Building the present, creating the future
BAM’s strategy ‘Building the present, creating the future’ is based on three pillars: focus the project portfolio, shape the business portfolio and create the future portfolio. These are supported by a strong foundation consisting of two layers: culture and capabilities.
BAM’s vision is translated into specific goals for profit, planet and people. The objectives of BAM for 2020 are:
- A return on capital employed (ROCE) of more than 10 per cent;
- An increase of the adjusted margin before taxes to between 2 and 4 per cent;
- A reduction of the real estate portfolio to less than €500 million;
- A reduction of working capital to less than -10 per cent;
- To be a sustainable company: have a net positive impact in 2050;
- To always put safety first: reach an incident frequency of less than 3.5.
Focus project portfolio
Doing things better
BAM is focussing the project portfolio. Using either scale or differentiation to win projects will be the main driver of performance improvement at the operating companies.
BAM keeps a focus on its project portfolio (‘doing things better’) by constantly analysing current projects. The main drivers for performance improvement are either scale or skills. In market segments where BAM is in price-led competition, the Company achieves cost leadership through project bundling, industrialisation and/or digitalisation. For complex projects, BAM achieves its product leadership by using its know-how, its position as a digital frontrunner and its quality assurance as key differentiating factors. This focus leads to scalable learning in relevant market segments with better propositions for the Group’s clients.
Shape business portfolio
Doing things better
BAM is shaping the business portfolio by rationalising its propositions in selected market segments and developing new solutions for clients.
BAM is shaping the business portfolio by supporting the operating companies in developing new propositions in home markets as extensions of projects along the lifecycle, and by leveraging specialisms in international markets. These initiatives are driven by investments in people and systems and by the development of partnerships to further improve the performance. At the same time, BAM continues to critically assess its operational activities and exit those activities not offering sufficient opportunities to use scale or distinctiveness as critical success factors. BAM will continue to reduce its portfolio of property assets.
Create future portfolio
Doing new things
BAM will position itself as leader in the digitalisation of the industry. BAM is creating its future portfolio by integrating digital construction solutions in the construction process and by accelerating innovative solutions for its clients (both digital and non-digital).
BAM creates its future portfolio by supplying construction services using a digital construction platform and by accelerating innovative solutions generated within BAM. The Company facilitates this transition by investing in innovation to create an attractive environment for partnerships and rapid prototyping in order to shorten the time to market. By creating this future portfolio, BAM strives to:
- Create a competitive advantage on the basis of innovation, with recurring superior financial returns for its shareholders;
- Improve product and project quality for its clients;
- Improve the attractiveness of the Company on the job market, and develop and retain talent;
- Contribute to the innovative spirit of suppliers and subcontractors;
- Build a sustainable environment for society in general.
BAM’s differentiating capabilities and operating model are being sharpened, with a focus on leveraging the scale and skills of the Company and its employees, and by striking the right balance between what can be done on a global level or by a more local approach. This is being done with the aim of knowledge sharing, promoting the usage of the same set of tools, systems and definitions and of coming to a common language across the whole Group. The introduction of these global support functions will eventually lead to a more cost-effective organisation. The operating companies are improving their systems, knowledge and expertise for data-driven project selection, tendering and execution. At the same time, synergies within the Group are being leveraged in areas such as business controls, human resources, information management, digital construction, IT, strategic sourcing and partnerships and enhancing local entrepreneurship to serve clients.
Reaching BAM’s strategic goals will be supported by its four values.
Another fundamental part of BAM’s culture is its safety ambition of ‘zero accidents’, allowing everyone to return home safe and healthy every day, and receiving recognition as a leader in safety in the European construction sector.
For BAM, the pursuit of these strategic targets goes hand in hand with aiming to have a net positive impact on climate change, material resources and people by 2050. The Group’s approach to sustainability delivers benefits to clients and the communities in which it works.
