Building the present, creating the future
It is BAM’s mission to create sustainable environments that enhance people’s lives by enabling the right people to capitalise on state-of-the-art knowledge, resources and digital technologies, providing solutions across the total construction life cycle for the Group’s clients and generating maximum value for its stakeholders.
It's BAM's vision that by 2020 the Group will be recognised as one of Europe’s leading sustainable and innovative construction businesses, with healthy profits and a strong balance sheet, active across the total construction life cycle in its European home markets and in selected growing economies around the world.
BAM’s vision and unique culture are underpinned by four values that guide the people of BAM: predictable performance, scalable learning, proactive ownership and open collaboration.
To realise the strategy Building the present, creating the future, BAM will position itself as leader in the digitalisation of the industry.
The construction industry has shown a limited increase in productivity over the last decades ¹.
¹ Mc Kinsey Global Institute, Reinventing Construction: a route to higher productivity, February 2017
5 - Values
Furthermore, several external influences impact the construction industry. Firstly, economies across our home markets are growing but are still vulnerable with global geopolitical uncertainties and unclarity about the outcome of the Brexit process. Secondly, sustainability and mega trends such as urbanisation and energy efficiency are creating new areas for increased growth.
Thirdly, digitalisation is increasingly transforming the construction industry and the built environment. Against this background, the main focus of BAM's strategy for 2016-2020 is to continue to
6 - Strategy 2016-2020
improve profitability and capital efficiency. The strategy is based on three pillars: focusing the project portfolio, shaping the business portfolio and creating the future portfolio. These are supported by a strong foundation consisting of two layers: culture and capabilities.
BAM’s vision is translated in 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, reduction of the real estate portfolio to less than €500 million and a reduction of working capital to less than -10 per cent, in order to have a net positive impact on the planet and reach an incident frequency of less than 3.5.
Focusing project portfolio – Doing Things Better
BAM is focusing the project portfolio (‘Doing Things Better’). Using either scale or differentiation to win projects will be the main driver of performance improvement at the operating companies.
In an environment that showed little productivity improvements historically, BAM is focusing its project portfolio ('Doing Things Better') and continuously analyses its existing project portfolio thoroughly. For winning projects the main drivers for performance improvement are either scale ('cost leadership') or differentiation through specialisation ('knowledge partnership'). In market segments characterised by price-led competition, BAM can achieve cost leadership through project bundling, industrialisation and/or digitalisation. For complex projects, BAM will use its knowhow, digital leadership, innovative drive and quality assurance as key differentiating factors. This focus leads to continuous scalable learning in relevant market segments with better propositions for our clients.
Examples of project focus areas include sustainable products like circular buildings and gravity-based foundations for offshore windfarms, hospitals, smart infrastructure and buildings and tunnel-based infrastructure. In its Property sector, BAM focuses on customer-oriented equity-light developments in main urban areas and further integration of activities with construction to unlock synergies. PPP will continue to target DBFMO (design, build, finance, maintain, operate) contracts in home markets where payments are based on availability of the asset, excluding volume-related risks.
In 2017, BAM acquired new projects mainly in market segments where it is distinguished on the basis of scale or knowledge. As a result, the quality of BAM's order book improved further, reflecting the choices for the market segments where the company could best be active. Some good examples of project awards during 2017 reflecting these choices are The Children’s Hospital (Dublin), Museum of the Future (Dubai), the redevelopment of the former Bijlmer prison facility (Amsterdam)and the modernisation of UK research facilities in the Antarctic. Challenges occurring in the 4th quarter on the IJmuiden Sea Lock project stress the need to continuously improve our processes.
BAM’s good progress in focusing and de-risking its projects portfolio in 2017 is built on a rigorous data-driven decision process. During 2017 progression was made with further tightening of its tendering stage gate process and conducting more peer reviews and operational audits. Peer reviews conducted by experienced colleagues ensure that BAM’s global knowledge is made available to generate the best propositions for our customers.
In 2017 BAM also completed its Project Management Information tool that brings all financial data on projects together and helps colleagues around the globe making the best decisions. The information from this tool will continue to be combined with other data to further improve data based decision making, thus improving our projects portfolio. These tools along with specific key performance indicators support BAM in delivering predictable performance to all of its stakeholders.
