Bancon Developments

Source: Construction Digital

Date :9/28/2007 4:47:11 AM

The Northern Line

Aberdeenshire must be a booming area for construction, to judge by the progress of The Bancon Group. MD Bill Beattie explained how the company’s rapid growth has been achieved

Written by Ruari McCallion & Produced by Nicholas Davies

Start with an eye-catching fact, they say. Well, here’s one: Bancon Developments’ turnover in 2001 was £18 million. Two years later it had increased by more than 50 per cent, to £29 million. Over the next three years, it almost doubled again, to £52 million in 2006.

This year the company is forecasting a group consolidated turnover in excess of £75 million. While the construction sector has been enjoying good times of late, that’s still an impressive growth figure. So, Bill Beattie, Group managing director, how has it been done?

“While the major oil companies have been reducing their direct exposure to the North Sea, there has been reinvestment by them in their facilities here. It’s a worldwide industry and Aberdeen has a global role now,” he said. “The second tier companies have been coming in, as well. But it isn’t all about oil. Aberdeen, the Banff and Buchan area and the north-east of Scotland generally has a growing economy.

For us, things have come together nicely. We’ve achieved planned growth on the housebuilding side; a number of things have come on-stream. And the market in general construction is quite warm, too.” Bancon Developments is the holding company of Bancon Group, which has four companies within it.

“The Group serves four distinct sectors,” said Beattie. “Banchory Contractors is a regional construction company, operating within a 60 mile radius of Aberdeen. It’s the largest company in the Group, with a turnover around £55 million.

Deeside Timberframe makes timberframe housing kits; it operates throughout the country, providing support to our own activities and to third parties. Its turnover is around £13 million. Bancon Homes operates in and around Aberdeen and built around 80-85 units over the last year, from low cost to executive homes, and turned over about £22 million.” The discrepancy between Group turnover and the individual companies is explained by inter-company trading.

Growth management

Anther part of the business is Property Maintenance, which is part of Banchory Contractors. As well as being the holding company, Bancon Developments undertakes non-residential developments in Aberdeen City and Aberdeenshire.

Each of the companies has its own managing director and board, reporting to Beattie and the main executive board. Bancon Homes’ activities reach across the whole housing market, from affordable housing to £750,000 executive homes.

“Starter housing is probably a better term than ‘affordable’ – we aren’t involved in the rented sector,” he said. “Three years ago, we began a major development with Communities Scotland building 130 houses in Banchory, Stonehaven and Kirkton of Skene. That was a £10 million project and was pretty large for us at the time.”

The current portfolio includes two developments at Hill of Banchory, a development of five-bedroomed executive homes at Upper Lochton, Banchory; and two projects for over-55s, at Airhall Pitfodels in Aberdeen, and Tor-na-Dee, Milltimber a short drive outside Aberdeen and close to the countryside of Royal Deeside.

Managing a company that has been growing so fast, in different areas, is something of a challenge but the record indicates that Bancon Developments has managed the task well, thus far.

“We have monthly management meetings, at which we discuss performance,” said Beattie. “At this time of year, we‘re putting our new budgets in place for each company in the group – our year end is November. Our people know their targets and expectations: they are given the power to go out and do it. We augment the senior management team as appropriate, to ensure the targets are met. Problems can’t be avoided completely but we seek to anticipate them and provide support in advance of strain and stress becoming an issue.”

Practical skills

Senior management is one thing – skills at the practical level are another. With building booming all over the country, there’s a high demand for skilled people and the temptations of high wages elsewhere, especially in London and the south-east of England, are often hard to resist.

“We have around 390 direct employees within the Group. The entire staff gets together every year – our annual meeting is due shortly,” he said. The intention is to foster a sense of community and belonging. “Skills are definitely a challenge. We keep tightly abreast of who we need; we advertise, headhunt and get a great deal from our profile within the area. We’ve grown significantly, and success is attractive.” So it’s a virtuous circle: as the company grows, people want to work for it, the quality of applicants rises. The Bancon Group is an ‘Investors in People’ company having achieved the award at the first attempt in 2004.

“We employ some Polish workers, and others. Two months ago, we had 30-40 foreign brickies; that’s probably less at the moment, because of the stage in the cycle. Now, we’re employing joiners and the like. We use a mix of immigrant workers, SC60 subcontractors and our own long-term workforce,” said Beattie. Securing the future skills base is clearly a priority. “We’ve been training for many years.

We take on both young people from school and adult apprentices. We have around 14 apprentices at the moment, joiners, bricklayers, drawing and technical staff. In fact we won an award in connection with the New Deal from our local employment office in 2004.

As a company, we pay our trade apprentices more than the standard rate and we pay an attendance bonus - £20 a week if they’re present throughout the five days. We also provide interest-free loans to our youngsters to help them buy a set of wheels.” Bancon takes the view that it’s in its long-term interest to invest in attracting and retaining the right people, and in generating loyalty.

The approach works. Growth is expected to be over 45 per cent in the coming year and the company has been short listed in the larger business category in the Northern Business Star Awards, which will be announced on 27 September. And there’s every intention of maintaining its progress in the future.

“In five years time, we would like to have a bigger presence in the non-residential development side. We’re at the planning application stage for a 102-bedroomed hotel in the city centre and the whole non-residential has a lot of potential for us,” said Beattie. “We have the seed of an idea for another location in house building – you can only do so much fishing in your own pond. That’s in the current market conditions but I would be surprised if the Bancon Group does not have anther presence somewhere else in five years.”

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Bancon Developments