Behind The Built Environment - Episode 18

David
Hello, I'm David Frise, Chief Executive of BESA. Welcome to Behind the Built Environment, the podcast where I delve into the major issues facing our industry through in depth conversations with key industry leaders. Join us as we explore the trends, challenges and innovations shaping the future of the built environment. Today I'm joined by Paul Ruddick, Chair of Reds10.

Reds10 has emerged as a standout in the offsite construction sector, pushing industrialisation, embracing digital tools and setting bold ambitions, including a £500 million turnover target. But the journey has not been without headwinds, especially in a market where many modular firms are struggling or folding. So what makes Reds10 different. Let's find out.

David
Paul, great to have you on the podcast.

Paul
Great to join you, David, thank you very much.

David
So, Paul, before we get into the main discussion, let's start with some quick fire questions. Yes or no. More difficult than it looks.

Paul
Okay.

David
But it sets the agenda for today. Do you believe industrialised construction will be the dominant delivery model within the next decade.

Paul
Yes.

David
Can modular buildings consistently match or exceed the quality of traditional builds.

Paul
Absolutely, yes.

David
Has the construction sector embraced digital transformation fast enough.

Paul
No.

David
Is the UK's current procurement system fit for supporting offsite and modular innovation.

Paul
Yeah, I think so.

David
Do you believe AI will significantly transform how we design, manufacture and manage buildings in the next five years.

Paul
Yes.

David
Great. I think you're the first person who's ever managed that without a maybe. I'm not sure. Before we go into the major bit, did the career choose you or did you choose the career. How did you end up running Reds10.

Paul
It was a series of accidents, really. When I finished school, I didn't really know what I wanted to do. I was applying for universities and I didn't understand and actually my mother came to me and said, why don't you consider a career in construction as a quantity surveyor. Now, I've got no family relations or history in construction.

I was quite surprised by it and I said, well, why have you chosen that. And she says, well, I know you can't sit. I struggled to sit in a classroom all the time. I was a bit lively as a child, but I was quite good at maths and she saw that in me and I applied to university and I did a degree at Heriot Watt in Edinburgh. It's quantity surveying and building economics.

I did that and then it took me to London. I chartered as a surveyor, did that for seven or eight years. And then in 2006 I started Reds10. So my background is actually a consultant, not a manufacturer, not a contractor. So how I ended up here is probably going to talk about it, actually.

David
Yeah, that's quite unusual for your mother to suggest construction. I think most mothers kind of go, yeah, you don't want to do construction.

Paul
I don't know where it came from. But she was actually a teacher, so she was careers advice and all that kind of thing.

David
Did she have any other options for you. Was it simply, this is. I've done the homework and I think this is the best option.

Paul
Yeah, I actually can't remember because I did choose other careers and other degrees, but I can't even remember what they are. But it was a great decision and actually, if I had one regret in life, I kind of wish I'd found construction earlier. I wish when I was. Instead of having summer jobs and weekend jobs, which were just kind of standard, like working in a cafe or petrol station, I actually wish I'd done it in construction. I wish I'd spent more time on site in my early career, early life. But it is what it is.

David
So can you take us back to the beginning. What inspired the formation of Reds10 and how has your vision for the company evolved as the industry has changed.

Paul
So I'd love to sit here, 20 years ago I sat down and said, look, I want to have a 200 million turnover, be half a billion one day and be industrialised construction, but it doesn't work like that. When I first went to London and I worked as a chartered surveyor, I actually worked at Heathrow Airport and there's a chap called Sir John Egan who wrote the Egan Report and he transferred from Jaguar Land Rover to Heathrow and he was saying, well, why can't we industrialise construction.

And, you know, we've had the Egan Report, the Latham Report, the Mark Farmer Report, and that was my first learnings and I didn't, because I hadn't been involved in construction before, I thought, well, actually, why is construction so fragmented. And I did that for a year or two and then went on to other roles, but it must have stuck with me.

And then in 2006, I saw an opportunity as a consultant, actually. So I started in my bedroom as a sole trader, the business offering consultancy advice to schools that were getting built. And over the next five, 10 years, I got involved in volumetric buildings, providing temporary schools and then that evolved to where we are today.

