Two decades ago a brave post-graduate student researching crime discovered that she could safely wander around the most crime-ridden streets if she disarmed potential muggers by engaging them in conversation.

What she had discovered is that it is difficult to commit a crime against a person with whom you have formed a bond. The same applies in the commercial environment.

Successful companies have always recognised the value of human relationships, while unsuccessful ones have generally lost sight of the humans behind their contractual obligations.

According to one study, better performers put more emphasis on relationships than competition, whereas poor performers gave, at best, equal emphasis to both.

Nonetheless, a study of management texts will produce little or no mention of the importance of relationship-building. When it is mentioned it is typically in the context of a company cynically exploiting “relationships” to extract more and more revenue.

“Relationships should not be about what parties can extract from one another,” explains Brian, “but rather a sharing of ideas and knowledge between people with common interests.”

Relationships offer an enhanced interface in contracting. They offer partnering on equal terms, whereas contracting alone typically entrenches a master-servant relationship.

Over the years, Murray & Roberts executives have maintained several such relationships which have indirectly spawned a number of business ideas and new commercial ventures.

But the benefits are by no means one-way. “We have, for instance, maintained a relationship with professor Roger Flanagan at Reading University in the United Kingdom. From us he has gained valuable insight into Murray & Roberts and the South African construction industry, which has assisted him in engaging the global construction industry.

“We, in turn, have benefitted from his other relationships with industry leaders throughout the engineering and contracting worlds. More importantly, Roger’s strategic insight into the future development of our industry has played a central role in defining our Rebuilding Murray & Roberts strategy. I first heard the phrase ‘Design Build’ from Roger in 1991,” says Brian.

“This demonstrates how value can be derived from relationships that otherwise have no commercial basis.”

Personal relationship-building is by no means limited to disinterested parties. It is even more important when there is a commercial bond between companies.

“Even where two organisations contract, most actions take place between individuals in the respective organisations. These relationships are as enduring as the effort invested in them by individuals.

“For instance, our success in the aluminium smelter programme is largely due to the fact that we put so much of ourselves into building relationships with the people who represent the organisations we were dealing with,” says Brian.

But not all Murray & Roberts projects have been as constructive. Much depends on the people charged with maintaining the relationship and Murray & Roberts has some long-standing relationships which are cold and sterile.

“It can be a war zone rather than a relationship, with endless bickering over rights and responsibilities. Yet without fail, if we make the effort to inject into the contractual arrangement the concept of a value-adding relationship, then this will in itself be sufficient to transcend day-to-day issues. Personal contact has a way of blowing away animosity,” says Brian.

“The lesson is – keep on talking and engaging, even if the relationship is tense. You have to continually raise the bar of connectivity to an ever higher level.

“It begs the question of whether we should even contemplate contracting into an environment where a client demonstrates no interest in establishing a relationship? Can we contract based on nothing more than payment of money for services rendered?

“We do have a few residual contracts like that,” says Brian, adding that such lack of relationship on a contract of any size results in no added value, no finding of innovative solutions or exploring new areas of common interest.

Relationships are considered important at all levels within the organisation but are arguably at their most dynamic and sensitive at the project management level, where they can mitigate the risk of getting too absorbed in the detail and neglecting the strategic destination of the project.

Relationships have been particularly important throughout Murray & Roberts’ history. “The Group would not exist in its current form were it not for strategically important relationships at various stages of its evolution.

“The company has grown, not by hostile takeovers or cold earnings-based acquisitions, but by the merger of like-minded companies which had long-since forged close relationships based on personal contact. The finance for growth often also came from friends,” says Brian. In more recent years, Murray & Roberts has made several asset-based acquisitions devoid of relationship, and paid the price.

In today’s construction economies, future survival depends on having the critical mass to be a global player. Industry consolidation has become a fact of life and Murray & Roberts intends to be an active player by acquiring assets before it is itself acquired.

“However, before we talk acquisition, we are actively developing up-front relationships with individuals in areas where acquisition has been identified as a strategic goal.

“In a consolidating industry, relationship-building is a valuable risk mitigation factor.” Murray & Roberts has over a period of decades achieved more within relationships, typically in commercial partnerships, than without them on a go-it-alone basis.

“And when we have failed it has been principally due to the lack of a relationship. Wherever problems have arisen, my first response has been to look at the nature of the relationship and to work on improving it,” says Brian.

Protecting a relationship can sometimes require turning work away. This is how Murray & Roberts responded when asked by one of its most valuable clients to deliver a project within an unachievable time frame, knowing that failure to deliver could have prejudiced the company’s long-term relationship with the client and a partner in a market offering good growth potential.

Brian draws the analogy between a commercial relationship and a marriage. A relationship, like marriage, is neither static nor an event, but something that has to be worked at regularly.

Its nature can also change. The leadership team of a client can change, replaced by a new generation of managers with different ideas. You then have to work at rebuilding the relationship.

