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Sustainability Report 2006

HONG KONG SAR CHINA Headquarters Gammon Construction DIALOGUE FOR Gammon Construction Limited (China) Limited 28th Floor, Devon House Shenzhen TaiKoo Place, 979 King’s Road 33/F United Plaza Hong Kong 5022 Binhe Avenue, Futian Tel: 852 2516 8823 Shenzhen 518026 Fax: 852 2516 6260 People’s Republic of China CHANGE Tel: 86 755 8373 2902 SINGAPORE Fax: 86 755 8291 1915

Gammon Pte Limited Co Reg No: 198001094M Beijing 29 International Business Park #06-05 No. 604 Diyang Tower Acer Building, Tower B H2 Dongsanhuan BeiLu Singapore 609923 Chaoyang District Tel: 65 6722 3600 Beijing 100027 Fax: 65 6722 3601 People’s Republic of China Tel: 86 10 8453 7688 MACAU Fax: 86 10 8453 7699

Gammon Building Construction Shanghai (Macau) Limited Room 903, Dongchen Building 168 EDIF Tong Nam Ah Centre Com 60 Mu Dan Road 19/R Macau Shanghai, 201204 Tel: 853 827 789 People’s Republic of China Fax: 853 827 938 Tel: 86 21 6845 7590 Fax: 86 21 6845 7270

We value and encourage dialogue on our reporting mechanism. Feedback provides invaluable insight to judge how to best communicate what is important and of interest to our stakeholders so that in future we can establish better platforms for dialogue on relevant issues. We encourage questions or comments by contacting [email protected]. This Report and other corporate information are available on our website at www.gammonconstruction.com.

Jointly owned by Jardine Matheson and Balfour Beatty Printed on chlorine and acid-free paper made from fibre sourced from substainable forestry. About this Report CHIEF EXECUTIVE’S STATEMENT Contents We have used the Global Reporting Initiative 1 Chief Executive's Statement (GRI) Guidelines 2002 only as a broad 2 Dialogue with the Executive Committee framework for certain sections and 5 Fifty Years of Quality Leadership performance indicators. In parallel, we have As the industry responsible for the design and construction of also prepared this Report giving due 9 Economic and Business our society’s built environment, we are increasingly consideration to BS8900: Guidance for 13 Social Responsibility accountable for both what and how we deliver. At Gammon, 16 Health and Safety Managing Sustainable Development (2006). 20 Environmental Protection we see this as an opportunity for industry to change. 25 The Dialogue for Change The 2006 year marks our fourth successive year of sustainability reporting. We report as part of our leadership and corporate social responsibility commitment and to demonstrate that sustainability makes good business sense both to us, as an individual company, and to the VERIFICATION STATEMENT wider industry. In addition to informing stakeholders on our progress for the year, this Report aids us in reviewing our internal management processes and serves as an internal benchmark The Business Environment Council (BEC) was Accuracy of Data and peer driver for targeted improvement. commissioned by Gammon Construction BEC is satisfied that the content presented in Limited (Gammon) to provide a verification this Report is consistent with the documents With this Report, we are deviating from our previous reporting structure and taking a bold statement for its 2006 Sustainability Report, and data reviewed and interviews conducted step forward to invite dialogue amongst our colleagues and broader industry stakeholders to “Dialogue for Change” (the Report). BEC during the verification process. Nothing has examine current practices with the view to encourage change at the macro-industry level. conducted sample checks of the data, claims come to our attention that causes us to We start this Report with our Executive Committee discussing our industry’s progress in critical and case studies in the Report through believe the Report contains or communicates areas of reform and the need for action. The departure point for this dialogue refers to document and data review and interviews any significant errors or interpretations that published industry reform papers such as the Construct for Excellence report in Hong Kong with responsible personnel. Our findings are cannot be supported by existing strategies, and Construct 21 in Singapore. Our objective is to foster leadership where it is lacking and to set out as below. documentation or procedures at Gammon. engender the will to move forward together to champion rather than impede our industry’s Recommendations to clarify minor and, by extension, our society’s sustainability. Completeness of the ambiguities identified during verification Report Scope have been incorporated into this Report to As I mentioned in our 2005 report, the construction industry is increasingly answerable to “Dialogue for Change” provides a BEC’s satisfaction. Existing data and society for its contribution to our collective sustainable future. As well as aspiring to act as a comprehensive account of Gammon’s information management systems are catalyst for change and offer a platform for dialogue to encourage reform, our 2006 Report sustainability commitments and performance considered both effective and reliable. demonstrates how we link business performance objectives under a balanced scorecard in relation to its core business activities and approach to our Quadruple Bottom Line in sustainability (economics, social, environment and, locations for the reporting period. The Report Opinion health and safety). This provides the background understanding in how key drivers to our covers Gammon’s “Quadruple Bottom Line” BEC considers this Report an accurate and business such as safety, risk, innovation and supply chain galvanise corporate strategy into approach to sustainability in working with reliable presentation of Gammon’s initiatives action. Each is addressed in detail within this Report, supported by performance indicators business partners and the wider community and achievements towards corporate and, where applicable, illustrated through relevant Gammon projects. With our performance

