Bam primed for energy opportunities

Bam COO John Wilkinson talks to CN about how the firm is set to capitalise on the government’s recently announced £775bn infrastructure pipeline

The government’s long-awaited February publication of a pipeline of UK infrastructure projects included £775bn of planned investment up to 2032/33, with the energy sector expected to receive the largest individual share at £316bn.

This has caught the eye of John Wilkinson, who has been Bam UK’s chief operating officer since January 2022. “I’d say we’re in a pretty strong place to capitalise on that,” he told Construction News.

“How to decarbonise an asset is going to influence how capital is leveraged”

John Wilkinson, Bam UK

“Improving self-sufficiency in energy is massively important for the UK and for other countries in Europe – and you can couple that with the clear need to decarbonise.”

Bam UK has worked with energy multinational SSE on high-voltage electricity substations, especially in Scotland where its UK engineering arm Bam Nuttall and Hitachi were last July named as the preferred suppliers for a £2bn undersea connection between Peterhead in Aberdeenshire and Drax in North Yorkshire. Wilkinson said he sees “a big pipeline” of opportunities to collaborate with major technical equipment suppliers such as Siemens Energy and Hitachi.

“That energy market is massive,” he said. “SSE is looking at different types of energy generation, for example pumped hydro [hydroelectric energy storage]. And there’s the planned Great Grid Upgrade from the National Grid.”

Bam Nuttall is at the preconstruction stage on the Peterhead-Drax job, and Wilkinson expects it to move into the execution phase later this year.

Nuclear energy programmes also feature prominently in the energy pipeline. Bam is involved in Hinkley Point C and Wilkinson noted £1.3bn of government investment in preconstruction of Sizewell C as another area of opportunity.

Bam Nuttall is also part of a consortium led by Rolls-Royce to develop small modular reactors. “It’s clearly an area that government wants to support with expenditure,” Wilkinson said. “We’ve still got to get through the competition to preferred bidder status.”

He added that there is plenty of scope in the nuclear sector for greater efficiency through replicable projects “where we’re not reinventing the wheel every single time”.

New strategy

In January 2023, Dutch parent company Royal Bam announced a new sustainability strategy enshrining decarbonisation, circularity, climate adaptation, biodiversity, health, social value, and safety and inclusion.

Targets such as a 75 per cent reduction in construction and office waste by 2030 compared with 2015, and women in 30 per cent of senior management roles by 2030, are mirrored by Royal Bam’s UK businesses — but Wilkinson is overseeing a more ambitious objective to reach net zero by 2026.

It is not enough just to provide an end-product safely and reliably, Wilkinson said. “Sustainability is a big piece of our three-year strategy cycle,” he said, adding he is “very fixated” on working with clients who can deliver “net biodiversity-positive” impacts.

He said it is easy to decarbonise on new-build brownfield or greenfield projects, although he added: “But actually, if you look across the whole built environment, there’s a lot of retrofitting required across a whole host of assets.

“And I think that’s only going to accelerate. The investor market is reacting very strongly around net-zero targets, so how to decarbonise an asset is going to influence how capital is leveraged.”

Wilkinson previously dismissed offsetting as a “red herring”, saying two years ago: “We have a serious job on our hands to get that down and to do so fast… Vague data is useless, so science-based, transparent information and a healthy dose of honesty are part of the medicine.”

Tough conditions

The new infrastructure pipeline includes £234bn for transport projects. Wilkinson said that the HS2 high-speed rail programme has provided “solid revenue” – Bam Nuttall topped the Network Rail contractor spending table for the year ending 30 April 2023 with deals worth £321.6m.

Bam was largely unaffected by the cancellation of HS2 phase two, and Wilkinson predicts that “money will flow through” for regional rail projects. But the roadbuilding sector has been problematic. Last July, client National Highways announced that Bam Nuttall was leaving the £200m project to link the M6 and M54 motorways. Wilkinson cited difficulties in arriving at a suitable contracting model that would have allowed the firm “to deliver that certainty to that client”.

It hasn’t been plain sailing for Bam’s UK construction arm, either. Unaudited financial figures from Royal Bam, released in mid-February, showed revenue of €1.05bn (£900m) for Bam Construction in 2023 compared with €1.06bn in 2022, while pre-tax (EBITDA) earnings slumped from €35.6m in 2022 to a loss of €14.8m.

“Cost has been at the forefront of our mind – we can’t hide from that – and it’s been very difficult to predict the impact of inflation, very difficult to predict the supply of materials, particularly with the volatility in the world at this moment in time,” Wilkinson said. “So I think we as an organisation have become more risk aware.”

Amid challenging market conditions, a Bam spokesperson admitted to CN in March that “a small number of redundancies” had been made. Speaking before then, Wilkinson said Bam was “constantly looking at how we can do better”, for example by recruiting individuals with non-traditional skillsets such as gamers, data specialists and digital engineers.

This context informs his appetite for infrastructure projects. “The good news, from the industry’s perspective, is the predictability that the pipeline announcement brings.

“That predictability really drives our investment and decisions on where to allocate capital. It’s also going to help us bring in the next generation of construction workers and engineers.”

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