John Milford, CEO of Stellar Energy International, elaborates on EPC matters, the challenges of diverting an entire river to set up Heathrow’s iconic Terminal 5, working across various continents as well as dealing with different nationalities and cultures in Dubai.

MY BACKGROUND

I was born in Durham, in the north of England. It is the heartland of shipbuilding and coal mining… the industrial and iron and steel part of the UK. I lived there, went to university in Sunderland, did a combined mechanical, electrical and controls BS degree, which I completed in 1979. From there, I went to work the same year for Parsons, a company steeped in history, in their turbines controls design department. At one time, 56% of turbines manufactured in the world were from Parsons; and 30,000 people were employed there.

While in university, I took lot of theory courses. But at Parsons, they said, “Throw the rubbish.” With the advance of computers, the theory was defunct. That was my first experience that universities were not keeping up with modern needs of industry and, to this day, that’s the case – they are not practical and relevant.

Parsons, where I worked till 1983, was a great company, but its market share came down. The company did not move with the times. It was a case of inadequate leadership despite great history.

From there, I went to work in 1983 for Davy Corporation, which was into process contracting, and design and building of big iron and steel plants. They did big oil and gas platforms. They were EPC contractors, a fantastic company to work for, with leading-edge technology. The company was successful, because the technology they used differentiated them from their competitors. So Davy had technology and the design and build capacity to offer turnkey solutions. One of the technologies they developed was in New Zealand, where it was a case of the presence of iron and sand in the beach, and they needed the technology to take the iron and make iron ore and make steel out of that. Davy executed that. It was a 700,000-tonne plant, a government-sponsored project. I worked on this project, along with some of the greatest technological minds, in 1983.

In 1983, fax machines had come into being, and in the context of the 13-hour time difference between the UK and New Zealand, the fax machine was fantastic. Thanks to it, we were able to communicate. The shift from telex to fax was beautiful, and it helped in the ability to get information, fast response to questions and the need for data. It was the first experience of concurrent working, 24 hours a day on a project. While we were asleep, they were working in the background, and we were building while they were sleeping.

It was a massively successful project. The plant in New Zealand is still in operation. It is called New Zealand Steel Development, Waiku.

Overall, the experience in New Zealand was fantastic. It was a huge project, we had the technology, we were doing project management, and design & build. It was my first exposure to an interesting project. Eric Brown was the Project Director and Bob Hopps the Deputy Project Director. I learnt quite a lot by watching them work. Eric’s job was to manage the complex stakeholders and Bob’s was to manage the project. He would push and cajole to get the job done. I learnt that for big projects you do need an external person and also a person pushing from within. Both did their parts incredibly well.

NUCLEAR PROJECT

In 1986, I returned to the UK to work on a nuclear project for British Nuclear Fuels Limited (BNFL) for Davy Corporation. Our task was to process all the nuclear waste emerging from power plants in the UK. I was exposed to one of the best innovative engineers in UK, Alan Axford. We took the project on board. The water they were using was being discharged to the Irish Sea. Though it met all conditions of compliance that the government insisted on, it was recognised that in 10 years’ time, the levels would be high, so we had to provide a solution to take the water with the nuclear contaminants and get rid of the contaminants. We won the project for design and build. Though Davy was good at technology, we lacked the innovation. Imperial Chemical Industry was the world leader in innovations, and we managed to get the Head of Engineering there to come and join us.

The challenge was what would you do with the contaminants that you removed. I was Alan’s assistant, and he was one of the bravest persons I had ever seen. We created six different research projects with a leading research company. Part of the process was how to design mechanical equipment that would be able to work for 30 years. We created some devices which could pump, but with no moving parts in them.

For me, working on the project was an exposure to innovation, in what looked like an impossible situation. So it was a case of research, testing, solution and implementation of that solution. And Alan led us with admiration – his ability to be creative was distinct.