to address health and safety, social, sustainability in 2006. presentation, we also revisit key themes raised by the Executive Committee through ,, ,, environmental and economic considerations. commentaries on sustainable best practices. These are indicated as Dialogue within the text. The Report also highlights Gammon’s leadership in promoting change within the Of significant interest for the year has been our improved safety performance. Through our construction industry to move towards a Step Change in Safety programme we have achieved our lowest ever accident incident rate more sustainable future. and no fatalities on sites. Other initiatives, building on previously established systems for risk Kevin Edmunds management and environmental performance, now allow us to assess our footprint and take Adequacy of Data Chief Operating Officer timely action to prevent or mitigate potential problem areas. The added outcome is the ability The relevance and clarity of the Report’s Business Environment Council to act on value opportunity for customers and projects. Various programmes and pilot studies presentation of economic and business, undertaken with our supply chain are advancing our ability to control our direct and indirect social, health and safety, and environmental impacts and again, leverage value into our work. performance are considered adequate for a broad audience of readers. The selected case Our purpose is to demonstrate that sustainable best practice drives value and offers viable studies provide a representative overview of alternatives to the traditional market practices that increasingly counter sustainable Gammon’s sustainability challenges across development. different business operations and locations, and the responses that the Company has Yours sincerely, made to these. BEC considers the indicators in the Report a sound basis for performance benchmarking in the construction industry that can continue to evolve as industry benchmarking becomes more widespread. Thomas Ho Chief Executive Gammon Construction Limited March 2007

Sustainability Report 2006 1 About this Report CHIEF EXECUTIVE’S STATEMENT Contents We have used the Global Reporting Initiative 1 Chief Executive's Statement (GRI) Guidelines 2002 only as a broad 2 Dialogue with the Executive Committee framework for certain sections and 5 Fifty Years of Quality Leadership performance indicators. In parallel, we have As the industry responsible for the design and construction of also prepared this Report giving due 9 Economic and Business our society’s built environment, we are increasingly consideration to BS8900: Guidance for 13 Social Responsibility accountable for both what and how we deliver. At Gammon, 16 Health and Safety Managing Sustainable Development (2006). 20 Environmental Protection we see this as an opportunity for industry to change. 25 The Dialogue for Change The 2006 year marks our fourth successive year of sustainability reporting. We report as part of our leadership and corporate social responsibility commitment and to demonstrate that sustainability makes good business sense both to us, as an individual company, and to the VERIFICATION STATEMENT wider industry. In addition to informing stakeholders on our progress for the year, this Report aids us in reviewing our internal management processes and serves as an internal benchmark The Business Environment Council (BEC) was Accuracy of Data and peer driver for targeted improvement. commissioned by Gammon Construction BEC is satisfied that the content presented in Limited (Gammon) to provide a verification this Report is consistent with the documents With this Report, we are deviating from our previous reporting structure and taking a bold statement for its 2006 Sustainability Report, and data reviewed and interviews conducted step forward to invite dialogue amongst our colleagues and broader industry stakeholders to “Dialogue for Change” (the Report). BEC during the verification process. Nothing has examine current practices with the view to encourage change at the macro-industry level. conducted sample checks of the data, claims come to our attention that causes us to We start this Report with our Executive Committee discussing our industry’s progress in critical and case studies in the Report through believe the Report contains or communicates areas of reform and the need for action. The departure point for this dialogue refers to document and data review and interviews any significant errors or interpretations that published industry reform papers such as the Construct for Excellence report in Hong Kong with responsible personnel. Our findings are cannot be supported by existing strategies, and Construct 21 in Singapore. Our objective is to foster leadership where it is lacking and to set out as below. documentation or procedures at Gammon. engender the will to move forward together to champion rather than impede our industry’s Recommendations to clarify minor and, by extension, our society’s sustainability. Completeness of the ambiguities identified during verification Report Scope have been incorporated into this Report to As I mentioned in our 2005 report, the construction industry is increasingly answerable to “Dialogue for Change” provides a BEC’s satisfaction. Existing data and society for its contribution to our collective sustainable future. As well as aspiring to act as a comprehensive account of Gammon’s information management systems are catalyst for change and offer a platform for dialogue to encourage reform, our 2006 Report sustainability commitments and performance considered both effective and reliable. demonstrates how we link business performance objectives under a balanced scorecard in relation to its core business activities and approach to our Quadruple Bottom Line in sustainability (economics, social, environment and, locations for the reporting period. The Report Opinion health and safety). This provides the background understanding in how key drivers to our covers Gammon’s “Quadruple Bottom Line” BEC considers this Report an accurate and business such as safety, risk, innovation and supply chain galvanise corporate strategy into approach to sustainability in working with reliable presentation of Gammon’s initiatives action. Each is addressed in detail within this Report, supported by performance indicators business partners and the wider community and achievements towards corporate and, where applicable, illustrated through relevant Gammon projects. With our performance