Sometimes the anonymity of the corporate environment can encourage people to hide behind the organisation. But Brian notes that contracting parties are increasingly driven to pierce the corporate veil and find out more about the individuals they will be dealing with.

This forces people to confront personal relations and make judgement calls on the individuals they deal with. To outsiders, the company takes on a distinct personality based on the aggregation of the personalities and integrity of its officers.

“If the market does not like the way our executives represent the organisation, we have to correct it.”

An organisation also has a personality comprised of its values and corporate culture. For instance, Murray & Roberts is a citizen of South Africa and for many stakeholders its personality is defined by the extent to which it builds relations with communities and the government.

Nowhere is this more important than in black economic empowerment (BEE) where there may be numerous partnership opportunities, but no value to the transaction. “In a world which has become quite cynical and contractual, the companies that succeed over the long term will be those that build on trust-based relationships.”

LONG-TERM RELATIONSHIPS
Enduring partnerships have been a feature of many of Murray & Roberts’ greatest achievements.

“Different levels of partnership are critical to our ability to deliver sustainable earnings growth and value creation,” says Brian Bruce. “They help us to access new markets, enhance our technology capability, deliver on black economic empowerment in South Africa and ultimately, deliver quality projects.”

World class delivery
The aluminium smelter programme in southern Africa, including the Mozal smelter in Mozambique and the Hillside smelter in Richards Bay, is an impressive showcase of one of the Group’s most successful partnerships to date.

Together with its Canadian implementation partner, SNC-Lavalin, Murray & Roberts has established new international benchmarks for aluminium smelters with the completion of Mozal I and II.

By developing and maintaining strong relationships with both SNC-Lavalin and the client, BHP Billiton, Murray & Roberts was able to deliver world class performances not only in commercial terms but also in the equally important criteria of health and safety, environmental impact and community benefit.

Empowerment
Murray & Roberts recently entered into an empowerment partnership with the J & J Group that will pave the way for substantial new opportunities in the railway rolling stock industry.

The partnership arrangement provides J & J and its empowerment partners with a share in future project work awarded to Murray & Roberts subsidiary, Union Carriage & Wagon, which builds and refurbishes railway locomotive coaches.

This initiative creates a broad empowerment base for UCW, enabling it to fulfil empowerment requirements in government tenders. But the value of the partnership goes beyond that. With the combination of market demand, operational success, innovativeness and superb credentials, it is expected to generate new business opportunities in the domestic market and in sub-Saharan Africa.

Market access
Partnership and teamwork have also been key elements of Murray & Roberts’ success in the Middle East. A mutually beneficial relationship with local contractor Al Habtoor has enabled the latter to tackle major projects in its own market and Murray & Roberts to generate new international growth.

The Burj al Arab hotel in Dubai provided a platform for Murray & Roberts’ entry into the United Arab Emirates. Completed by the partnership of Murray & Roberts and Al Habtoor for the Ruler of Dubai, Sheikh Mohammed Bin Rashid Al Maktoum, Burj al Arab is the tallest hotel in the world and the ultimate expression of luxury and hospitality.

A number of other world class structures have subsequently been completed by Murray & Roberts and Al Habtoor, including the Dubai Airport concourse.

LONG-TERM RELATIONSHIPS
As the $45 billion aluminium smelter programme in southern Africa draws to an end, Murray & Roberts has been developing new relationships with potential clients.

In an environment of long gestation periods for new projects in South Africa, as well as investment uncertainty and the expectation of some clients that contractors should take on unreasonable levels of risk, Murray & Roberts has had to be innovative in its efforts to develop viable new opportunities.

One example of this is the Group’s relationship with pulp and paper producer, Mondi. Mondi recently awarded a R2,3 billion brownfields mill expansion project in Richards Bay to Murray & Roberts in partnership with the Finnish engineering consultancy, Jaakko Pöyry.

Mondi selected Murray & Roberts for a number of reasons, including its proven world class mega project capability, its triple bottom line approach which gives equal attention to commercial, health, safety, environment and community matters and its extensive knowledge of the Richards Bay area.

The Richards Bay Pulp Mill expansion is the first project in a substantial capital investment programme that Mondi is currently considering. It will involve the installation of sophisticated new equipment geared to reduce environment-unfriendly coal consumption, fresh water consumption and effluent as the mill increases its production capacity.

If Murray & Roberts delivers the quality of performance clients have come to expect on projects such as the Mozal and Hillside aluminium smelters and the Ibhayi brewery in Port Elizabeth for SAB Miller, it will be ideally positioned to participate in other projects in the Mondi mill upgrade programme. As Casper Nice, General Manager of Mondi Group Technical Services, confirms, Mondi is an extremely loyal partner and will reward good performance with ongoing opportunities, as is evidenced by its 20-year relationship with Jaakko Pöyry.

The project may also open other doors for Murray & Roberts. Mondi is a wholly owned subsidiary of Anglo American and this may offer the opportunity for Murray & Roberts to demonstrate its capability to the global mining and industrial giant.