Market change leads to rethink on construction needs

Water Treatment Plant(1)

Total Construction has opened a new category to its expanding portfolio of construction specialities. Mike Wheeler asks James Bolton and Rob Blythman about the company’s new Infrastructure Division.

With any business, those in the driving seat have to look ahead to the future if they want to expand and/or succeed. Success can come in many forms, but in the construction industry, with its tight margins and deadlines, it is important to diversify.

Up until recently James Bolton headed the renewable energy side of the business for Total Construction. However, 12 months ago, he and other senior management realised that while renewables are certainly an expanding market, there were other, similar markets that needed attention. Thus the Infrastructure Division of the company was born, which will cover waste, water and rail, as well as renewables. Bolton heads up the new division as general manager, and is bullish about the future and why the change had to occur.

“It was multifaceted approach,” said Bolton. “We found we were doing some work in these sectors, particularly a lot of work coming from the waste sector. Recycled water-type projects were also coming through.”

“The commercial reality is that we have to go where the work is, to a degree. When we looked at the renewable energy division of Total Construction, we realised there was a lot more going on than just renewables. So that was one part of changing our focus. The other component was some self-reflection and self-realisation that we are not going to go out and build $100 million plus solar farms or 100MW wind farms. That’s something that is outside the scope of Total.”

Total Construction’s business development manager for food and beverage and renewable energy, Rob Blythman, backs up Bolton’s assertion.

“The crux of it is that renewable energy projects are in the marketplace, but they are only at the top end of town at the moment,” said Blythman. “We came to the realisation within the business that we couldn’t maintain a renewables-only division because those type of projects require a significant investment in costing and planning by the builder, and unfortunately the projects consistently end up going nowhere. James identified correctly that there were more water treatment/waste-type processes and infrastructure-type opportunities out there that became real projects. We couldn’t ignore it.”

So why would someone come to Total Construction? Both Bolton and Blythman agree that the company has an all-encompassing approach when it comes to mid-level type projects that the company specialises in.

“There are several reasons you would come to us,” said Bolton. “One is that we have in house design capability, which not every construction company has. You can come in at the front end and don’t have to get a consultant or spend a lot of money to only end up with some documents to then go to a builder. You come to us, the builder, at the very inception of the idea and come up with something that is workable.”

And if there are risk-averse Tier One construction companies looking for a sub-contractor to take over part of the project, then Total Construction could be a go-to choice due to another Sydney and NSW,” said Bolton. “It could be because China is no longer taking as much of our rubbish, or because tipping fees in QLD have gone up. We are finding quite a few waste transfer stations are popping up, where waste is dumped on a slab, sorted out, then repackaged up and sent back out. They also split the waste at what they call a MRF (material recycling facility) where they take out the wood and the paper and this kind of stuff for valuable re-use.”

“One driving force is the tipping fee I mentioned. Currently, it is arguably now more expensive for me to take my truck and its refuse from the kerb and chuck it in a landfill. It’s a considerable incentive for putting processes in place to avoid sending material to landfill.”

Bolton spells out why it is worthwhile building this infrastructure and why he is expecting more to be constructed over the next decade as the new mindset starts taking shape.

“The waste company gets paid a certain amount of dollars per tonne to take away the waste,” said Bolton. “They take it to facility A and they take out the paper and plastic. They then take it to facility B and they compost it and they put that material in an abandoned mine, rather than landfill. Let’s say that compost is at zero value or costs $5 a tonne or whatever, and so then you are left with a very small fraction that goes to the landfill, and the waste company needs to pay a relatively small amount of money to put that in landfill. The difference between what the company gets paid from the Council, the cost to process all that and the avoided the landfill charge, is the profit.”

A final key to the building jigsaw puzzle is early contractor involvement, or ECI, as Bolton and Blythman call it.

“Infrastructure is going to be the biggest cost for the country over the next 10 years,” said Blythman. “Tens of billions across all the states. We are in a position to take advantage of that pie, but we can’t go for the big ticket projects. Of course, the government will not look at us for that size project. They want guarantees. However, what we can do is help on smaller projects and if we become involved early we can be a big difference in making sure these projects come in on time and on budget.”

With rail infrastructure increasing over the next decade, Bolton said that this is another area that the company is looking to expand into in the near future and so has appointed a new person, James Hooker, to look after that aspect of the business.

Disposing of waste is an ongoing problem for councils and states alike, which means that a lot more processing plants are going to be needed in the near future. And Total Construction plans on being there when the roll out of these projects start increasing.