Sustainability Report 2006 1

DIALOGUE

drawn out mediation and arbitration WITH THE EXECUTIVE COMMITTEE ,, The Tang Report cites procedures. Customers and project Q: recommendations to engender proponents must therefore bear a share of The traditional practices of the construction industry worldwide have consistently resulted in a quality culture, professionalism, the responsibility for change.

poor quality and performance, allied to a confrontational culture. In the markets where we the pursuit of value in procurement, operate, this position on the whole has been no different. In response to the state of the excellence in safety and environmental ,, Better procurement practices are industry, the Construct for Excellence report (more commonly known as the Tang Report) performance, and, an overall innovative put forward in the reports as was released in 2001 as a way forward for the construction industry of Hong Kong. and productive industry. A similar Q: one of the key drivers to reforming the In Singapore, a similar report, Construct 21, was released in 1999. Both reports strike at the message is portrayed in Construct 21. industry. What is Gammon’s view heart of an industry in crisis, addressing the shortcomings and practices that are leading the These are issues familiar to Gammon’s ,, on this? construction industry towards failure rather than being a champion of the sustainable business culture. What is your experience development movement. These reports put forward suggested changes within industry and a in practising these recommendations and Change to the procurement process is timetable for implementation. To date there has been a significant groundswell of opinion what changes,, are necessary to make them perhaps the most viable of the suggested within the industry that considers progress to have been limited. mainstream? reforms that can be implemented

immediately with minimal effort. We say this The following dialogue addresses selected issues discussed in these reports that our Executive To reverse accepted practices and bring these as it was proven to be effective in changing recommendations into the mainstream, Committee views as necessary for review and offers viable recommendations for industry the UK industry following the release of change involves all levels of industry. reform based on current developments around the world. similar themed reports (the Egan and We test our sustainable business culture on Latham Reports). Today in the UK, it is an a daily basis and find that these very accepted practice to have early inclusion of recommendations can and do make us project participants in the procurement non-competitive in today’s market. process. Government as both customer and regulator needs to act more decisively and consistently. Executed properly, creative procurement in Regulate, but more importantly, create the the form of design and build, PPP or other incentives for best practice. And, when similar contract types, delivers value while electing punishment, it must be immediate minimising risks, induces the quality culture, and punitive enough to deter future engenders project lifecycle management repetition. Customers, both private and and promotes environmental best practice. public sector, must develop awareness of a Examples of these can be seen in the PPP project’s lifecycle process and be accountable contracts used internationally and now for the long-term negative industry impacts evolving in Singapore and mainland China. they are creating through the lowest price We have hopes that Hong Kong will follow mentality which gives rise to the current suit in this respect. adversarial atmosphere. Procurement also requires partnering within

a project. Experience has taught us that ,, Is legislation the answer to ,, partnering enhances the delivery process, Q: implement these changes? decreases the all-too-common adversarial attitudes and, of major importance to the financial strategy, helps to reduce disputes Whilst legislation and enforcement have and costly claims management. As an their place in our industry, we are not example, partnering is embedded in our necessarily seeking enforced change. We are preferred subcontractors and suppliers promoting change as a win-win scenario system, through which we are beginning to due to the benefits and value it can see positive and encouraging results. generate. We would encourage the creation

of an industry environment which drives quality and opportunity by looking at the ,, The Tang Report maintains longer-term value, and not price alone. Q: that safety is a shared Incentivising and rewarding best practice responsibility amongst regulator, will help drive forward continuous employers and employees. It adds that improvement and ultimately a more while a sufficient statutory environment sustainable and responsible industry. exists for site safety, the fault lies with enforcement by appropriate authorities. We cannot expect high quality whilst It also suggests that major public and demanding lowest cost nor can we achieve private sector clients need to drive world-class safety standards under the improvements in safety performance. contractual obligations of compressed work Do you agree with these as the way programmes. Partnerships are at best ,, forward? difficult on projects experiencing the often

