virtually every market has felt the effects of the banking crisis and the resultant recession. All that said, there have been major achievements at Davis Langdon in 2008–9, even in a very difficult economic environment, as demonstrated by a further six per cent increase in our turnover in Europe and the Middle East to £208m (US$385.9m).
Of course, none of this compensates for the very difficult decisions we have had to take by way of redundancies and remuneration reductions. Like other construction consultants, we have had to say goodbye to some of our partners and our people and this has been very painful for everyone. We are known to be the best employer in our sector and this makes the difficult decisions even harder to make. But as Senior Partner I have had to make tough calls as the person ultimately accountable for the future success of the business. There are still challenges ahead, but we are in a good position which is demonstrated by the fact that over the past year we also transferred ten partners and 60 plus people to the Middle East.
The foundation of our confidence is our knowledge. This is where we believe we stand apart from others in the market, and it is what we will use to help our clients adopt successful strategies; achieve more for less; and apply sustainable approaches – all of which will help deliver their bottom line. Our role in informing the industry remains unchanged, and this review is peppered with great examples. We call it ‘thinking big’. Clients and colleagues value our view on when the industry might claw its way out of the current market conditions. Our forecast is that although the economists will refer to data that shows that the economies in the United Kingdom (UK) and Ireland will be pulling out of the recession by the first quarter 2010, weak balance sheets plus the level of public debt will continue to constrain the property and construction industries for another couple of years.
The positive news is that Davis Langdon has anticipated the market and this has enabled us to focus on those geographies, sectors and service areas that have access to the requisite funding and have the level of demand to produce a viable business case.
The task was made that much easier for us in May 2008 when the business adopted sectors in lieu of geography when facing the market. We are now reaping the benefits in that we are aligned with the needs of clients who are looking for expert knowledge and capability that extends well beyond local ambitions. Our range of abilities across all construction sectors is also a major strength in weathering this storm. Our new focus has produced strong growth in a number of sectors including energy, public, industry and infrastructure. Amore detailed perspective is provided in this year’s review by our Sector Heads (see centre spread).
We have also built on our 60-year history in the Middle East and strengthened our commitment to the region further with Kevin Sims, a member of our Board, relocating to Doha. Again, our sector capability has helped us enormously as the global recession has also put pressure on business cases in the Middle East. Kevin explains later in this year’s review how we have been able to ease this pressure with our expert knowledge, helping to improve the balance between cost and value.
We have also made progress in new markets such as Libya where we are working on major resorts, universities and large housing developments. New services have also advanced such as program management where we are part of the preferred bidder team for the 2014 Commonwealth Games in Glasgow.
Our strategy this year is focused on countering the recession. Our people are concentrating on doing things ‘better, faster, cheaper,’ thus helping clients to close the ‘viability gap’ that, as a bare minimum, requires a 30 per cent improvement in the cost, quality and time equation.
At the end of July 2009 we added another dimension to this equation when we merged with DEGW, a 150-personstrong consultancy with offices in Australia, Europe, Singapore and the US. DEGW will enable us to measure the performance of people and place. The sole aim of the merger is to provide strategic advice around the optimisation of space. We will not be providing architectural or design delivery services. Instead we will be able to provide even richer evidence based support to design colleagues by helping to put a value on place. Despina Katsikakis, the Chairman of DEGW, shares her thoughts on page 34 as to how rethinking place in this market will lead to better performance from people.
Previous mergers have added engineering services, specification consulting, building surveying and banking, tax and finance to our range of services. Our tradition of merging with only the best in market consultants continues with DEGW. The addition of strategic space consulting alongside program, consultancy, project and cost management has allowed us to develop a truly differentiated offer in all our sectors that enables clients to achieve more for less.
The resilience we have shown over the past year has stemmed from our history. As long ago as 1946 one of the founding partners of Davis Langdon relocated to Persia, as it then was, to establish an office to work for the Anglo Iranian Oil Company. It is therefore very appropriate that in the past year Jim Meikle, the former head of our consultancy team, has completed the book ‘Thinking Big: A History of Davis Langdon’. I have been asked on several occasions why we commissioned the book and it is very much to do with tracing our DNA. Having grown significantly over the past decade it is essential that we recall our history, for in doing so we can appreciate that in times such as these we must clear our thinking and start afresh.
We are using the recession to re-engineer our business: helping clients and colleagues to a position whereby value can still be found to match affordability. The key challenge is the alignment of aspirations and expectations. This is well illustrated by a very prominent architect that I spoke to recently who said "we have entered a period that requires the creation of a no frills built environment that performs better than ever before."
Our partners and our people are showing a flexibility and mobility when rising to that challenge. In the UK there will be the added twist in that the next government will have to find ways to facilitate private sector investment in order to stimulate public sector activity.
At Davis Langdon we fully appreciate that in the current environment we must continue to focus on our future. We must think and act smarter. It is our ability to think big that has made us respected market commentators and thought leaders in our practice area. Our focus is on local, national and global markets and the clients within those markets who are seeking advice founded on knowledge and expertise. Over the past two years our great people have aligned our business with the markets that will be active even in today’s economy.
This year’s review will show how we are adapting to find the right solutions for our clients in a very changed world. It also looks ahead to providing predictions for 2009–10.
Looking even further forward, I am confident that the knowledge and expertise of our people will be recognised in a global market that will be increasingly focused on the key issues for the planet, namely water, energy and the environment.
We have a very simple aim, we want to help clients improve the performance of people and places.
Rob Smith
Senior Partner
