Building the present, creating the future
To realise Building the present, creating the future, 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 (figure 4).
In 2018 external influences impacted the construction industry. Firstly, economies across BAM’s home markets are growing but global geopolitical uncertainties, (looming) trade wars and uncertainty about the outcome of the Brexit process makes them vulnerable and hesitant. Secondly, (governmental) sustainability agendas and mega trends such as urbanisation and energy efficiency are creating new areas for increased growth. Thirdly, digitalisation is rapidly 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 improve profitability and capital efficiency.
4 - Strategy 2016-2020
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, reduction of the real estate portfolio to less than €500 million and a reduction of working capital to less than -10 per cent, to have a net positive impact (2050) and reach an incident frequency of less than 3.5 (figure 7).
Focusing project portfolio
Doing things better
BAM is focusing the project portfolio. Using either scale or differentiation to win projects will be the main driver of performance improvement at the operating companies.
By constantly analysing the current project portfolio, BAM keeps focus on its project portfolio (‘doing things better’). The main drivers for performance improvement are either scale (‘cost leadership’) or skills (‘knowledge partnership’). In market segments where BAM is in price-led competition, BAM achieves cost leadership through project bundling, industrialisation and/or digitalisation. For complex projects, BAM makes use of its knowhow, digital leadership, innovative drive and quality assurance as key differentiating factors. This focus leads to scalable learning in relevant market segments with better propositions for the Group’s clients.
Shaping business portfolio
Doing better things
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 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.
Creating 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 its 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. BAM 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 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.
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 and enhancing local entrepreneurship to serve clients.
BAM’s unique culture
Reaching BAM’s strategic goals will be supported by its four values:
- Scalable learning;
- Predictable performance;
- Open collaboration;
- Proactive ownership.
5 - BAM Values
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. BAM also aims 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. It is underpinned by a strong focus on innovation and solution-oriented approach to delivering BAM’s projects and exceed expectations.
Doing things better
In 2018, BAM was more selective in tendering and focused only on those projects where it could differentiate on scale or knowledge. As a result the quality of BAM’s order book improved further in those market segments where BAM can leverage its unique capabilities. Examples of project awards during 2018 reflecting these choices are the reinforcement of the iconic Afsluitdijk dam (the Netherlands), construction of the Edge Grand Central building (Berlin, Germany), the expansion of London City Airport (United Kingdom) and a joint effort of Civil engineering and Construction and Property led to the winning of three large maintenance plots at Schiphol Airport. During tenders, peer reviews were conducted by subject matter experts to ensure that BAM’s global knowledge is unlocked to generate the best propositions for the Group’s clients.
BAM’s Project Management Information tool has now been fully operational for one year. This tool unlocks all financial data on projects in one place and helps colleagues make the best decisions. It is used to analyse project performance and to enable data driven decision making on projects and tenders. With this information BAM can make timely adjustments to retain or improve margins.
Accelerate strategy execution
BAM’s financial, social and sustainable performance illustrate the Group’s progress in executing the strategy. Key to accelerating the further execution of the strategic agenda is One BAM – a way of working that is aimed at getting the best out of the Group by unleashing BAM’s collective knowledge and experience.
To further accelerate the strategic agenda, in 2018 BAM started a program to benefit from scale and skills. BAM developed a Uniform Project Approach (UPA) based on learnings and best practices of BAM’s projects around the globe. This results in one uniform way of working on projects for the entire company. With UPA BAM aims to provide benefits for all stakeholders. It makes for a common (project) language, easier knowledge sharing and increased employee engagement. The final goal of UPA is to achieve better – more predictable and comparable – forecasts and results. In 2019 the roll out of UPA will commence in all operating companies.
One BAM also includes changes to the governance and organisational (top) structure. Changes will be implemented in early 2019. To ensure knowledge and common approaches are shared across the Group, support functions will be reinforced with a stronger mandate at Group level. This new way of working is kicking off in Finance, HR and IT, and will eventually extend to other functions.
