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“Unprecedented” supply chain demand to increase construction project costs

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Following recent comments from the Construction Employers Federation that an increase in costs could “destabilise” the sector, Skope associate Oliver McGuckin outlines why this could be the case.

“Basically, unprecedented demand is being placed on supply chains as a result of the pandemic and the continued uncertainty that still stands around trading with the EU,” he said. 

Skope_Oliver McGuckin
Skope_Oliver McGuckin

“We are seeing evidence of this right now on live projects. Contractors are feeling the pinch from price increases and are approaching clients to assist with the recovery of these increased costs, even if there are no fluctuation clauses in the contracts.

“So as a result of ongoing volatility in the market, some contractors are now seeking to use alternative products to mitigate uncertainty around programme delays and increased costs and are looking at value engineering proposals to offset increased costs.

“But only so much of this can be done and the opportunity and scope to do this will vary from project to project. Contractors may now start to insist that fluctuation clauses are written into contracts to make provision for such costs to be recovered,” Oliver explained.

With many raw material costs having risen by around 15% – and some having risen by up to 50% – it stands to reason why sub–contractors are now holding sway in the market. This is starting to cause a ripple effect on the wider industry.

“A shorter supply of building materials is resulting in longer lead–in times for projects, extended programmes and commercial challenges in terms of project viability. It’s a simple matter of fact.

“Coupling this with the uncertainty in Construction Estimating and Programming, clients need to be taking this into consideration when preparing their development appraisals. 

“We recommend that clients look closely at their contingency budgets to make informed decisions regarding how much risk the project can absorb in terms of material price increases.

“At Skope, ensuring value for money is a core part of our service. We are adept at managing the fine balance between the client’s requirements, stakeholders’ priorities and the development budget to ensure the project will continue to be delivered to the required quality within budget and on time.”

Making a splash at Belfast’s historic Victorian era Templemore Baths

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Forming part of Belfast City Council’s £105 million Leisure Transformation Programme for the city, the redevelopment of Templemore Baths will see the renovation of a building that is steeped in history.

With the baths dating back to 1893, the project will not only see the restoration of the site’s original features but also its transformation into a commercially sustainable business with a new 25 metre swimming pool, a state–of–the–art gym and spa facilities.

The Heritage Lottery Fund will provide a £5 million grant towards the £17 million project’s extensive restoration and construction of the new leisure facility.

There will be further provision for the building’s heritage with learning and engagement information centring on the history of the baths and surrounding area being a key focal point.

Skope_Templemore Baths sign
Skope_Templemore Baths sign
 
The Skope team, with the project spearheaded by Jenny Johnston, is providing cost management services on behalf of Belfast City Council.

“With considerable experience and expertise working on projects within the leisure industry, including Belfast’s Andersonstown and Lisnasharragh Leisure Centres, the Skope team has been enamoured with the redevelopment of the Templemore Baths,” Jenny said.

“A landmark of East Belfast, Belfast City Council’s investment will help ensure the building’s original features are preserved and its extended footprint is future–proofed.

“Whilst it is certainly an ambitious project with half of the building being vacant and in various stages of disrepair, many of the building’s original features – such as twin entrances, the minor pool and slipper baths – remain largely intact. We’re delighted to help ensure these features will be restored and maintained for the next generation to enjoy,” she said.

Work is currently underway on the Templemore Baths, which are due to open in Autumn 2022.

Consider it done.

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The business world has been through one of the most transformative years on record.

Established ways of operating were turned on their head as the Covid–19 pandemic took hold to be replaced by new, previously unheard of practices: video meetings are now considered the norm rather than the exception; the rate of digitisation has been accelerated tenfold and attention has refocused the business’s responsibility to nurture the increasingly fragile environment.

All those factors and more have been experienced by the team at Belfast–based Skope over the last 12 months, with the added change of a branding revamp.

Formerly Bruceshaw, the cost and project management consultancy took the opportunity to refresh its business with the demerger from its London arm.

Skope's managing directors John McIlwaine and James Henderson
Skope's managing directors John McIlwaine and James Henderson

Bruceshaw had established itself as a leader in the industry throughout its 47–year history and, whilst changing their name, Skope has retained the history and heritage which had been built up during that time. And what heritage that is.

