As part of our 50th anniversary activities, we had a chat with Keith Noddings, Group Finance Director at FT Group. We asked this long-standing RedSky customer for his views on the evolution of the construction industry and its software.
Reflections on Industry Evolution
What changes have you seen in the construction industry through the years?
Well I can’t claim to have industry experience stretching back as far as 1975, because I was only three at the time! But I do know for sure that construction has undergone a lot of change since then.
My dad was a joiner by trade. I’ve got a black-and-white photo of him stood on a timber-framed building on a roof, with a hammer in one hand and a cigarette in the other. He’s not wearing a hard hat or any PPE, and there are no safety railings.
You simply couldn’t get away with that these days. Things are very different now. Construction is a lot more safety conscious and professional.
That’s a good thing …
Yes, of course. Health and safety are vitally important and as an employer, we want everyone returning home safe every day.
There’s now a huge emphasis on abiding by laws and regulations, and on being able to provide evidence of compliance. For example, for every job on site we have to produce a method statement and get it signed off – these extra requirements all add time and cost to the job.
Today, employers have a legal duty of care to protect not just the safety of employees, but also their health and wellbeing – mental and physical. That means doing all they reasonably can to provide a safe and supportive work environment. And that includes how people interact with each other.
When I started work, back in the ‘90s, there wasn’t any of that. You got on with your job, you behaved sensibly, you worked safely and you spoke to people in a way that you felt was right and fair.
Life has always been unpredictable, but people somehow seemed more resilient back then, and more able to navigate life’s ups and downs.
Do you feel the industry has become more litigious?
Yes. Today’s world is an insurer’s dream: everyone can claim for anything. And it seems that the buck always stops with the main contractor.
In years gone by, the supply chain was responsible for its people and their actions. But the main contractor now carries responsibility for how its supply chain works and interacts on site, as well as for anything that goes wrong.
It’s much easier to single out one entity. Fines can be unlimited and based on turnover so litigation against the main contractor can result in very expensive penalties.
I mentioned earlier about having to provide evidence of compliance. Well, we’re now taking extra steps to provide evidence of our workmanship, health and safety by providing video evidence of work carried out on site.
Our site managers now have camcorders built into their hard hats, so that we can create and then store a digital record of the work carried out that day. If there’s ever a query about the quality of our workmanship, years down the line, we’ll be able to provide video evidence of exactly what we delivered.
You mentioned carrying responsibility for your entire supply chain – could you explain, please?
The government is continuously introducing changes, placing more and more onus on us as the main contractor to bear responsibility for our supply chain, including its people and their actions. If there’s a subcontractor incident on site, it’s ultimately the main contractor who’s held responsible.
We also have to be certain that employees in our supply chain are paid at least the minimum wage, have been trained, are qualified to do the job they are working on, have the legal right to work in the UK, are treated fairly…. to name but a few areas that are now our responsibility.
Do you carry the tax liabilities for your supply chain too?
In a sense, yes.
The VAT domestic reverse charge is a case in point. It was introduced in March 2021 and applies to most building and construction services supplies. Our subcontractors used to pay the VAT themselves. But under the CIS [Construction Industry Scheme], as the main contractor we now have to deduct the VAT from each subcontractor payment and pass it on to HMRC.
As we are acting as a tax collector, we are ultimately responsible for any VAT errors, as well as any CIS deductions taken from our supply chain.
As part of our responsibility, we need to also ensure that our supply chain is not involved in any tax evasion. We can be liable if it is seen that we were aware of this, even if we aren’t directly involved.
I believe this situation has come about because the government lacks resources. Main contractors have become the tax collector for their supply chain. These additional new responsibilities involve big changes that place a significant cost burden on main contractors’ shoulders.
Technology and the Role of Software
How has the use of software evolved in your operations?
We have three companies in the FT Group: Walter Thompson and Tom Willoughby (both are fairly large main contractors), and Langtons (which is slightly different in that it does a bit of product selling and steelwork).
RedSky software is a job costing system and has been from the start, through MICA, DEMA and now the current RedSky solution. All three companies use it, predominantly for accounts and cost control of sites – they all account costs by job.
RedSky used to be a client desktop system but today everything’s now web based. It’s far more integrated and user-friendly, with dashboards that enable users to see only the data that’s relevant to them.
That’s a far cry from the days when we had to print out and pore through reams of paper, marking the data we needed with a highlighter pen.
Which RedSky app or module has made the biggest impact on the Group?
That has to be Business Analytics. It’s been a game-changer for us.
RedSky used to be a piece of software for the Finance only, but over the years we’ve rolled it out to more and more departments across the business, to boost the efficiency of our operations.
Our contract managers and QSs [quantity surveyors] used to ask the Finance team to provide them with costs on their jobs, but now they can ‘self-serve’, using Business Analytics.