Doing better things
BAM remains selective in its investments. In 2018, It acquired a company called Tidal Bridge which directly supports BAM’s international division to remain a leader in international nearshore construction.
BAM and Heijmans are investigating the possibilities to transfer their current asphalt plants in the Netherlands to a new joint asphalt company. By establishing the new asphalt company, the knowledge, expertise and investments in innovation of both companies can be combined.
Accelerate strategy execution
The Project Management Information tool is used to perform additional strategic analysis on operational activities. This tool enables BAM to make objective analysis on project performance, business units and operating companies. Combined with data from the tendering stage gate procedure this enables improved assessments on operational activities. BAM will continue to build a portfolio of investment opportunities that match its criteria.
Doing new things
In 2018, twenty-four innovation initiatives were managed within the innovation funnel. The innovation funnel consists of a stage gate review process of business innovations by BAM’s innovation community based on the Lean startup methodology.
Some examples in BAM’s innovation funnel are: the modular development and production of building installations; robotics to lay brick slips on facade elements and deliver pre-engineered concrete building blocks that can be 3D printed and assembled; and a co-development with startup HARDT to showcase technology and enable a high-speed test facility for the hyperloop.
BAM’s startup named b.Home continued its development of the platform to connect suppliers, assistant project managers, foremen and sub-contractors in their collaboration around renovation projects. In 2018 the startup had its first paying customers and received positive feedback from its users.
In BAM’s ambition to become a leader in digital construction, it has made good progress in 2018. BAM is externally acknowledged as leader in digital construction and have been awarded international prizes in the area of digital construction, like the award for Global Leadership in Digital Construction from GEO|Design+BIM. BAM has also featured in many international reports on digital construction, such as Forbes Magazine and EY’s 2018 Global Digital Survey.
The execution of the digital construction programme is well on track and successes have been reported, such as the BIM Level 2 certifications for BAM Bouw en Vastgoed, BAM Deutschland, BAM Belgium and Wayss & Freytag Ingenieurbau. With that, 95 per cent of BAM’s operations are now certified towards BIM Level 2. BAM International aims to be certified by Q3-2019, which will lead to the first internationally operating BIM Level 2 (ISO 19650) certified construction company. Other successes are the development of maturity measurement dashboards, Return of investment (ROI) workshops, development of training and e-learning programs and the specific growth of maturity in BAM’s projects around the globe.
Accelerate strategy execution
In 2018, BAM put an additional focus on Uniform Business Controlling (UBC), aimed to further strengthen accurate management and operational information. This will result in one dashboard bundling all performance information on projects to manageable indicators on detail levels that fit its purpose (from project management to OpCo management to Executive Board). UBC gives comparable and real-time accessible data for better forward looking and uniform reporting. The dashboard makes it possible for management to focus where it is most needed to improve performance and forecasts. In 2018 the beta version of the UBC dashboard is tested at Wayss & Freytag. Further global roll-out will take place in 2019.
BAM’s unique culture
One BAM global safety: Your Safety is My Safety
BAM launched a global safety campaign Your Safety is My Safety, within all operating companies.
One BAM Panel
In 2018 BAM upscaled its HR Analytics tool BAM Panel company-wide. BAM introduced the Net Engagement Score (NES) as a single score indicator per OpCo which can easily be used for benchmarking. In this way BAM Panel gives direct insight in employee engagement and helps BAM to improve on segments as indicated by its employees to further improve as employer.
Sharing skills and knowledge through communities
In 2016 BAM created communities along functions and themes. The communities are formed by representatives from all operating companies and are chaired by a community lead. In 2018 all communities were in full force. The activities of these communities reflect BAM’s values and accelerate learning and collaboration across all operating companies to operate as One BAM.
In 2018 BAM set up a Smart City platform. Representatives from different operating companies come together to share knowledge and initiatives regarding the concept of Smart Cities, with the goal to develop products and solutions for cities of the future.
BAM’s sustainability performance has led to several third-party recognitions. The company was awarded a leadership score (A-) on the CDP climate ranking. BAM recognises more and more market and legislative drivers for solution-oriented, innovative and collaborative projects.