Richard Jeffrey is a business leader in the firing line. Nearly two years ago, he took up his position as chief executive of TIE Ltd, the arms-length project management company tasked with building the tram system in Edinburgh. He anticipated at the beginning he would be in the frontline of this half-a-billion pound battleground, yet have the bombshells been harder than he thought? Now there is a truce.
At the time of preparing this article, TIE and the major contractors, the BSC Consortium – representing Bilfinger Berger, Siemens, and CAF – are in mediation to resolve a running sore that has knocked Scotland’s confidence in its own ability to deliver major public and private projects on time and on budget. With a proposed new Forth crossing now on the cards, there is an imperative to ensure that fundamental lessons have been learned about project management and procurement and about preserving Scotland’s reputation.
The Edinburgh Trams project provokes extreme reactions from normally placid individuals. The whole saga has unleashed a vituperative public response fanned by point-scoring politicians and a drooling local media who have found a cause more mouth watering than banker bashing. A “Blame the Bloody Trams” brigade has become the 21st century version of the Edinburgh Mob – the unruly hoi polloi who once roamed the Old Town in the 19th century. Currently anyone prepared to suggest our congested capital needs a modern public transport network is inviting a haranguing. Yet there can be little doubt that if Edinburgh is to maintain its position as a cultured global capital, the city requires a transport system on par with most major European cities.
What is often forgotten is that the argument is not simply about transport but is fundamentally about the economic development of our capital city and ensuring that Edinburgh is ready to support the necessary commercial growth in the next ten to 20 years. Jeffrey and his team in Edinburgh have persevered. But the dispute with the contractors has resulted in the stoppage of all track-laying while mediation goes on. Edinburgh’s denizens, infuriated by the disruption, have had a lengthy temporary breather. At the time of writing there is not yet word of when major work is likely to resume, although significant work continues in some areas, such as the setting up of the new tram depot at Gogar Park. Without prejudice, BQ Scotland wanted to find out how a business leader such as Jeffrey was able to handle the extreme wall of criticism and yet keep a focus on the end result. Sitting in his TIE office at Haymarket in Edinburgh, silver-haired Jeffrey concedes that life has been a whole lot harder than he could possibly have imagined.
But, as an engineer, he says he is used to complex challenges, and that it isn’t in his DNA to throw in the towel and walk away. A welcome reinforcement has arrived in the shape of TIE’s new chairman, Vic Emery, a troubleshooter who understands engineers and who turned around the fortunes of the Clyde’s shipyards running BVT Surface Fleet. Sue Bruce has also now arrived in her post as chief executive of Edinburgh City Council and she brings with her her own very credible track record. So did Richard Jeffrey know running TIE was going to be such a hot potato? “Yes, I did,” he says.
“Interestingly, having had exposure through my business and commercial life with major strategic projects.” Jeffrey has a strong backbone for the job in hand, but acknowledges that the disputes and the constant negative backlash has been energy-sapping. He says: “Does it affect us? Yes, it does. And of course it affects everyone else too. Internally there’s a lot of pride in the people working here. They don’t like coming into work and reading or hearing stuff that’s highly critical.
“Certainly we can’t hide from the situation we’re in – and we are facing up to this. When I talk to the team it is about resilience as a core skill. We have to see this project through to the end and to do the right thing for the people of Edinburgh.” Richard Jeffrey has had a significant career, including an appointment as managing director of Aberdeen Airport at the age of 33, and he sees no reason why the trams should not be successfully delivered. By instinct, his default position is to fix things. He agrees that the contractual impasse requires resolution.
“Mediation is the sensible thing to do at this stage,” he says. “It can be quick. It’s not a detailed forensic examination of who is right or who is wrong. It’s a willingness for both sides to move forward constructively, and set aside the past.” Richard Jeffrey always wanted to become an engineer. He was born in Staffordshire, and as a studious teenager he was an avid reader of engineering magazines explaining how major new roads, bridges and hydro dams were built and their impact on society. He was outstanding at maths and studied at Imperial College in London, where he gained first class honours in 1987. His thesis was on the vortices caused by rivers flowing around bridge piers. He joined British Airports Authority – the new airports plc – as it was going through its privatisation.
It was headed up by the civil engineer Sir Norman Payne who died in February last year aged 88. Payne had designed Gatwick Airport and a fresh-faced Jeffrey worked on the Gatwick North terminal and, as low-cost air travel began to boom, on Stansted, designed by Norman Foster. “I started my career as a site engineer working on several airport projects,” he says. “What was interesting for me was that I became rather disillusioned with the lack of professionalism in the UK’s engineering industry at that time. It was backward-looking, the methodologies on site were poor and this led to contractual disputes and shutdowns.” He says it was the visionary Sir John Egan, the former chief executive of Jaguar Cars, who joined BAA as chief executive in 1990 that brought about positive change.
Egan’s Rethinking Construction, which was a landmark report commissioned by the Labour Government, helped improve people and processes and drive efficiencies in large construction projects. “What Egan’s report showed was that construction projects didn’t have to be like this,” he says.
“He singled out leadership, integrated processes and teams, and a drive for quality. There’s the thorny old project management joke about the five stages of a project. First, optimism and euphoria; second, disenchantment, third, search for the guilty; fourth, punish the innocent, fifth, reward for the uninvolved. Actually, there’s a lot of truth in this, and I’m sure the trams project will be no different.” There is another irony for Jeffrey. His career with BAA took him to Pittsburgh for a year, then into the airport’s international business development division, working in Naples on a drive to modernise the city’s airport.