I worked on the project till 1989 and, then, moved to John Brown Engineers. For this, I moved to the south of England. I joined the company as Engineering Manager and went to work on a huge pharmaceutical plant. Never before had I worked in pharma, but it was about leadership. My job was to make sure engineering was being integrated. I finished that project and moved to being a Project Manager in 1991. I did bigger and more complex projects and developed skills and worked through to 1998, in the UK predominantly. The projects I worked on were 100 million dollars worth, so they were huge.

In 1998, I moved to China with John Brown Engineers to build Glaxo’s first integrated primary and secondary plant. Glaxo was a lot of separate plants. It was the first time plants were integrated… so it was a complex project. Four design offices around the world worked on the project, two in the UK and two in China. Trying to integrate the various engineering aspects was complicated, but the company did not move with the times, and so we set up our own satellite dish in China. The only other ways for communicating in 1998 were still basic in China. There were very few EPC contractors doing business in China, despite Deng Xiaoping’s open-door policy. So this was the first time they were allowing design & build companies to do the task.

I left JB Engineers to join AMEC and to set up their China business. This was in 2002. I became GM of AMEC in China. We went from four people to 170 in basically 18 months. It was great. It was an interesting time. What my time at AMEC brought me was four years of China knowledge, be they tax laws, understanding approval processes or supply chain. All these you get to know by the mistakes you make. AMEC is one of the large EPC contractors in the world: they had political connections.

Then, I got a call to come back to the UK in 2004 from BAA to basically help them build Terminal 5, a $9 billion project. In China, I had done quite a number of complex projects: my ability to see a project for what it is, understand its risks, wrap a team around it and mitigate and manage risk helped me tremendously.

DIVERTED A RIVER

T5 was probably one of the most complex projects — it holds a number of world records. It sits between two runways in London Heathrow. And London Heathrow is the largest airport in the world, with 70 million passengers a year; and the runway runs at 99% capacity. So if there is any hiccup, the whole place can be in chaos. So to build a $9 billion dollar project, with construction cranes and debris in between two busy runways, some would call you daft. Where you were putting T5 was a river that had run from the passage of time. So we diverted an entire river (the Longford River). When you drain an entire riverbed, it’s fascinating for archaeologists, because they can find artifacts. The archaeologists needed time, and that had to be factored in the time and paid for. And also environmentalists. I joined to help manage the delivery of the project.

The challenge of the project was that the opening day had been fixed as March 27, 2008. And it couldn’t be moved in an airport sense. BAA as landlord was leasing the terminal to BA, and BA are still one of the leading companies in the world. We were told by the CEO of BA that if there was any risk of T5 not being ready on the planned date, he was to be told. BAA could have caused BA to go bankrupt, so it was a challenge. We recognised that we had diverted a river and if they had found some Roman remains, then it would have delayed the project. In Longford Village, today, you have a museum of artifacts from the riverbed. It was something like giving back to the UK.

In the UK, big projects come up once every 6-7 years, so inherent skills are not there: Project Manager, contractor, supplier… the whole supply chain is geared to small projects, so for the UK, it was a challenge to ramp up to handle a mega project. The local authorities also had to ramp up to work through approvals… there were simply too many designs to get approved. Fortunately, the councils had the foresight to be ready.

Mega projects in UK have been the Channel Tunnel, T5 and the Olympics. A mega project is one that is over $5 billion. In China, there are 5-6 mega projects in a year.

Compared to others like BP and Glaxo, BAA were the most intelligent client I have ever worked with. They had some very creative people in the company and were always finding better ways to get more value out of their investments.

I lost 30% of my pay package, but for me it was not about the money but the need to give something to my home country. I had learned skills in small and big projects, and so BAA asked me to join them. BAA were looking for someone for 18 months to fit that role. They took me through a process to see if I had the credentials to do the job. They didn’t want someone who would find it hard and leave. So the evaluation process included psychoanalysis and testing to get the job. I joined BAA, and we set off on a course to finish T5.

There were factors aplenty to consider
1.Traffic movement
2.Light levels (planes landing, it might disrupt visibility)
3.Noise levels (a lot of villages around)
4.Restrictions on dust (the biggest risk in an airport is FOD – Foreign Object Debris)

You couldn’t have cranes at certain height, because it disrupted radar; and on top of it, security challenges. Post-September 11, there were additional challenges. Security had been beefed up since then.