Shaping business portfolio – Doing Better Things
BAM is shaping the business portfolio (‘Doing Better Things’) by rationalising its propositions in selected market segments and developing new solutions for clients.
BAM is shaping the business portfolio (‘Doing Better Things’) by supporting the operating companies in developing new propositions in the home markets as extensions of projects along the lifecycle, and leveraging specialisms in international markets. These initiatives will be driven by investments in people and systems and developing partnerships. At the same time, BAM will continue to exit from operational activities not offering sufficient opportunities to use scale or distinctiveness as critical success factors. BAM will continue to reduce its portfolio of property assets.
In 2017, BAM launched a new investment review process and explored various options to strengthen its position in supporting its customers in the product life cycle in facility management and mechanical and electrical engineering. BAM remains very selective and has not made any investments. BAM will continue to build a portfolio of investment opportunities that match its criteria.
Creating future portfolio – Doing New Things
BAM is creating its future portfolio by integrating digital construction solutions in its construction process and by accelerating innovative solutions for its clients (both digital and non-digital)
BAM creates its future portfolio ('Doing New Things') by supplying construction services using a digital construction platform and by accelerating innovative solutions generated within BAM. BAM wants to be a leader in the field of digitisation through advanced design, project implementation and visualisation tools to meet the changing needs of customers. BAM will facilitate 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 for:
- Creating competitive advantage on the basis of innovation, and recurring superior financial returns for its shareholders;
- Improving product and project quality for its clients;
- Improving the attractiveness of the company on the job market and developing and retaining talent;
- Contributing to innovation at its suppliers and subcontractors;
- Building a sustainable environment for society in general.
To become the leader in digital construction, BAM structures its innovation with a clear focus on tangible results, embracing and driving scalable learning and open collaboration. Moreover, BAM creates a lively ecosystem for co-creation of innovative solutions. In 2017, a community for digital construction was set up, which represents digital construction experts from all operating companies within the Group. This community drives the digitalisation of the construction process within BAM.
BAM distinguishes innovation into two streams: business (or ‘incremental’) innovation and transformational innovation.
In 2017, BAM continued with increasing innovations in its innovation funnel process. This process consists of a stage gate review process of business innovations in a process based on
the Lean start up methodology that includes the following five phases:
5. Scale up.
In 2017 eighteen innovation initiatives were managed within this innovation funnel. These eighteen initiatives progressed one or more phases within the process. BAM clusters these initiatives around value spaces like modular design and construction, end-to-end building solutions, smart solutions including new materials and digital construction.
Some examples of innovation in BAM’s innovation funnel are the first 3D-printed bridge in Gemert, the Netherlands, the gravity-based foundations for Blyth Offshore Demonstrator wind farm in the northeast of England, support of the Hyperloop team and the Circular Building Platform, both in the Netherlands. These innovations show the involvement of BAM and its investments in technologies at an early stage that lead to digital and sustainable solutions that can disrupt the construction sector.
After BAM's stronger focus on innovation from 2016 onwards, the Group noticed in 2017 that partners find BAM easier to collaborate in innovation projects. BAM has further strengthened and improved partnerships, including startup platforms, to grow its innovation ecosystem. For passionate explorers across BAM, a knowledge-sharing platform was launched to facilitate learning and collaboration across the Group and accelerate the delivery to the market of innovative solutions and services.
In our ambition to become the leader in digital construction, BAM has made good progress in 2017. We have been awarded international prizes in the area of digital construction, like the first-place winner Synchro’s digital construction awards with the 30 Broadwick Street project in London; first-place winner in buildingSMART International’s award for the Frankfurt Höchst hospital project and first-place winner in Autodesk’s AEC excellence awards with the Museum of the Future project in Dubai.
The execution of our digital construction programme is well on track and successes have been reported, such as the BIM Level 2 Kitemark certification by BSI for BAM Infra. With that, more than fifty per cent of our operations (UK, Ireland and BAM Infra) are now certified towards BIM Level 2. The remaining part of the operations will be certified in 2018. Other successes are the development of maturity measurement dashboards, development of training and e-learning programs, communication on BAM’s website about digital construction and the specific growth of maturity in our projects around the globe.