2224 Sustainability Report 2006 Sustainability Report 2006 3

DIALOGUE

2224 Sustainability Report 2006 Sustainability Report 2006 3 Safety starts with the individual, not the fore the issue of minimum wage and non- Leading through quality Gammon’s Services and regulation. First and foremost, management payment of wages. Managing these serves Operations at levels and then workers need to have an to lower project risks and reduce the risks to for 50 years, we remain Gammon Construction Limited is a leading ingrained safety culture across the industry. our own business viability. Gammon works committed to growing with construction and engineering services group This is about a formalised on-site hierarchy of across the region and holds to compliance operating in South East Asia. We are equally safety management that involves the main with the minimum wage guidelines set out and serving the region owned by Jardine Matheson and Balfour contractors and all subcontractors on site. by the relevant regulatory bodies. through a constant search Beatty, both of which actively contribute Last year Gammon established the Step A component of our KPIs for preferred for excellence in all we do. Change in Safety programme to tackle this subcontractors involves this issue. their expertise and experience to support our very problem. We find that where there is vision of being the industry’s leading services Ensuring prompt payments down the supply awareness there is better behaviour. provider and partner of choice. We have chain to suppliers and subcontractors is also established and grown our reputation Rather than using the regulatory stick as the an important issue. Regrettably, it is through our in-depth knowledge of the local primary motivator, we tend to look at frequently the main contractors who receive markets leveraged by the application of prevention as the way forward. Training is the bad press when non-payments occur, international best practice to the projects and strategic to the safety strategy and leads to despite having fulfilled obligations, whilst activities we undertake. a more professional staff and workforce. the culprit time and again restarts business Gammon's Workers Registration Centres under a new name elsewhere. Main In 2007, Gammon celebrates 50 years of have helped, but more needs to be done contractors frequently get treated as bankers business in Hong Kong. From our beginnings in terms of public courses and industry of last resort even after having paid the associations’ participation in training. supply chain. Unfortunately, we often see in building a new runway for Hong Kong’s There must be also a quality control element little regulatory action to pursue the former Kai Tak Airport through to our for effectiveness. defaulting payers. Such practices need to regional presence today, we approach each change if we are going to attract talent and project with the same principles of integrity As a business incentive, a scheme akin to survive as an industry. and quality. the UK’s Five Star Health & Safety Audit,

which rewards good performance through insurance savings, would be a welcome ,, So where does industry go influence to promote better practices. Q: from here to,, bring about the We also advocate that the procurement reforms you support? process lends itself as a powerful tool in how safety is managed on site and brings the Rather than be reactive, we should be customer into the picture, as suggested by proactive in fostering change. The key is the Tang Report. engagement and leadership from all who As a company, we acknowledge we have claim leadership positions. With this, there a long way to go in our pursuit of the safe should no longer be the fear of change but workplace. Regrettably, the safety record the will to embrace practices that are within the wider regional industry, already demonstrating the benefits that FIFTY YEARS OF whilst showing improvement, still does industrial reforms can bring. However, this not make good reading. For example, requires a leap in collective leadership from Hong Kong's average industry incident rate governments, industry stakeholders and individual companies. In Singapore, QUALITY LEADERSHIP is approximately six times higher than comparable statistics for the UK and we should build on the recent promotion Singapore. As much as we do as an of PPP contracts and price-quality tender- individual contractor on sites, our influence scoring mechanisms to demonstrate the is limited, and it will take more effort on the value these generate to customers and the part of project owners and the Government wider industry stakeholders. In Hong Kong,

to spur this complacency into action. the ideal opportunity now exists through the

newly formed Construction Industry Council ,, (CIC) to respond to the challenges in need The Tang and Construct 21 of industry action. Q: reports heavily emphasise the need for a professional workforce.,, How might this come about?

Gammon holds by its sustainability tenet that employees are productive and perform when they are treated well and know there is a pay cheque on time. This brings to the

4 Sustainability Report 2006 Safety starts with the individual, not the fore the issue of minimum wage and non- Leading through quality Gammon’s Services and regulation. First and foremost, management payment of wages. Managing these serves Operations at levels and then workers need to have an to lower project risks and reduce the risks to for 50 years, we remain Gammon Construction Limited is a leading ingrained safety culture across the industry. our own business viability. Gammon works committed to growing with construction and engineering services group This is about a formalised on-site hierarchy of across the region and holds to compliance operating in South East Asia. We are equally safety management that involves the main with the minimum wage guidelines set out and serving the region owned by Jardine Matheson and Balfour contractors and all subcontractors on site. by the relevant regulatory bodies. through a constant search Beatty, both of which actively contribute Last year Gammon established the Step A component of our KPIs for preferred for excellence in all we do. Change in Safety programme to tackle this subcontractors involves this issue. their expertise and experience to support our very problem. We find that where there is vision of being the industry’s leading services Ensuring prompt payments down the supply awareness there is better behaviour. provider and partner of choice. We have chain to suppliers and subcontractors is also established and grown our reputation Rather than using the regulatory stick as the an important issue. Regrettably, it is through our in-depth knowledge of the local primary motivator, we tend to look at frequently the main contractors who receive markets leveraged by the application of prevention as the way forward. Training is the bad press when non-payments occur, international best practice to the projects and strategic to the safety strategy and leads to despite having fulfilled obligations, whilst activities we undertake. a more professional staff and workforce. the culprit time and again restarts business Gammon's Workers Registration Centres under a new name elsewhere. Main In 2007, Gammon celebrates 50 years of have helped, but more needs to be done contractors frequently get treated as bankers business in Hong Kong. From our beginnings in terms of public courses and industry of last resort even after having paid the associations’ participation in training. supply chain. Unfortunately, we often see in building a new runway for Hong Kong’s There must be also a quality control element little regulatory action to pursue the former Kai Tak Airport through to our for effectiveness. defaulting payers. Such practices need to regional presence today, we approach each change if we are going to attract talent and project with the same principles of integrity As a business incentive, a scheme akin to survive as an industry. and quality. the UK’s Five Star Health & Safety Audit,

