At Rebel, we want make a positive impact on the world. Curious about how and why we do that? Read all about it in our new, honest-to-goodness book – it even has an ISBN! – Challenge Your Professional Life, available now at bol.com. We put together this book to inspire others to think about their impact on the world. But for us, it was also a reason to take a critical look at our own work.
Part of our work takes place in the construction industry, where we aim to promote efficient, high-quality, and increasingly sustainable infrastructure. Because we can only do so much as consultants, we are now teaming up with the sector and getting involved on the nuts-and-bolts construction side as well. And Rebel’s impact in the sector hasn’t gone unnoticed: in 2018, we came in at number 8 in Rijkswaterstaat’s top-10 list of highest-scoring construction companies (“Dutch Infrastructure Market back in Dutch Hands,” Cobouw, March 12, 2019). In this article, we reflect on this aspect of our work.
Changing a conservative sector
Overall, it is safe to say that the construction industry is fairly conservative. And in some ways, that is fine – the use of tried-and-true building methods for all kinds of different constructions ensures safety while reducing costs. But that same conservative attitude also means that little attention is paid to things like innovation, diversity, and societal developments. There is an enormous potential to make the civil engineering sector more productive and socially relevant. At the moment, Rijkswaterstaat is taking the lead in these developments, but we believe it’s high time for the sector to seize the initiative and chart its own course.
In this article, we argue that it is time for the construction industry to strive for full maturity. Because as it stands, the sector is still overly dependent on Rijkswaterstaat as a major client. Adopting a more pro-active attitude could unlock a great deal of potential, a process Rebel is contributing to by highlighting the opportunities we see. And since we apparently are a construction company ourselves – according to Cobouw, anyway – we cannot discuss the construction sector without going into our own hands-on efforts in helping the sector grow. It is not easy to seize every opportunity that presents itself. Still, if we want to make a real impact, that is exactly what we need to do. It’s time to get our hands dirty!
Our diagnosis: the construction industry needs to grow up
Let’s talk about the wait-and-see attitude among construction companies. Rijkswaterstaat recently presented a clear vision for the future of civil engineering in the Netherlands, setting out the challenges facing the sector in a report titled “The Road Ahead for Rijkswaterstaat: Perspective on the Challenges and Possibilities for Improvement in the Civil Engineering Sector” (Rijkswaterstaat, May 2019). This spring, these challenges were translated into a concrete plan of action (“Towards a Vital Infrastructure Sector” (Rijkswaterstaat, March 2020).
The market was involved in the development of both the vision and the strategy, and there are plenty of opportunities for the sector to enter into dialogue with Rijkswaterstaat: from project-based market consultations and feedback sessions to sector-wide meetings. We have also found that Rijkswaterstaat welcomes unsolicited advice.
But despite these efforts on the part of the Dutch government, the construction industry remains largely uncooperative. Like a surly teenager who feels that he is being structurally ignored by his parents while at the same time constantly questioning their authority – without looking at his own behavior. Are we being too critical? Let us take a look at a recent example: the A9 Badhoevedorp-Holendrecht tender. A contract for a large, complex project in the heart of Amstelveen, involving a below-ground highway section, which was eventually awarded to a Spanish construction company. The Dutch sector expressed its indignance about the award in no uncertain terms (“Infrastructure Sector Points to A9 Shambles: ‘Spanish Construction Company Is Spoiling the Market,’” Cobouw, June 25, 2020).
“(…) Rijkswaterstaat is offering billion-euro projects on the European market like they’re handing out candy – financed by the Dutch tax payer”;
“If they go on like this, they’ll end up destroying the entire market”; and, “Things start going wrong as early as the pre-qualification round (…). Anyone can get admitted, regardless of whether or not you have experience with Dutch infrastructure projects.”
This never happens the other way around, the sector argues:
“In countries like Spain, Italy, and France, it’s much more difficult for outsiders to break into the market. Dutch companies don’t stand a chance there.”
Harsh words. But the government is doing exactly what it should be doing: following European tender law – why would the sector have a problem with that? And angrily pointing the finger at other countries that don’t play by the rules is classic whataboutism. The Dutch government is acting in accordance with its conviction that the current tendering system provides value for money across the board. And rightly so.
Here’s another example of the sector’s juvenile attitude, from the same article: “CEOs, hydraulic engineers, and project managers feel undervalued and pushed aside by this powerful purchasing organization we call Rijkswaterstaat (…). Whenever we do express criticism, we are met with resistance. Before you know it, you’ve blown your chances of landing any future projects.’” This reaction is also typical. Rijkswaterstaat is a monopolist, and the poor builders have no choice but to dance to its tune.
Our advice to the Dutch construction industry is simple: stop playing the victim and start taking responsibility. Here are a few concrete opportunities.
Opportunity 1. Formulate your own raison d’être
As far as we’re concerned, the added value of the Dutch construction industry does not lie in the execution of simple, repetitive projects. All too often, building things seems like a goal in and of itself. That’s why we’re calling on the sector to formulate more clearly why they do what they do. When you see your own work as a means to achieving a higher goal, you become much more flexible, and you can even preempt the changing demands of Rijkswaterstaat.
Builders: think about your raison d’être – why do you exist? What do you want to contribute to the Netherlands? What part can your company play in tackling major challenges like climate change, the biodiversity crisis, and strategic environmental management for local residents? How can you anticipate changing mobility needs? Formulate your own vision, strategy, and ambitions. How will your contribution to a healthy civil engineering sector benefit the Netherlands? Because the responsibility cannot lie solely with the government.