But the business has grown. That view of where I started, that construction's kind of missed the Industrial Revolution, it needs to change, the other industries have done it, it kind of stuck with me and as I've gone further in the career, I try to do something about it.

David
So you've gone from your back bedroom to what, about 350 million turnover.

Paul
It's 200 million at the moment.

David
200.

Paul
Hope for the next two or three years it will be 350 and then.

David
Half a billion and you're still debt free. How have you balanced that ambitious scaling with financial resilience, which is in what has been a volatile market.

Paul
Myself and my brother still own all the business, so one thing we've got on our side is time and patience. I think a lot of the modular companies have failed. They had private equity backing, or they had big, deep pockets and they kind of went too big too soon. They had all these ambitions, built a huge factory, but actually didn't sort the human element out, didn't sort the processes out, didn't sort the technical details out.

And because we started from nothing and we bootstrapped the business, we've had time to do that. So where we are at the moment is we're in a really good position, we've got a great team, but it's taken us 15 years to grow that and now we're ready to springboard into more growth.

David
Did your brother, by the way, get the same careers advice as you did.

Paul
My big brother's doing quantity surveying, so I'll do it as well. So I've actually got three brothers and all three of them did it as well and followed us into the industry. We all work within the business or businesses, because Reds10 is actually a group of nine different companies. They all work in a separate part of the business at the moment.

But I've tried to create Reds10 as being a family business, but with a meritocracy. So unlike other family businesses, we're not in positions where we're not qualified for. We've got some proper qualified people into that.

David
And where did the name come from. Reds10.

Paul
So I don't talk about my mother again, but when I was starting Reds10, naming a company is actually quite difficult. I couldn't think of a name for some reason. I didn't want to call it Ruddick, Paul Ruddick, because I thought it might restrict me in the future.

So my mum said to me, so why didn't you call it Reds10. And I was like, well, yeah, it's a name, it's a colour and a number. People remember it. So where did you get that name from. Oh, it's actually my surname. Rudd is Anglo Saxon for red. And dix is French for 10, so Reds10 is Ruddick. So that's where it came from.

David
Wow, great story. You've spoken a lot about industrialisation of construction. What does that really mean to you. And what's the transformation you're pushing for in design, manufacturing and delivery.

Paul
I think construction. If I said one word to sum up the ills of construction, I'd say fragmentation, where we're relying on 20 organisations to design a building and another 20 or 30 to build the building. And people wonder why we're not making progress in terms of productivity, why we're not making gains in terms of clever design and all that kind of stuff.

Because you've got 50 organisations that come together and then go apart and come together and they're not aligned. They're all holding their IP close to them because they're relying on their next job. And my simple view is to vertically integrate and try to bring as much design and construction industrialisation in house as possible.

And once you've got that philosophy, then you can go down the industrialisation route. And if you're looking back to those other companies that failed, I think they just went for the industrialisation route without taking a step back. Everything starts with design and process, so sort that out and then the construction can follow.

David
And you use a lot of digital tools in that process. AI, data systems, to boost what, predictability, efficiency and quality across all the operations. How does that all fit together.

Paul
We're a gold partner of Autodesk, so Autodesk, Revit, BIM, CAD, and we're working very closely with them to make sure their systems integrate. So our common data environment is ACC, which is Autodesk. But also now we're working with Autodesk to put scripts and automation into that.

But again, you can't do it in isolation. You can't have the architect or the steel fabricator way ahead of everyone else in terms of their tools and the door manufacturer or the fire stopper using pen and paper. It doesn't work. So everyone has to be on the same level and using the tools at the same time.

And as I said, we've got nine companies within the business, but those companies are in house M and E, in house furniture, in house doors, which then build into the design and manufacture side.

David
And you can't do that without a client who understands it. Can you tell me a bit about what you're doing with the NHS healthcare programme or the New Hospital Programme.

Paul
95 percent of Reds10's clients are the government, and I think the government get criticised sometimes, but I actually think they've done a lot in terms of setting up frameworks and pipelines of work. So we established ourselves in the Department for Education, now the Ministry of Defence, where we've demonstrated that secure pipeline and repeatability of design standardisation. Then you start to get the benefits of that.