to spur this complacency into action. the ideal opportunity now exists through the

Gammon holds by its sustainability tenet that employees are productive and perform when they are treated well and know there is a pay cheque on time. This brings to the

4 Sustainability Report 2006 Map of business locations Our services cover design, management Gammon's Quadruple Bottom Line and construction services in building, Beijing civil engineering, foundations, electrical and mechanical, infrastructure maintenance and Economic & Business operation and, interiors refurbishments and The integration of sustainability into our Social Responsibility fit out. To support our services, we own and organisation supports us We promote socially CHINA maintain a comprehensive range of heavy in meeting the expectations responsible practices and Shanghai construction plant and equipment in of our shareholders initiatives to retain our and customers. industry leadership role Hong Kong, a concrete batching business and be the contractor Shenzhen (operating from batching plants in Hong of choice. Dongguan Kong and Macau) and a steel fabrication business provided from the Gammon

Hong Kong Technology Park in Hong Kong and our Taiwan Sustainable Pristine Works factory in Dongguan in Development Macau THAILAND mainland China. PHILIPPINES Governance VIETNAM Although privately owned, Gammon works within a structure of corporate As the fourth facet of governance that reflects organisational our sustainability vision, We strive for continuous Health & Safety is managed MALAYSIA transparency, integrity and accountability. improvement and leadership as a priority function Pristine Works Governance is vested in the Board of in environmental protection to our business. Singapore Main Offices through innovation Health & Safety Directors and chaired by a Non-executive and best practice. Director (a shareholder representative). Environmental Protection The Board sets the strategies and policies Gammon Group Operations that govern corporate management, financial performance and risk management. During 2006, Gammon operated through registered companies The Executive Committee (ExCo), Gammon has an established Risk and and joint ventures in Hong Kong, Singapore, Macau and Sustainability at Gammon comprising six Executive Directors, mainland China. Under the Gammon brand, our internal Compliance Committee to strengthen We define sustainability as the pursuit of our Construction Services Division operates in Hong Kong, Macau and is responsible for the implementation of management structure. Chaired by a long-term economic and business goals in an mainland China. these strategies and policies, and the day-to- shareholders’ representative, the Committee environmentally and socially responsible day management of the Group’s businesses. Business Nature: civil, foundations, building and reviews in greater detail the Group’s manner. This definition aligns to the maintenance services, and support services covering plant & The Committee reports directly to the Board financial controls (including receiving reports guidelines set out under the universally equipment, concrete technology and steel fabrication and is accountable to the shareholders for from external and internal auditors), recognised 1987 World Commission of performance. All members of the Committee legal compliance, health, safety and Environment and Development (WCED). are full-time employees of the Group or are environmental compliance, insurance status, Lambeth operates from offices in Hong Kong, Singapore and exclusively seconded on a full-time basis. risk management, business continuity In pursuit of our sustainability journey and Shenzhen in mainland China. Each Executive Director holds specific planning, information management systems with respect to the nature of the Business Nature: engineering design services and responsibilities within the Group’s operations and human resources matters. construction industry, we operate under the material technology with clear delineation of portfolio. accepted triple bottom line captured in the Code of Conduct WCED guidelines, with the addition of health Gammon’s updated Code of Conduct has and safety, thus forming our unique Provision of services during 2006 in Hong Kong and Macau been approved by our shareholders and is Quadruple Bottom Line. Risk to life and due for release in 2007. It has been livelihood is an inherent factor within the Balfour Beatty E&M Limited Business Nature: electrical & mechanical contracting services developed from the business principles and construction industry and therefore frameworks of our two shareholders’ necessitates and justifies health and safety own codes, the Hong Kong Independent becoming this fourth component in our Provision of services during 2006 in Hong Kong and Macau Commission Against Corruption sample sustainability framework. Business Nature: interior specialists providing contracting and Code of Conduct and the United Nations project management services, along with selected quality interior Global Compact’s ten principles covering construction products human rights, labour standards, the environment and anti-corruption.