The use of 3D and 4D (time) BIM is becoming standard practice in tenders and projects and the developments in increasing the use of 5D (cost) and 6D (quality control and handover) are on track. We are seeing professional use of digital construction on projects such as the V&A Museum of Design in Dundee, Scotland; the Museum of the Future in Dubai; the gravity-based foundations for Blyth Offshore; the Driebergen-Zeist railway station in the Netherlands; the Children's Hospital in Dublin in Ireland. And developments in the area of VR/AR, such as the development and use of an augmented reality app for BAM FM, which is being used in projects like Zaans Medisch Centrum in the Netherlands, are very promising.
BAM’s startup named b.Home continued its development of the digital platform that will bring together the full construction value chain (including users of the projects to be build). In 2017 the startup launched its first minimum viable product for the platform and executed the first transactions over the platform to validate its value generation assumptions.
BAM’s differentiating capabilities and operating model are being sharpened, with a focus on employee training and development and setting minimum requirements. The operating companies are improving their systems, knowledge and expertise for data-driven project selection, tendering and execution. At the same time, Group synergies are being leveraged in areas such as business controls, information management, digital construction, strategic sourcing and partnerships, enhancing local entrepreneurship to serve clients. The Group has a blueprint target-operating model around strategic enablers and gradually aligns core processes in accordance with these enablers.
The business planning and performance review process is integrated with the strategic planning process for all operating companies and business functions, ensuring full alignment of business planning initiatives across the group. In 2017, BAM's operating companies agreed to harmonise and coordinate the tools used to record their sales funnels in order to learn from each other and to facilitate collaboration within the Group.
Operating companies strengthened their collaboration in many fields to optimise the offering for BAM’s clients. This resulted in the awarding of several prestigious projects such as the Children's Hospital in Dublin, the Museum of the Future in Dubai and a new sealock in Terneuzen and the redevelopment of the former Bijlmerbajes prison in the suburb of Amsterdam.
BAM’s unique culture
Reaching BAM’s strategic goals will be supported by its four values:
1. Scalable learning;
2. Predictable performance;
3. Open collaboration;
4. Proactive ownership.
Another fundamental part of BAM's unique culture is its safety ambition of 'zero accidents', allowing everyone to go home healthy every day, and recognition as a leader in safety in the European construction sector.
CSR (corporate social responsibility) is an important aspect of BAM’s sustainability journey. CSR best describes the impact BAM will have as a business on the environment and its social responsibility towards both internal and external stakeholders.
In 2017 all operating companies and corporate functions adapted the four values. BAM put a lot of emphasis on these values and the behaviour that follows these values. Among other initiatives a leadership meeting in autumn was dedicated to BAM’s values and related behaviour. The Group organised eleven leadership dialogues between BAM's Executive Board and all business units and staff functions.
Another step to grow on BAM’s unique culture in 2017 was the formation of so-called communities. These communities are created along many functions and themes. The communities are formed by representatives from all operating companies and are chaired by a community lead. The activities of these communities reflect BAM’s values and accelerate learning and collaboration across the Group. Fourty BAM colleagues from across the Group completed the Olympus project managers development program.
BAM's sustainability performance haveled to several third-party recognitions , The company was awarded a leadership score on the CDP ranking and won the prestigious Dutch Crystal Prize as part of the Transparency Benchmark (see section 3.3 Environmental Performance). BAM recognises more and more market and legislative drivers for more solution-oriented, innovative and collaborative projects. A good example is the construction of the circular CIRCL pavillion for ABN AMRO.
Alignment BAM’s strategy with Sustainable Development Goals
BAM values alignment of its strategy with regard to the UN-adopted Sustainable Development Goals (SDGs): 17 goals that serve as a roadmap for good growth by 2030. In 2016 BAM evaluated the key areas of alignment of the goals with its people and planet strategy and the relevant stakeholder material themes (see graph 8).
BAM’s business potentially impacts all of the SDGs. However, some have more direct influence within current markets, given the nature of its business. BAM has subsequently considered these global issues in relation to its 2020 strategy and has identified key focus areas where progress will be monitored going forward. BAM therefore strives to make a positive contribution to six SDGs in particular, because these best fit in with its strategy.
BAM has a seat in the United Nations Environmental Programme steering committee for Buildings and Construction, in order to move forward the SDG’s in construction.
7 - Targets 2020
8 - Sustainable Development Goals - key focus areas and alignment with 2050 'net positive' strategy (see more at page 30)