Digital construction in daily practice
In BAM’s ambition to become a leader in digital construction, it has made good progress in 2019 see Strategy execution below. In daily practice, the Company’s digital construction approach focusses on six main areas. Below, a selection of concrete implementations in these areas.
- 3D point cloud scans used as a basis for 3D model designs.
- Integrated 3D modelling, with BIM software, combining the different disciplines such as steel, concrete, installations, reinforcement in one 3D model;
- Parametric design based on algorithmics, which offers engineers many realistic design possibilities;
- Generative design to quickly generate design alternatives with a focus on specific constraints;
- Certification to the international ISO 19650 standard see Environmental performance.
- Virtual reality: 3D visuals of the design for all stakeholders, and also used for safety training and safety walks;
- Gaming engines to simulate actual excavation plant movements and verify construction methodology;
- 4D (project scheduling) and 5D simulation (costs);
- Sustainability simulations to calculate the energy use of a building, waste management, etc.
- Off-site (modular) development and construction, DfMAD (design for manufacturing assembly and dissasembly);
- 3D concrete printing: modular building services skids for office buildings;
- Robots to apply bricks to modular façade elements for housing.
- Tablets/smartphone devices for quality and health & safety monitoring;
- Machine guidance & control technology to improve efficiency, safety and reduce CO2 emissions.
- Augmented reality, virtual reality, as-built BIM data to support service engineers in operating and maintaining projects (schools, hospitals, roads);
- Artificial intelligence: BAM proactively scans roads with satellites and scanning vehicles. The collected data enables to identify road problems easy and efficiently.
During all these phases, a lot of data is generated, which can be used for:
- Machine learning and artificial intelligence to learn and scale the business;
- Autodesk BIM 360 Construction IQ, a tool to support
Several external influences impacted the construction industry in 2019. Firstly, economies across BAM’s home markets showed a flattening of growth. Trade wars, uncertainty about the outcome of the Brexit process, declining consumer and industry confidence, made them hesitant. In the Netherlands, environmental rulings such as the PFAS- and PAS (nitrogen)-case, led to further uncertainty within the industry. Secondly, (governmental) sustainability agendas and mega trends, such as urbanisation and energy efficiency, are creating new areas for increased growth. Thirdly, digitalisation continued to have a transformative effect on the construction industry and the built environment. Against this background, the main focus of BAM’s strategy in 2019 remained to improve profitability and capital efficiency.
Doing things better
Thanks to the further sharpening of its tender stage gate procedure, BAM was even more selective in pursuing projects where it could differentiate on scale or knowledge. The tender stage gate is now being used to assess all major tenders at BAM. In 2019 BAM pulled out of 34 per cent of large tenders (projects regarded as highly complex and/or with a contract value > €45 million) because the risk/reward balance was considered not right. For example, BAM stepped out of the ViA15 project in the Netherlands. Together with branche organisation Bouwend Nederland, BAM is in talks with public clients in the Netherlands on getting a better risk division between contractor and client.
Of the tenders BAM pulled out of, 68 per cent was stopped at the early stages of the tender to prevent tender costs. Two thirds of this 68 per cent was stopped directly after assessing the tender documents and the other third after the assessment on a strategy to earn.
By using the tender stage gate procedure BAM is focussing on projects which benefit from the value of the Group and have an acceptable risk profile, such as the Metro Brisbane project, a joint effort of BAM PPP, BAM Nuttall, BAM International and Wayss & Freytag Ingenieurbau, a multi-year framework rail contract by BAM Nuttall, highschool projects including maintenance in Denmark by BAM Denmark and the Tergooi Hospital in the Netherlands, a joint effort of BAM Infra and BAM Bouw en Techniek.
BAM has started the roll out of its uniform project approach (UPA). This programme is designed to use best practices from BAM’s projects from all around the globe, resulting in a uniform way of working on large projects for the entire Company. In 2019, eight best practices were defined with the help of experts from all operating companies. These best practices, finalised during 2019, were rolled out across all operating companies. As of 1 January 2020 these best practices are mandatory on all new large projects. The goal of the UPA programme is to achieve better – more predictable and comparable – forecasts and results.