Established in 2006 in Singapore and Hong Kong

Business Nature: specialist Public-Private Partnership business

6 Sustainability Report 2006 Sustainability Report 2006 7 Map of business locations Our services cover design, management Gammon's Quadruple Bottom Line and construction services in building, Beijing civil engineering, foundations, electrical and mechanical, infrastructure maintenance and Economic & Business operation and, interiors refurbishments and The integration of sustainability into our Social Responsibility fit out. To support our services, we own and organisation supports us We promote socially CHINA maintain a comprehensive range of heavy in meeting the expectations responsible practices and Shanghai construction plant and equipment in of our shareholders initiatives to retain our and customers. industry leadership role Hong Kong, a concrete batching business and be the contractor Shenzhen (operating from batching plants in Hong of choice. Dongguan Kong and Macau) and a steel fabrication business provided from the Gammon

Established in 2006 in Singapore and Hong Kong

Business Nature: specialist Public-Private Partnership business

6 Sustainability Report 2006 Sustainability Report 2006 7 In an industry that traditionally fails to with the best in safety and environmental The business strategy of Balanced Scorecard embrace best practices in sustainability performance standards. These principles managing risk and working Gammon uses the balanced scorecard and often, in the short-term, can penalise directly reflect our established core values. approach to guide corporate strategy and best practice to the point of non- In practice, this concerns the application of with opportunity through our set the annual targets for the Group’s competitiveness, we choose to adhere to the value engineering for risk control, balanced scorecard approach performance. Whilst the scorecard driving principles of integrity, inclusivity, innovation for differentiation and quality of consistently delivers on incorporates financial performance and cost stewardship and transparency underlining workmanship, in order to deliver beyond leadership, it also serves to promote the core our sustainable development journey. customer expectations. As discussed in the Gammon’s business model to principles of sustainability reflecting our In doing so, we build the long-term strategy introduction to this Report, we see our promote long-term value for commitment to the Gammon Quadruple of Gammon’s identity and reputation as the sustainability commitment as a leadership Bottom Line. partner of choice. Translating this to our position to lobby for and advocate industry our customers. Quadruple Bottom Line is about fostering reform. Whilst as a company we can In developing, guiding and communicating a quality culture and professional workforce, endeavour to positively change our own corporate strategy, the balanced scorecard taking responsibility for building and ways, it is only through collective action by ensures that our core drivers, which for 2006 managing our supply chain and, all stakeholders including governments, included safety, risk, innovation and supply implementing operating processes that are customers and subcontract partners that our chain management, become key risk aware, efficient, innovative and industry and the wider community will reap performance areas for all business units. productive whilst operating in accordance the benefits of a sustainable future. Business, function-specific and project manager scorecards incorporate and cascade Gammon's Core Values down these key drivers through operations intentionally bringing accountability to the front lines. Employee remuneration and Customer-centric bonuses are by design linked to balance • consensus builders scorecard performance. • responsive • trustworthy

Resource-rich Quality Risk Managers • design, build, plant • safety • environmentally • Asian experts • integrity committed • Balfour Beatty • value • forward, lateral thinking • Jardines • social responsibility • respectful, team players ECONOMIC Innovative • learning organisation • technology enabled • sustainable construction AND BUSINESS

8 Sustainability Report 2006 In an industry that traditionally fails to with the best in safety and environmental The business strategy of Balanced Scorecard embrace best practices in sustainability performance standards. These principles managing risk and working Gammon uses the balanced scorecard and often, in the short-term, can penalise directly reflect our established core values. approach to guide corporate strategy and best practice to the point of non- In practice, this concerns the application of with opportunity through our set the annual targets for the Group’s competitiveness, we choose to adhere to the value engineering for risk control, balanced scorecard approach performance. Whilst the scorecard driving principles of integrity, inclusivity, innovation for differentiation and quality of consistently delivers on incorporates financial performance and cost stewardship and transparency underlining workmanship, in order to deliver beyond leadership, it also serves to promote the core our sustainable development journey. customer expectations. As discussed in the Gammon’s business model to principles of sustainability reflecting our In doing so, we build the long-term strategy introduction to this Report, we see our promote long-term value for commitment to the Gammon Quadruple of Gammon’s identity and reputation as the sustainability commitment as a leadership Bottom Line. partner of choice. Translating this to our position to lobby for and advocate industry our customers. Quadruple Bottom Line is about fostering reform. Whilst as a company we can In developing, guiding and communicating a quality culture and professional workforce, endeavour to positively change our own corporate strategy, the balanced scorecard taking responsibility for building and ways, it is only through collective action by ensures that our core drivers, which for 2006 managing our supply chain and, all stakeholders including governments, included safety, risk, innovation and supply implementing operating processes that are customers and subcontract partners that our chain management, become key risk aware, efficient, innovative and industry and the wider community will reap performance areas for all business units. productive whilst operating in accordance the benefits of a sustainable future. Business, function-specific and project manager scorecards incorporate and cascade Gammon's Core Values down these key drivers through operations intentionally bringing accountability to the front lines. Employee remuneration and Customer-centric bonuses are by design linked to balance • consensus builders scorecard performance. • responsive • trustworthy