So we've got involved in the New Hospital Programme and we approached it by building the prototype single bedroom ward. So 50 percent of the New Hospital Programme are bedroom wards. So what the NHS and NHP are doing is recognising this and saying, let's not redesign the wheel. Every single hospital we're going to build, let's standardise the design.

So we worked very closely with NHP and their design team, took their concept design, and we manufactured it and built an actual full scale single bedroom ward. And in doing that, we've also worked through some of the design coordination issues, the fire stopping details, the plumbing issues, the connections, the patient experience.

So it's been a great piece of work and real foresight. And I think when the New Hospital Programme gets released in the next month or so, the successful contractors will be able to take that information and incorporate it into their new hospitals, and hopefully we'll be working with them as well.

David
Although you do a lot of work for the government, you've stressed that diversification is really important for a modular manufacturer. So you're in defence and education. Why is diversification so important to a modular manufacturer.

Paul
Well, I've got a big factory. I've got five or six hundred tradespeople that I need to keep employed. In a single sector you do have planning delays, decision delays, funding delays, and you can't be dependent on just one sector. So I realised quite early on that we need five or six different income streams as one goes down and one goes up.

So we've also got a big hire fleet as well. Temporary classrooms, site accommodation, which we provide so if we have a down spot in the factory, then we can put some temporary accommodation through to even out the strain. So if I want to go from a 200 million to a 400 million, 500 million turnover, I need a lot more work coming through.

And what we're finding now in the factory, as we industrialise, where something was taking me 50 days to build is now taking me 30 days because we're getting better at what we're doing, we're getting better details using sub assemblies. So again, we need to find that income stream. Hence us now moving into the NHS sector, but also we're looking into the residential sector as well.

David
So what would you say are the foundational pillars of that growth through modular, organisational, financial, technology. What are the pillars that are allowing you to do this sustainably.

Paul
Good people. I've realised that you need the right people with the right shared vision, the right culture in place. And once you've got that, then you can pretty much do anything. I think the other key thing is design and process. So we've invested loads in design, technical design. We've got our own steel fabrication capability, our own insulation capability in house, our own M and E design in house.

So it takes time to design that and stand up the team. And once that's in place, then we can start looking at throughput through the factory.

David
We talked about the pillars of success. A lot of modular companies fail though. You see the headlines. What do you think the reasons are for that.

Paul
I think they went too big, too soon. They didn't spend the time sorting out the processes, sorting out the details, making sure the building doesn't leak when it gets transferred from the factory on the back of a lorry or onto site. We've been doing it for almost 16 years now. We know what the roof detail is.

And 10, 15 years ago, I had leaking roofs. I'm not going to run away from that. And we had some issues in our units to fix. But we've learned from that. We've developed our details from it. It just takes time, because if you're building traditional construction, there are standard details out there that have been there for 10, 20, 30, 40 years.

We've got to develop those details for modular. But I think the other key reason why they failed was because they had only a single income stream of residential and the market just, there wasn't enough throughput coming through. So they got caught by the planning laws as well. It's a shame because a couple of those, in general, they were bang on the money.

If they'd held on and hadn't gone so far so quickly. The industry's crying out for affordable housing to be built at pace with high quality. And that's what they were going to do. That's what we're going to do. But we need more of us to do it if we're going to hit the 1.5 million target.

David
And one of the other challenges facing offsite is demand volatility and procurement cycles that don't always align with factory economics, which is what you've been describing. What would you like to see change in public or private sector procurement to support a more sustainable industry.

Paul
I think the biggest issue for construction, not just modular, is planning. Before it used to be 12 weeks to get planning, it just doesn't happen anymore. It could take six months, 12 months, 18 months. And that uncertainty needs to be taken away and addressed. And I do think the government planned infrastructure bill is the first step towards that.

But we need to sort it out. I've never seen a school be refused planning permission. It always gets built in the end. But I've seen a school take two, three years to get planning permission because they need to make a tweak, which in the bigger scheme doesn't make any difference at all. But it's the process and we need to address that because while that school wasn't built, inflation went up, so it cost more to build and those kids didn't have a great education building for two years as well.

David
I read an interesting article that kind of backs that up. I think that we're a nation of lawyers compared to China, where they're a nation of engineers. They say they're going to build something, they build it because there's nothing to stop them building it. The net result is you might end up with a railway that goes from nowhere to nowhere, but you get stuff done.