The tender stage gate process is being expanded into the execution of projects. With this extension, BAM builds on the existing stage gate procedure and aims to improve control and predictability. The various stage gates review if a tender or project is on track, and to check if projects are compliant with the uniform way of working and ready to move on to the next stage (see Risk management).
Doing better things
BAM remains selective in its strategic investments. It acquired a minority stake in MHI Ireland, which specialises in the construction of prefab modular housing. This investment supports BAM’s strategy to be at the forefront of new developments in the housing sector and supports BAM in Ireland as a key player in the Irish market.
BAM and Heijmans have formally applied for a permit for an asphalt plants joint venture. The objective of the proposed joint venture is to combine knowledge, expertise and investments in innovation in the area of asphalt production, to further increase the sustainability of the asphalt chain and to improve efficiency. The plan for the intended joint venture of asphalt plants was submitted to the ACM (the Dutch Consumers and Markets Authority) for approval in 2019. ACM has granted permission on 23 February 2020.
Personal advice on safer routes
The AllRide platform uses data from smart bicycle lights and an app to capture safe and unsafe spots in cycling routes, such as busy crossings or dangerous roundabouts. Based on the accumulated data, AllRide gives personal advice on safer routes. In a pilot project at schools in Mechelen, Bruges and Antwerp, AllRide aims to encourage pupils to use their bikes more and find safer routes to school. Participation is encouraged via gamification: the children win points and prizes by giving input and cycling more safely. Developed together with engineering consultancy AE, AllRide is an integrated solution that fits BAM’s smart mobility vision.
It generates relevant insights for smarter cities and communities.
Ultimately, AllRide aims to offer safe and dynamic infrastructure solutions, which can be offered to cities in every home country. AllRide is a result of BAM Belgium’s innovation programme ‘Future Forward’, launched in 2018 in search of innovative solutions. Of the 100+ generated ideas, seven were developed into concepts that cover challenges in mobility, energy and living.
Doing new things
In 2019, 35 innovation initiatives were managed within the innovation funnel. This funnel consists of a stage gate review process of business innovations by BAM's innovation community, based on the lean startup methodology.
In 2019, BAM continued the further development of 3D printing. Together with partner Saint Gobain (Weber Beamix), BAM opened a print facility in Eindhoven, the Netherlands. BAM uses this facility to accelerate the embracing of this technology and to bring viable projects and products to the market. This is done by digital construction: creating a fully digital 3D design which is uploaded to the printer. BAM has started the design and production of 3D-printed bridges. In addition, the facility has printed concrete formwork for the Driebergen-Zeist rail station project. The potential for the 3D concrete printing facility is acknowledged by clients, which has resulted in visits and information requests from, amongst others, the United Kingdom and Ireland.
BAM's innovation success has also been recognised in the extension of the collaboration with Dutch Analytics, a startup company focussing on AI (artificial intelligence) which BAM helped to start up in 2016. Together with Global Founders Capital, BAM invested €2 million to further develop its AI product Xenia; artificial intelligence algorithms which are put to use into operations, which they can help manage and monitor throughout their lifecycle. This helps to project upcoming maintenance tasks and to prolong the lifespan of assets, making them more efficient. This is done at both Dutch operating companies and was in 2019 also applied at BAM Nuttall in the United Kingdom.
Digital construction embedded in business operations
Digital construction is now embedded in BAM’s standard business operations, including the stage gate process and the overall operating model. It is no longer perceived as an optional activity, it is the default approach to the business, making it the new normal.
BAM continues to be acknowledged as a leader in digital construction. With the certification of BAM International in December 2019, all BAM operating companies are now BIM level 2 certified. All of BAM projects are using the same standards and best practices on digital construction. (see Environmental performance)
2019 saw the successful introduction of the AI system Construction IQ, which uses machine learning algorithms to support site engineers on a day-to-day basis with proactive risk management. The system uses large volumes of data from current and historic projects to analyse and prioritise risks on a real-time basis for BAM’s site engineers. BAM achieved a 20 per cent reduction in quality and safety issues as a result of better decision-making by using Construction IQ.