He was based at BAA’s Victoria HQ in London, flying to Italy, and commuting in from his cottage in Dorking which he shared with his wife Liz who works in property development. Then he was asked to handle a potential joint venture in South Africa.
He was sent to negotiate with the new Rainbow Government about the privatisation of a group of airports. In 1995, he travelled to Johannesburg with Bill Morris, the former head of the T&G union, where they held discussions with the former transport minister Mac Maharaj, an ANC member, a prison-mate of Nelson Mandela in Robben Island, and with former president FW De Klerk.
“We were there to take a 30% stake and explain how the privatisation of public sector airports had been successful in the UK,” says Jeffrey.
“Bill Morris was there to talk about how it benefited the trades union. Here, we sat with politicians who had once had visceral hatred of each other, purely because of the colour of their skin. Now they were working together for the good of the nation. They put aside a lot of their baggage.
“The whole point about the Truth and Reconciliation Commission in South Africa was there was closure. It didn’t mean ignoring or forgetting about the past, but it meant moving forward to a new level. Mac told me that it was difficult for the politicians because the people wanted freedom and all they could offer was democracy. He’s also famous for saying ‘revenge should not be our motivation’.” In the end, BAA lost out on the contract, but for Jeffrey, still in his thirties, it was an experience that has kept a sense of perspective when dealing with the trams.
“I’ve always been of the mind, ‘How do we solve this?’ which I think is solution orientated,” he says. “Rather than, ‘who’s to blame and let’s string up those who have got us into this’.” Jeffrey is keen to see further discussion on the execution of publicly-financed projects in Scotland and believes there needs to be a new way forward.
“The public sector does not always appear to have a learning culture on major projects,” he says. “In recent years, in a plc where there are shareholders demanding results, you accept that when things go wrong, you apply measures to ensure such things don’t happen again. In the public sector, this does not seem to always be the norm.“ Jeffrey undertook a senior business management course at London Business School and had as a mentor Russell Walls, the BAA finance director. Armed with corporate finance skills, he was asked to run an airport. Jeffrey took up his post in Aberdeen, becoming the youngest manager in BAA. In December 1998, oil was a low $8.64 a barrel and the airport’s North Sea oil and gas business was declining with helicopter flights down. Marginal oilfield activity wasn’t worth the financial return. Passenger numbers were also in decline. “We had to put a lot of effort into cost control,” he says. When he moved on 21 months later, the oil price was heading up to $30 a barrel, airport revenues were up and so were general passenger numbers. BAA had a bigger job for him and he was asked to take on the job of managing director of Edinburgh Airport.
“I loved working in Aberdeen,” he says. “There were a lots of experienced people there who helped me find my feet as a managing director, but I was keen to take on the challenge in Edinburgh which was going through a major redevelopment programme with a 25-year master plan, with new piers to the south-east, extension to the taxi-ways, new car multi-storey parking, expanded retail and a new control tower.
“I had a fantastic time at Edinburgh Airport. We invested more than £200m in modernising the airport and expanding the facilities. In the six years at Edinburgh, we doubled the number of passengers from five to ten million and made it highly profitable.” Then came a crunch. He was offered a job in Melbourne working with the consortium Australian Pacific Airports Corporation (APACS), in which BAA was a partner and had 22 million passengers a year. This entailed a frank discussion with his senior figures at BAA. But Jeffrey, by now embedded in the corporate business scene in Edinburgh – elected president of the Chamber of Commerce and active in the city’s tourism forum – decided he wanted to stay in the capital.
He says: “I’d just completed 20 years with BAA and six years with Edinburgh Airport. It was the right time to move on. I’ve always been someone to preach that people should go off and develop their careers in other jobs, and I was the one sitting there staying still.” So he left BAA in 2007, still only 41. He considered a portfolio career but found that he was working on international airport projects outside of Scotland. He joined Babcock & Brown, an Australian advisory and consultancy, who were looking to expand their investment portfolio in Scotland but were hit by the economic crisis and eventually ended up in liquidation in 2009. Jeffrey was headhunted to take on the trams project for the City of Edinburgh Council.
The Scottish Government approved the project and the funding, but Edinburgh faced extra costs as a faltering project faced delays and over-runs on budget. The then chairman David Mackay, the former head of Menzies and a well-respected Scottish business figure, was keen to have a respected engineer like Jeffrey on board, so he agreed to step into the frontline on May 1 2009. Mackay resigned in November last year. There was no honeymoon period for Jeffrey and he refuses to be drawn on what were the major problems when he arrived.
“The challenge is not following into the trap of saying, ‘Oh, that’s not the way it should have been done’,” he says. “We don’t come to work to have disputes. Those who like working on projects understand there is a natural ebb and flow which makes the work more engaging. There is a big difference between running a day-to-day business with a profit and loss account and a strategic construction project. One of the big things a project has going for it is a momentum which takes you through the ups and downs. The Edinburgh Trams project has never been able to build up that kind of momentum. It’s been stop-go, and that has an impact on the morale of everyone. There are a lot of economic benefits in terms of employment when everything is working.
It’s in no-one’s long-term interest to have this project stall.” Does he take it personally? “It’s not escaped me all the venom and personal abuse,” he says. “On the other hand, it goes with the territory. I definitely have a thicker skin now than when I started. My previous chairman called it ‘strategic endurance’; I call it being dogmatic, but not so much that you aren’t prepared to change things. I’m not dwelling on the past, I’m looking ahead to a time when we’ve delivered the first stage of a great new public transport network for Edinburgh. I think the city deserves that.”
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