The biggest issue was how do you get 8,000 people (architects, engineers and construction workers) to Heathrow with bottlenecks, and back? So we had to make it very attractive for construction workers to do the work and, yet. keep the costs down. The budget was tight, so all those dynamics were in play. So the job started in 2002. I joined in 2004, and at that time, the job was just coming off the ground. Also, the challenge was that it had to be a sustainable building: a rainwater collection system to flush the toilets, the lighting, the cooling system (district cooling plant) and the like. I was in charge of it. BAA were trying to push the boundaries on energy efficiency. It was a very complex project and, as such, BAA’s approach to the job was probably the best you will see in the world.

For BAA, T5 had to be seen as an iconic building. Their position was that each person that worked on the project had to believe that he or she was doing something iconic. They created a campaign, “History in the making”. That T5 would be classified as Eiffel, Sydney Opera House.

It had to be done on budget, on time, and keeping in mind HSE and quality. So… each became subsets. History in the making. There were posters on sites related to some iconic building or other and that we were going to do it on time. We were going to do it safely.

CHANGING PERCEPTIONS

We did a survey and found that over 60% of the people on the programme felt it couldn’t be done. They were less convinced and, hence, in doubt. So the challenge was to change the perception. The challenge was to inspire and create a catalyst. So we took some time out. We turned to Crownfield, one of the better MBA courses on how to take the company to the next level. It was a non-linear leadership course. We went to this course and felt if we got people into the course, it would bring about change. And that’s precisely what we did. And that brought about change. Again, a fascinating thing about BAA was that it was a free-thinking company. It was a company that recognised the construction industry. The UK construction industry was fragmented. Sir John Eagen was one of the great industrialists. And he was a champion. We are fantastic in the UK in aerospace and the car industry, he reckoned. So how is it that we cannot construct projects in time? So Sir John was pulled in to see how projects were done in UK and he came up with a report, called “Rethinking Construction”, and BAA was one of the first to take that report to heart and do the project.

People just move around, and they never see other industries. So when you bring people from other industries, there is resistance to change. So BAA and Sir John recognised that. They needed to modularise the job, with sustainability built at the heart of it.

They assembled core industry: aerospace, etc., and people like myself. And that came through with right leaders and commitment. So T5 was an example of a client taking the initiative to bring people from different industries together with a common aim. I was Head of Buildings (which was basically Programme Director).

Terminal 5 comprised T5A, T5B, Energy Centre and Control Tower. These were served with a car park and railways lines. T5A included 4,000 rooms and many stakeholders, who included customs, immigration, 110 retails shops, police, BA crew and BA administration. We leased all these rooms to these people. The challenge and complexity of the project came as much from the number of clients. And they would say, “Three months before you finish, I will give you my specs.” So there was a huge disconnect in getting their final requirements, so the challenge we faced was how to handover a project to the end-users, because the end-user is not a construction guy. In addition, we had 4,000 rooms, each room involving 12 different contractors: HVAC, lighting, flooring, sockets, fire alarms, etc. So, it was 12 x 4,000 = 48,000 rooms. If you assume each has five snags, then you are looking at 250,000 snags, so you see… it was complex. Another was how would we know which room they were in. We came up with a snagging tool – each room would have bar codes and the tool would tell which room you were in. So we had a centralised database of snags. We were able to measure the state of the project on the number of snags. If there was a Code A snag, you couldn’t commission the building till it had been removed. This technique ended up being used in Olympics.

A part of snagging is about analysis trends. How do you prevent the snags from happening? With T5, we busted a few boundaries. The whole site, the computers and lights were measured in terms of power consumption to cut power use. As much as 99% of construction material was recycled on site. Also, in construction, they used lot of recycled materials. But it was not to win awards. The view was, “Look, we are here to make a difference, and not to win awards on green or on safety.” Speaking of which, we also had an incident-injury scheme. They took safety to be a moral value.