8 Sustainability Report 2006 Gammon’s Balance Scorecard for 2006 Selected Corporate Risks

Financial Customers and Markets Identified Risks Mitigation and Response Achieve net profit Increase customer satisfaction in private • Over-reliance on Hong Kong market • Develop new territories and products Control corporate overheads to meet sector budget Issue Sustainability Report • Loss of competitiveness due to • Simplify business structure, improve process Achieve claims Build capabilities for recurring and life- high overhead efficiency, exit low value activities cycle earnings opportunities • Failure of specialist subcontractors • Tighten up subcontractor selection and Internal Business Processes People and Future Growth develop partnerships Meet HSE objectives and targets Improve internal staff morale and Implement standard risk management in engagement • Disastrous construction accidents • Implement Step Change in Safety programme all projects Structured succession planning for senior Implement supply chain management management • Major environmental or public • Each project to have environmental plans and preferred and strategic partners Demonstrate through staff survey an health incident audit schedule Optimise material procurement through increase in innovative culture China sourcing Firmly establish rail unit Risk awareness has improved under this we took measures to re-position ourselves to system with significant steps taken in pursue wider regional opportunities in the = achieved = substantially achieved = not achieved establishing a clear governance structure and Singapore and Macau markets as well as new accountability within projects. An important business opportunities such as Private-Public

Group Turnover for 2006 (US$ millions) Disputes Resolution objective of these measures is to create an Partnership (PPP) projects. The contract ,,Due to the complex nature of construction, effective risk management process that format and long-term nature of these types $1,200 the resolution of disputes can be prohibitively directly involves the project site workers. of projects offer a significant chance to $1,000 $1,108 expensive and time consuming for the parties promote and implement sustainable best

$800 involved. Disputes can and do impact the An outcome of this process is the opportunity practice into construction and property $822 $778 financial bottom line through cash flow to identify potential areas within a project management. Gammon Capital was $600 $739 and budget uncertainties, and can ultimately that leverage value. By working smarter with established in 2006 as the vehicle for $400 harm business viability for all companies risk, we can re-engineer processes or enhance participation in PPP projects in the Asia $200 across the procurement process. Disputes, safety designs and incorporate a range of region. $0 and the poor handling thereof, invariably opportunities such as better procurement 2003 2004 2005 2006 cost society and end-users more money. practices, higher levels of quality and Turnover by Location for 2006 lowering costs by containing adverse social Gammon advocates reform in the and environmental impacts. 5.0% Group Turnover by Discipline for 2006 management of disputes, such as through 1.0% Hong Kong resolution mechanisms for use during the 3.6% Corporate Risk Management Macau 4.1% Civil & Rail contract period, as opposed to arbitration, In addition to systematically addressing 32.4% which comes only at contract completion. project-level risks, during the year we China Foundations The absence of more progressive forms of 30.4% progressed with the establishment of a live 67.6% resolution, we believe, is contributing to the Singapore Building corporate risk register. This register captures 45.5% confrontational nature of the industry and the risk exposure at the strategic level of our Electrical & therefore stifling partnering, innovation and goals and operations and those which exert 16.4% Mechanical corporate profitability. Despite proven significant influence on our business viability. Construction successes gained through the use of Seventeen primary risks have been Services mechanisms such as contract dispute consolidated through company consultation Hong Kong Construction Market resolution advisors and interim mediation and consensus. The above table gives clauses in the UK, Singapore and elsewhere, examples of these risks and the mitigations $140 14.0% Gammon's Financial Performance little progress has been made in Hong Kong Market ,, we have put in place. These continue as focus 120 12.0% Share (%) The strong performance from across the in this direction. areas of management attention and are Group’s businesses during 2006 delivered 100 10.0% discussed further in subsequent chapters. Overall above our financial targets, ensuring a good 80 8.0% Risk and Opportunities Market Size 6.0% return to our shareholders and providing an 60 (In HK$ Management Gammon’s market position and excellent springboard for our various 40 4.0% billions) We see our commitment to sustainability competitiveness have been identified as business plans for 2007. Performance was 20 2.0% being naturally aligned with our approach to strategic business risks. In our traditional achieved through a substantial order book 0 0.0% implementing a comprehensive and robust and principal market of Hong Kong, we have 1998 1999 2000 2001 2002 2003 2004 2005 2006 secured across our disciplines during the 1st half risk management framework. The year 2006 seen a substantial and continuous decrease year and the successful conclusion to Note: Information from Report on the Quarterly Survey of Construction Output issued by Census and marked the first full year of operation for the in the market size, which whilst increasing outstanding claims and older contracts. Statistics Department, HKSAR Government Group’s formalised risk management system, our actual percentage in market share, may which forms part of our long-term business actually present an unsustainable business sustainability strategy. position in the longer-term. During 2006,