That is all well and good, you might say, but what role does Rebel play in all this? When you have an outspoken opinion about the future of the sector, it is only fair that you should take responsibility yourself too. That is why we not only advise construction companies – we also invest. And we always stay involved during the execution phase of our projects, optimizing wherever we can. For our A16 project in Rotterdam, this means we’re heading up a special public-private optimization team: Team EMVU, short for Economisch Meest Voordelige Uitvoering (Most Economically Advantageous Execution). It’s a great example of using your skills in a different way than you’re used to: we’re no longer just coming up with project-winning plans, but also realizing added value after the award.
Opportunity 2. Define your desired risk distribution
A great deal of the criticism targeted at Rijkswaterstaat is about the distribution of risk between the government and the market. We are not denying that there are steps to be taken in this regard, but we need to put the “this is not fair” stage behind us. Be clear about what it is that you do want: what would your ideal risk distribution look like in concrete terms? And when we say concrete, we mean it: everyone’s tired of having the same old discussion about principles. Have your risk team draw up your ideal contract – not acting in response to a call for tenders but to create clarity for yourself. Be proactive instead of reactive. Let Rijkswaterstaat know where you stand.
What is our contribution as a sector? In response to the government’s report about the industry’s challenges and its plan of action for a vital infrastructure sector, we sent Rijkswaterstaat our own concrete proposals for a healthy risk distribution, unsolicited. And Rijkswaterstaat – miraculously – didn’t get angry or exclude us from future tenders. In fact, many of our recommendations ended up being included in the plan of action.
Opportunity 3. Unlock your potential by focusing less on failure costs and risks
We meet a lot of smart math wizzes and draftsmen in the contracting business. But we also see that their potential is not always being used as well as it could be, resulting in a less-than-optimal pace of innovation. It seems as if people are afraid to take risks – like they are waiting for cut-and-dry assignments and instructions before getting to work. This has to do with a sector-wide culture in which errors are poorly tolerated. Which is understandable enough, given the fact that failure costs and risks eat away at the industry’s profit margins, which are wafer-thin as it is. The profit margins argument is also used to argue that investments should always pay themselves back in the short term. If a specific innovation doesn’t immediately pay off by helping win a tender or if it can’t be recouped during the project’s execution phase, the idea will quickly disappear in the back of a drawer. Better luck next time.
It’s these kinds of mechanisms that cause too many innovative initiatives to die on the vine. Which is a shame, because we could be making real headway when it comes to digitization, for instance. We believe that a culture that permits failure would benefit the entire industry. But how do you break this vicious cycle of thin margins leading to too much focus on costs, leading to a lack of innovation, which in turn leads back to thin margins? It is a tall order, for sure.
What is Rebel doing to help break this cycle? We want to take construction projects to the next level. This means that we will sometimes invest in tenders we might not win and partnerships with below-optimal cost efficiency, which may not generate the highest-possible returns. In these cases, we are consciously taking more risk, because we believe that the potential impact if we do succeed is worth it. Sometimes that means taking a leap of faith by diving headfirst into a new sector or joining forces with an underdog. In the long term, this strategy always pays off – and then some: it helps us forge new relationships and enter unfamiliar markets, making our work more varied and keeping our team happy and engaged. The Rebel Automated Shuttles are another great example. Together with several partners, this initiative led to the development of self-driving zero-emission shuttle buses as a last-mile solution for public transport services. Several of these shuttles are now in active use, including on the ESA ESTEC site in Noordwijk and at Haga Hospital in The Hague. There were no guarantees that we would be successful before the start of this project. But we felt that it was necessary, so we did it.
Opportunity 4. Focus on diversity
It’s no secret that the construction industry is fairly homogenous. In August 2019, the departing editor-in-chief of Cobouw, in a top-10 list of things he’d learned in the sector (“What I Learned Working in the Construction Industry,” Cobouw, August 14, 2019), succinctly summarized the situation as follows:
“You’re afraid of women.”
The few women that do work in the sector are often mistaken for secretaries. This is something we’ve experienced ourselves, and it even happens at the executive level (https://www.evajinek.nl/onderwerpen/artikel/5159906/bouw-vrouwen-mannen-steigerbouw-dura-vermeer-directie). From our experience, we also know that even some of the younger men in the industry find the culture to be so abrasively masculine and counterproductive that they end up dropping out and looking for work elsewhere. The result? More of the same. Especially at the highest level of the sector. So, take diversity seriously and stop hiring carbon copies of yourself – introducing new, dissenting voices will only make your company stronger in the long run. And these new voices do not necessarily have to be women. Men with a different style of working from what you are used to can also offer a fresh perspective.
But in all honesty, we do not exactly hold the moral high ground when it comes to diversity: with six women and only one man, our own tender team is pretty homogenous. Because apparently, we also find it easier to hire people who look like us. A year and a half ago, we added a second man to our team, but he has already decided to move on. He says it is not us… We like to joke sometimes that we just can’t find any male candidates who meet our stringent quality standards, but obviously that’s not true. We just have to look harder. (Incidentally: if you know a good tender strategist, preferably male, let us know!)
Want to continue the conversation?
The coronavirus crisis has had an enormous impact on the construction industry, but we believe that seizing the opportunities listed above can help the sector make a strong comeback post-Covid. We know we’ve been harsh in some of our criticism in this article – no one likes to be accused of acting like a moody teenager – but we also know that this industry has the grit and resilience needed to make the necessary changes. Our intention is to build a new construction sector. Would you like to continue this conversation and share your thoughts on our observations? Do you have a fresh take that might be useful to us? Give us a call and drop by for a cup of coffee. Our old boys’ club is wide open!