Bruceshaw was instrumental in the redevelopment of Belfast International Airport, Marks & Spencer at Sprucefield, CastleCourt Shopping Centre, the Port Stanley Airport restoration in the aftermath of the Falklands War, Laganside redevelopment, the Gateway Offices in the Titanic Quarter, The Obel Tower and many more.

While a rich roster of success, the demerger in 2020 provided the catalyst for the firm to not just refresh its brand but to show the market that its offering is anything but typical, Skope’s managing partner James Henderson said.

“We saw this as the perfect opportunity to make a statement, reconnect with existing clients as well as enhance and promote ourselves to prospective clients,” he said. “The rebrand and name change was driven by wanting to stand out from the crowd, do something different and not just ‘change our clothes’.”

The difference that James refers to is a level of service which is head and shoulders above the rest of the market, one which has a relentless focus on delivering projects on time and on budget, one which offers solutions, which adds value and, crucially, one which ensures success.

“We are a service provider and we are driven by achieving success for our clients, hence the strap line – consider it done. As a business we have always prided ourselves on the level of client service we offer, together with direct partner contact and dedicated teams passionate about delivering best value.

“It’s our industry knowledge and ability to build strong relationships which also sets us apart. Our partners alone have more than 140 years of consultancy experience and our team as a whole is driven by innovation and a commitment to excellence.”

That excellence comes from the wealth of experience across the team of experts at Skope who have collectively helped successfully deliver for a broad range of clients over the last few years.

The team, meanwhile, is led by James and fellow managing partner John McIlwaine, along with partners Andrew Murray and David Wilson, all stalwarts of the industry and all passionate about providing the best possible client service. Associates Jenny Johnston and Oliver McGuckin make up the rest of the senior management team.

Skope_Senior Management Team
Skope_Senior Management Team

It is that passion which means Skope has a strong pipeline of projects across both the public and private sectors including mixed–use, commercial, residential (private, social, build–to–rent and student), hotels, leisure, health, research and education.

Alongside local work, the firm is also growing its business in other regions and retains an office in both Dublin and Glasgow.

While already working with a number of clients across the UK and Ireland, the changes brought about by the pandemic mean expanding the firm’s footprint outside Northern Ireland is, in fact, easier and the team expect the ‘export’ side of the business to flourish.

“There will be opportunities post–Covid,” John said. “We have learnt new ways of working and clients now accept that physical project meetings are not a necessity. We have the technology and platforms to support this type of service delivery, having innovated and invested in new tools which can deliver the outputs in a virtual world. This should make working in mainland UK or in Ireland more accessible and achievable.

“Our vision is to deliver value to clients no matter where they are. Skope’s roots are founded in Belfast but our client base and expertise extends throughout Great Britain and Ireland.”

He said the construction sector’s focus has pivoted over the last year.

“In the post–Covid world, some of the key challenges will be regeneration, communities, homes, health and wellbeing, employment, climate change and, very specific to Northern Ireland, Brexit and the ongoing challenges for business and commerce. But these challenges can also be opportunities and we see ourselves being able to provide solutions to our clients to meet each of those issues.”

Such dynamic thinking, combined with unrivalled experience and the capacity to deliver means Skope is well placed to do just that, whether in the local market or further afield across the UK. The current list of projects is enviable and includes a number of notable schemes across the public and private sectors, such as The Paper Exchange on Chichester Street, The Department of Agriculture, Environment and Rural Affairs’ new Animal Health Sciences Building, Templemore Baths restoration and extension, LIV Student Housing on York Street, Glasgow’s Maldron Hotel, Bedford Square, Tribeca, Project Sahara, Pirrie’s build–to–rent in Titanic Quarter and Dublin Road’s aparthotel.

However, paring the firm’s focus back to that which is really important for clients is the real secret to its success.

“It is simple really,” James said. “We deliver projects on time and on budget. Provided we continue to keep that focus as our mantra then we’ll continue to meet the central needs of our clients and they can consider it done. We’ve always been experts at building relationships and that is still very much at the heart of Skope.”