Whereas in the UK and to a degree in the US in some areas, because everybody's got a legal background, there's due process to go through that takes time, expense and takes so long. How do you cut through that without ignoring people's objections, but still get stuff done within a reasonable timescale.

Paul
Yeah, I think also when you get planning, there's so many consultees who can stop it. 20 people can say no and one person can say yes and you have to go through. Look at the Lower Thames Crossing. Some ridiculous amount, like £250 million being spent, might even be more than that, on just planning. Spade isn't in the ground. How can we get in that situation. It's crazy.

David
Yeah, something has to change, doesn't it. You've structured your leadership to embed technical innovation and industrial thinking at all levels. How is that helping you future proof the company and develop the next generation of talent.

Paul
In particular, if you look at my business, any business, if I'm true to myself, when we deliver our work, we rely on great people to deliver work and you've got those key superstars in your business and we need to get away from that where we're not firefighting. So we've got an absolutely clear process from start to finish. Whether it's initial design, procurement, costing, going through design, technical, it's just a smooth process. So anyone can slot into that process, which is industrialisation, anyone can go into the line and pick it up.

And in construction, we rely on really, really good people to come and troubleshoot and rescue that. So the reason why we've embedded technology across the whole of the business and our sister businesses is actually how can we turn what we do into really clear process.

And I talk about that because when I first joined the industry, the consensus was in 20 years time you'll be useful because you've had loads of experiences and stuff like that. And I'm a great proponent of bringing young people into our industry because they're very technology savvy. But the problem is our industry is so complicated that for them to pick it up takes time.

But I think technology and process and standardisation is a way to accelerate that. If you come to our offices, which you've been to, we have a very young demographic. Technology wise they get it, but in terms of standard details and coordination they don't. But if you've got standard designs or a standard design platform which you repeat, repeat, repeat, they probably don't need to know that as much.

And that's where I think AI can come in by freeing up the super deliverers, I call them, so they get time to think, really look at the problems, understand the details, instead of firefighting the whole time. And that's when you get even more.

David
Benefits as well, I guess, where you can really add value as opposed to just go through process.

Paul
Yeah. Every organisation can think about those brilliant people, we've got a problem, we send them in, they're the troubleshooter. But how much better would those people be if they were there just looking at how we can improve process and how we can change details and how we can improve stuff rather than getting sent in to sort out problems. And our industry has lots of problems because there's 50 organisations building it.

David
That's what we call innovation. When we get over a problem, rather than thinking about it before the problem occurs, well.

Paul
But also capturing that innovation, the lessons learned. I'm not convinced it's captured enough. People do and there's almost a disincentive not to capture the learning for the way the industry is set up, because then especially a subcontractor can get variations out of it down the line when it happens again. And that's our industry and that's what we're trying to address.

David
Is it easier to attract talent because you've got a different business model, do you think.

Paul
No, it is, actually. We have a lot of women in our company, for example, and when they come into interview and they walk into our office and they see a lot more women, I've had a comment that they joined our business because it felt very dynamic and not traditional.

David
What role does offsite have in the UK's decarbonisation targets and ambitions.

Paul
Huge, actually, because standardisation and industrialisation means you're doing it once, you're doing it more efficiently, you're spending fewer man hours on it, there's less waste and you're delivering at lower cost and it takes a shorter amount of time to build it. If you add up all those things, then you're reducing carbon footprint.

So I think it's the way. Every other industry is industrialised, every other industry apart from construction, and we need to have that mindset and say, well, we need to change. And I think the natural change will reduce carbon.

David
Is the reason it hasn't changed though because we build prototypes and therefore it's persuasive to say we need to do this in a bespoke fashion every time.

Paul
It is. But the way the industry is set up, we're incentivised to build prototypes.

David
I guess you're right.

Paul
I'll leave it at that.

David
Yeah, we are indeed. Just a final bit around policy and regulation. Does it really support modern methods of construction and are there still barriers to widespread adoption, do you think. When you go before clients, do they need persuading to go down the modular route.

Paul
They do because of the failures you've mentioned. What I tend to find is once we go into sectors, so education now, there's no questions. We're delivering in defence, we're delivering it. I have a hearts and minds issue when I go into a new sector because of the failures. It doesn't work.