They just log onto the system and immediately they are presented on screen with a nice-looking, user-friendly dashboard displaying real-time cost and sales information on their jobs. Simple pie charts give users a handy overview and it’s easy for them to drill down into the data if needed.
The self-service model is proving to be a far more efficient way to operate and it saves a lot of time for everyone involved. Across the three businesses in the Group, we now have 40 Business Analytics licences.
I understand the RedSky Payment Performance app is proving very useful too…
Yes. We use the app to measure how quickly we pay our supply chain. It’s ideal for us.
Public sector frameworks now insist that you pay your supply chain within a defined payment period. To be successful – and to stay on them – you have to be able to prove that you have a track record of paying suppliers within an agreed number of days.
For example, we may be required to demonstrate that we pay 80% of our supply chain within 30 days and 20% within 50 days. It’s a pass/fail question.
The app is perfect for us because we can build in parameters to make the timings work for our business. For example, invoice dates are always a bit of a grey area, so we set up the system with the date when the invoice is received as our start point, rather than the date on the invoice (which could in theory be several weeks earlier).
Once the parameters are set, the app then provides us with all the evidence we need, at the touch of a button.
How do you feel about payment performance targets?
The public sector pays us quickly as the main contractor, so expects us to pay our supply chain quickly. Many Tier 1 contractors pay their supply chain in 60 days plus, so in principle I think it’s a good thing.
What’s your procure-to-pay process?
We have two buyers for the Group’s three trading companies. They use the RedSky system as a transaction process: to generate the purchase order, which is then automatically emailed to the supplier and digitally stored in the job folder.
We used to distribute paper invoice copies around the business for approval, but it’s all now handled within the system.
Perspectives on AI in Construction
What are your feelings about AI?
I sometimes struggle to get enthusiastic about technological innovations like AI. Maybe I don’t have the energy or the enthusiasm to change. I can’t help thinking that I’ll just leave that to the next generation… they’ll grow up with it, so it’ll be the norm for them.
Mind you, I do believe there is immense value in understanding the older, traditional methods. In finance, older members of staff tend to have a better understanding of how the figures on the computer screen have been calculated and where they’ve come from. That’s because they started out by working out things like Payroll manually.
When I look at data on screen, if I spot something that doesn’t look right, I interrogate the data, work out if there’s an error or not and then correct it if needed. Although many young people are a whizz on computers, they don’t always have the accounting knowledge to be able to spot unusual figures or check that they are correct.
Is there a risk of people in construction becoming over-reliant on AI?
Yes, and it’s happening already.
Whenever we want to get onto a public sector framework or tender for a public job, we have to provide a raft of information about how we do things, including our processes, safety procedures and a lot more besides. Usually about 40% of the information is about price and 60% is about quality.
We are finding that many competitors are using AI tools like ChatGpt to assist in their tender submissions. ChatGpt will answer any question generically. It is raising the bar in terms of the quality and depth of answers expected. And of course, it also slashes the time needed to complete a tender document.
But using AI for public sector submissions can be very risky.
What are the risks?
We want to benefit from all the efficiencies that AI brings. But understanding how to use it to our best advantage is a major challenge.
We recognise the vital importance of building in sufficient time and effort to be able to scrutinise the entire draft submission, line by line, to ‘make it our own’. It’s absolutely essential that every aspect of the submission is an accurate, genuine representation of our company, our processes, our people and our performance.
Public sector bodies are clearly concerned about the potential for over-reliance on AI in preparing tender documentation, because many now ask bidders to declare what proportion of their submission has been generated by AI.
Why RedSky Over Generic Accounting Software?
What does RedSky software do for the FT Group compared with a more generic accounting product?
RedSky is dedicated to the construction industry. It understands how construction companies work and has a solid appreciation of the complexity of our industry.
Generic accounting packages like Sage don’t even come close – they just do accounts. If you want them to do job costing, you have to purchase on a bolt-on. And there’s no way that generic systems can deal with things like CIS and retentions. Whereas with RedSky these things are just part of the product.
What I also like about RedSky software is that everything is always nicely integrated, so Payroll can be integrated with all your costings. RedSky covers all the bases. It is a good piece of software for our industry.
Is there anything else you’d like to say?
Fifty years is a long time for any business, but especially in something as niche as construction IT.
Happy birthday RedSky!
ABOUT FT GROUP
Based in the North East, FT Group comprises three well-respected and long-established construction businesses: Walter Thompson Contractors Ltd (contracts up to a value of £15 million across a variety of sectors); Tom Willoughby Ltd (private and public sector projects up to a value of £2 million throughout the North East); and Langtons Ltd (steel products and services). The Group has £70 million annual turnover and employs more than 250 people.