EPC CHALLENGES IN THE GCC

Having worked around the world, China, in particular, was where I saw a massive willingness to learn. We knew that at the end of the day, they were going to be competing with us. So what legacy we were going to leave in China was important to us. It was also about understanding culture: how they think and so on. So in China, we ran a lot of courses. The UAE is quite different – multicultural and with so many different nationalities. We have 13 different nationalities here at Stellar. So the challenge for us is how do we recognise what different people feel and think when you say something, because some take offence and some don’t react. This is so, not just within the company but also with clients. The challenge is to be culturally sensitive and get the best out of the best.

Stellar’s vision is to be a global leader. We are focused on delivering innovative, integrated energy and power-enhancement solutions. We have just registered our company in Qatar. Next year, we shall do so in Saudi Arabia. We believe we want to let clients know we are looking to do things differently, to give best value.

We are integrated. We are looking at some projects where we can divert the waste heat to run absorption chillers. We also recognise that we don’t have to have all the innovative ideas and that we can partner with others.

I have been with Stellar for a year. My introduction to Stellar was through Peter Gibson, one of the owners of Stellar. He is a New Zealander. He has invested in Stellar and so he is one of the owners. He sees Stellar has huge potential and a market that we are not yet tapping into. In the US, we are the number one food processing contractor. And the company is active in district energy. They have a good tradition in the US.

They opened an office in the GCC in 2005 and saw an opportunity in district energy. They accomplished a lot here, and then the crash happened, but they have managed through that. Ronald Foster, the CEO and President, is a fantastic individual. He and Peter have worked together, and they introduced me here.

We see fantastic possibilities. Stellar in this part of the world has a great name and is well respected among clients. It is about getting traction with core clients.

We need to work closely with chiller companies. My approach is that the best strategy is to get supply chain to work together.

We have great people here and we have brought some new people in. We aim at better relations with turbine suppliers and power companies.

The carbon footprint here per capita is among the highest in the world. TIAC solution is the best solution. The challenge is to get the message across and get visibility across. The challenge is that a lot of electricity here is subsidised and so when you look at the business case in comparison to the international scene, it takes longer to recover your capital costs. In today’s climate, it is about capital costs and better value to carbon footprint and sustainability.

So for us, we see power enhancement as key. We recently recruited two top people from GE. It is part of a plan to get people in.

It’s not just about power stations, but also about facilitating industries. If an industry wants to add facilities they may be constrained by power plants. So why not use TIAC to increase the efficiency of the existing power infrastructure? LNG plants have a high demand for power, and so we would like to tap into that market.

There is an opportunity for the EPC contractor, consultant and supplier to collaborate. Gas turbine suppliers do want to sell more, but at the end of the day, there is a moral obligation. The whole carbon footprint, the energy required to make the turbine and the energy spent are factors to consider, so TIAC is the solution. So we see power enhancement as key, especially in Saudi Arabia. Also we see the power demand in Qatar, Saudi Arabia and Oman. We want good relations with power turbine people and the downstream electrics and with suppliers and consultants to get better solutions.

DISTRICT COOLING

We need to identify the problem. How do we measure this? How do we quantify it? These are questions we need to answer. So yes, there are challenges. We at Stellar are making progress, though. We recognise the skills we have at Stellar are still at managing the delivery stage. We need people who can, then, come up with processes. It’s about looking to work at front-end better. We are working at how we can look at an integrated energy model in Qatar, with CHP and everything. We realise we cannot do it on our own, and so we have chosen to partner.

Also, modular solutions is a better proposition from a quality aspect and a time aspect. The other side we look at is the O&M side of things. The only thing missing is finance, and at some stage, we will look at getting into that, as well. The bit we have not done is the front-end thinking.

One of the things I learnt while working on T5 was how do you put teams together with a fantastic facilitation to get the best possible result. If you are able to push consultants, suppliers and clients together and are able to build trust and teamwork, it will be wonderful. All ideas come from teams working together. Strong leadership and selecting of the right people is important. The three pillars at BAA were: trust, commitment and teamwork

Here, in the GCC, it is about patience. We are not going to change the industry overnight. We do stick-build and modular, and we don’t differentiate. Each has its place. Modular is good for expansion.