BAM’s projects involve the creation, alteration, control and retention of millions of different files across project teams. In 2019, BAM agreed on a single approach to information management using a common data environment (CDE). This enables BAM to significantly reduce the usage of paper and local storage of files. Currently, CDEs are daily practice in each operating company, with measurable benefits in terms of team collaboration, version management and paper reduction.
A new governance structure
In 2019 BAM introduced a new governance structure. With the new Executive Committee (since April 2019) and the business lines Construction and Property and Civil engineering - led by their respective COOs - there is more focus on projects and improving collaboration within the business lines (see Governance > Executive Committee).
Leveraging the One BAM scale and skills
To better leverage the scale and skills of BAM, the functional mandate of the supporting functions Finance, HR and IT is being reinforced. The transformation from different Finance, HR and IT organisations per operating company into One BAM Finance, One BAM HR and One BAM IT started in 2019. The preparations for the kick-off in 2020 of the transformation from different procurement organisations towards One BAM Procurement were completed in 2019.
With the safety campaign 'Your Safety is My Safety', BAM paid extra attention to conversations about safety, creating an open and honest environment to talk about feeling safe or unsafe. (see Social performance).
New leadership programmes
In 2019, BAM introduced two new leadership programmes: the Future Leadership programme for young talent and the Enterprise Leadership programme for business leaders, both across the Group. Just like existing project management programmes Olympus (for the top project managers) and Everest (for upcoming project managers) the new leadership programmes are aimed to get colleagues better acquainted with eachother, share knowledge and become better educated about BAM and the uniform way of working within the Group. An Advanced Leadership programme was developed for BAM's top management in 2019 and will start in 2020.
All these programmes reflect BAM’s values and accelerate learning and collaboration across all operating companies and functions to operate as One BAM.
Science-based CO2 reduction target
To support the Paris Agreement and climate change science, BAM developed and published its science-based CO2 reduction target (SBT) in 2019, which focusses on reducing BAM’s own emissions and helping other parties in the value chain to reduce their emissions (see Environmental performance).
New XblocPlus finds immediate application
XblocPlus is BAM’s further development of the successful Xbloc which has been applied on projects around the world over the past fifteen years. The new block makes breakwater construction even more reliable, faster and more efficient. Compared to other blocks in the market, XblocPlus requires significantly less concrete and fewer units to cover the same breakwater, which means a reduction in material quantities, time and effort, and in the carbon footprint of breakwater construction. A few months after its market introduction, XblocPlus was already selected for two high-profile projects.
Afsluitdijk: 75,000 units
On the iconic Afsluitdijk dam project in the Netherlands, XblocPlus is applied under the name Levvel blocks, after the Levvel consortium (BAM, Van Oord and Rebel) that is strengthening the dam on behalf of Rijkswaterstaat (part of the Dutch Ministry of Infrastructure and Water Management). A total of 75,000 units, each weighing around 6,500 kilograms, will be produced specially for the Afsluitdijk. In addition to being extremely strong and having a wave-retardant effect, XblocPlus is easy to install due to the similarity in shape to roof tiles. Last but not least, XblocPlus gives breakwaters and shore protections a very smooth and beautiful look.
Marina Porto Albania: combination of Xbloc and XblocPlus In Albania, both the Xbloc and the XblocPlus are being used in the Marina Porto Albania project. XblocPlus is applied on the straight and mildly curved breakwater sections, where units can be placed fast and efficiently in a rooftile pattern. The flexibility of the original Xbloc is used on the breakwater heads, where it provides protection on the sharply curved surface area.
Pieter Bakker, Manager Xbloc: ‘In both projects, clients have chosen a solution that provides an armour layer which is economical, stable and robust, while at the same time contributing to the aesthetic quality of the project through the beautiful placement pattern of the XblocPlus layer.’