But we build great buildings. If you strip it all back, it's a steel frame building with exactly the same materials as traditional construction. But it's down to us, the offsite industry, to build buildings that are quicker, high quality and at a lower cost. Because if we do that, there'll be no barriers because that's what clients are interested in, the delivery vehicle. And I think it's now down to the industry to deliver against that.

David
You talked about the importance of design. A lot of people have a view of offsite modular as boxy and bland. Is that still the case.

Paul
No, not at all. Again, it's a steel frame building. Listen, we are not going to build the Sydney Opera House, we are not going to build a landmark building through it. But social infrastructure, schools, prisons, accommodation, housing, they can look great. It's exactly the same materials.

But for the New Hospital Programme, for example, we are not going to build the central core and all the complicated spaces. It's going to be a blended approach. We can go and build all the wards and we can industrialise that and deliver it at high quality.

So five, 10 years ago, I'd say everything must be volumetric, this is the way forward. But as I've matured in my thinking, no, it needs to be a blended approach. And we are working with some big tier ones in terms of potential joint ventures in the future, where it's exactly that approach. We do what we're good at and they do what they're good at and I think that's the way forward.

David
I guess there's no reason why a classroom should be different in Bradford to Bedford, should it really. It should have the same components.

Paul
Yeah. And the way the Department for Education procures schools now, those classrooms aren't different. They have standardised it. I think they've done a great job on that.

And it's kind of like the tweaks. The biggest issue with schools is the planners making sure it looks the same as the local landscape, which we can do. But then you get planners who have specific requirements that, you know, I don't like. I want double height space here or whatever. And it just costs a lot of money to the public purse. When you look at it, does it make that much difference. We can make it look like a great building. That's the kind of thing we need to address.

David
I'm going to attempt to summarise what we've talked about. Modular offsite has a great future. You've got a great model for taking advantage of that. You focus heavily on digitisation, technology, innovation, talent. In order to do that, don't grow too quickly. Grow in a manner that you can control and you have control of quality and design and all the elements of the build.

We need some changes to planning to make it easier to build, period. But there's a great future for modular construction in the UK. Does that sound.

Paul
I think we can become world leaders at it, I really do.

David
Do you think we are already or not.

Paul
We are world leaders in the uptake of 3D design and world planning delay. Our name's getting out around the world. A lot of companies from other countries visit me and start to talk. You'd be amazed how many of us have the same issues across different construction areas.

There's a huge social housing problem across the developed world. There's huge legislative barriers that stop it getting built. Sometimes you need to take a step back and go, actually, there's the requirement, the funding's there and we need to stop certain vested interests and work together to deliver it.

Because everyone deserves to live in a lovely house, afford a lovely house. And I think mass production, quality and scale can address that. And that excites me.

David
And that's a great way to finish. Except I've got one final question. If you could change one thing, you're the king of the industry, whatever you say goes, what thing would you change to make the industry better.

Paul
We could probably guess what I'm going to say, because I picked it up, but I think to make the industry better, there's probably one legislation piece and one behavioural piece. The legislation piece is we need to sort out planning. Key government infrastructure projects like schools, hospitals, prisons should be delegated powers. We shouldn't have to go through the whole planning requirement. There should be a central government team that makes sure the buildings look great, but they should go through because it's costing us a lot of money in delays and it's costing the population in them not having great buildings.

So that's the first thing I would change. The second thing I would change is culture. There's too much confrontation and people not looking at the bigger and long term picture. And if we can address that, and that comes with fragmentation of how we're set up, but if we're going to address those, we're going to have a great next decade.

David
Well, you did great on the short yes or no questions. You did terrible on the one thing you changed too, but exactly. Paul Ruddick, Chair of Reds10, thank you very much.

Paul
Thank you very much.

David
Thank you for tuning in to Behind the Built Environment. If you enjoyed this episode, like, share and subscribe on your favourite podcast provider. And don't forget to leave us a review. It really helps us to reach more people across the industry. For more in depth conversations with industry leaders and the latest updates from BESA, stay connected and keep listening. Until next time, I'm David Frise and this has been Behind the Built Environment. Goodbye.