CHALLENGES

The UAE is probably a challenge. In Qatar, we see an opportunity. In Saudi Arabia also we see an opportunity. It’s about getting people to listen and understand.

We want to be an intelligent contractor. We want to work as an integrated team: work closely with suppliers and consultants. The mission is to improve the lives of communities through district energy and power enhancement, be they TIAC or thermal energy storage.

As of yet, we are not looking at water.

WHAT GOT ME INTO ENGINEERING

My maternal grandfather was a chief engineer with Doxfords in Sunderland. Back in the 1910s and 1920s, a significant percentage of ships were manufactured in the UK. And Doxfords was a significant player.

My grandfather had retired by the time I was growing up. He had lot of drawing instruments at home, but I wasn’t allowed to touch them. He was a source of inspiration. I was always keen on learning. I used to strip down cars to see if I could put them back together again.

I went to grammar school, where the emphasis was on education and sports. Grammar school in the 1960s was a great part of the UK education system. I played basketball for England. We played tennis and soccer. If you were excellent, you were given time to play, but you had to do well in studies. Sports and education were very important. Sport teaches you teamwork and respect for the captain. And if you are the captain, then the question is: how do you motivate? I was fortunate to be the captain as well, so I learnt to be a leader.

PEOPLE I LOOK UP TO

If you look back, my grandfather, I suppose, was a mentor, because he got me into engineering. Another person was Deng Xiaoping. He opened doors in China, and I admire him for his courage in doing so. What he did for China is staggering. If you look at the transformation of China in the last 13 years, it is absolutely unbelievable.

People also look at Dubai and Sheikh Mohammed, who is absolutely fantastic.

Richard Branson is a people’s person and yet another personality I respect and admire. He is not a traditional businessman. He is behind the unbelievable branding exercise that is Virgin. It’s a name that is right up there with the best. Steve Jobs is another person. He grew an entire business through innovation.

Miki Walleczek is a person I regard as a mentor. Miki is an internationally recognised cultural transformation consultant and introduced the concept of Non-Linear Leadership methodology into BAA (Terminal 5). This focuses on an approach that organisational change comes from personal transformation. It links directly to team and individual performance, effectiveness and deployment.

Miki has been the hardest person to work with in my entire life, but if you look at his background, it is amazing. Miki’s father died when he was young. He built up a sports clothing firm in Austria and found a natural ability to motivate people than what they expected of themselves. He has even worked with Nelson Mandela. What he does is that he gets teams and individuals, in particular, to see things from a new perspective. Most people in life get stuck in creating the future and use their current knowledge base, which is a weakness. Miki said, “You have to create the future from the future.” You have to take the past out of creating the future.

MY FAMILY

I have two grown-up children. One daughter is in Dunedin College in New Zealand. She is studying physiotherapy. She already has a degree in geology. My son is in the UK, doing his articleship in Law, training to be a solicitor. I also have a little boy of two.

My wife, Lara, is based here. She is Chinese. I do believe all Chinese are born with an ability to make cash. A massive difference between the British and the Chinese is that it is very rare to find people in the UK with the intensity the Chinese display in making money. They have a tremendous appetite to be creative. The scary thing about the Chinese is this insatiable urge to be creative and make money.

INTERESTS

I love my golf. I have a handicap seven. I have played only a dozen times this year, though.

I like to read fiction and a lot of business books. I think the world is a different place now than what it was. It is certainly more global. What’s happening with the Arab Spring is that it will create a better future and opportunities for people. I think China will continue to do what it has been continuing to do. In the Middle East, I see a huge opportunity. In Saudi Arabia, there are massive opportunities. The challenge is to encourage the local Saudis to become great leaders. What Sheikh Mohammed has done here in Dubai is unbelievable, especially when you consider he has achieved all this without oil. I know there are challenges, but I do believe good will come from that. He is an example to Emiratis of what you can do with drive and ambition. It’s going to be interesting to see how things pan out.