10 Sustainability Report 2006 Sustainability Report 2006 11 Gammon’s Balance Scorecard for 2006 Selected Corporate Risks

10 Sustainability Report 2006 Sustainability Report 2006 11 In mainland China, we still encounter processes, thus enhancing the means and The engagement of our main Stakeholders resistance, licensing issues and unsustainable methods to work smarter and more stakeholders – customers, Our success as a business and our pricing strategies, which restrict contracting efficiently. In addition to the work commitment to sustainable development opportunities. In order to break down these fostered under the CITE, we reward staff community, employees and are directly related to our ability to meet and barriers to entry to the mainland China through our biannual innovation supply chain partners respond to stakeholder expectations. construction market, further support is competition and include innovation targets provides the springboard of Our customers (and in many cases our needed from the Hong Kong Government to within the balanced scorecard. Our annual customers’ customers), employees, supply support a level playing field. Whilst we still staff survey on innovation shows the opportunity from which to chain and the wider community represent see a longer term future in this market, understanding of and supports the need for integrate the principles of the key stakeholders to our business. Innovative Solutions at present our strengths lie in developing innovation; however, the survey results sustainability. Continuously engaging with these groups materials and supply resources, supported by indicate that we are not proving as and actively working with their interests in To house the extensive ventilation fan a strong supply chain programme that successful in the development and mind are essential management approaches systems at the Eagle's Nest Tunnel project assures quality and integrity of supply. application of ideas. We have therefore used to develop our strategy as a preferred in Hong Kong, approximately 15,000 m2 of prioritised a programme in 2007 to mild steel ductwork is required. The original partner and employer of choice. project requirements demanded continuous Platform for Innovation encourage innovation to flourish by welding and full painting of the steelwork, Proactive innovation is a cornerstone of our establishing innovation champions within Customers despite the cramped and confined tunnel business. Aided by our global reach through middle management. In our strategic vision for 2010, we position environment. The BBE&M team, Balfour Beatty, we stay well informed of new who are subcontracted for the electrical ourselves to be customer focused with a

product development and the potential Encouraging Innovation strong sales and business development and mechanical items on the project, ,, proposed an innovative engineering solution applications to our regional operations. Involving contractors and suppliers at earlier culture and to be the preferred service that modularises the steel ductwork so With external collaboration and through our stages of a project significantly contributes provider in all our business areas. that it can be folded into shape, own Centres for Innovation and Technical to the design and planning process so as to This requires an ongoing programme that thus eliminating the need for on-site Excellence (CITE), which are embedded in better control costs and risks, and ultimately, welding. Pre-galvanising of the steel actively engages customer interests when to provide a platform for innovation. modules was also proposed to eliminate the each of our business disciplines, we foster developing services. Efforts are in place to need for painting. This innovative approach the pursuit of innovation, whether Current forms of tender often discourage be more adept at services by means of generated real value to the project through refinement and improvement of existing alternative proposals, thereby stifling enhanced internal business processes and by programme, cost and safety improvements. practices or the development of new innovation and ultimately the pursuit of a working with customer interests to creatively products and processes. more sustainable solution. We therefore encourage a tendering process that allows Front line management is where innovation time to develop and explore opportunities, proves its worth. Gammon nurtures a culture promotes appropriate alternatives,, and of thinking creatively with technologies and ultimately, rewards innovation.

Procurement and Value SOCIAL Planning Design Construction Operation & Maintenance Differentiation through Innovation RESPONSIBILITY

In late 2006, Gammon and Lambeth won the contract for the removal of a tract of

buried seawall at Marina Bay in Singapore lue Opportunity Greatest Very Limited Opportunity based upon an innovative construction Va Opportunity to Add Value proposal that clearly demonstrated value to to Add Value both the project and customer. Our previous experience of the Marina Bay area, including Time an understanding of the complex soil behaviour, enabled us to offer an alternative engineering solution. This featured prefabricated modular trusses and underwater working, utilising specialist machinery from our Hong Kong operations. This robust design and construct solution ensured we were able to win the project through our technical proposals as opposed to cost alone.

12 Sustainability Report 2006 In mainland China, we still encounter processes, thus enhancing the means and The engagement of our main Stakeholders resistance, licensing issues and unsustainable methods to work smarter and more stakeholders – customers, Our success as a business and our pricing strategies, which restrict contracting efficiently. In addition to the work commitment to sustainable development opportunities. In order to break down these fostered under the CITE, we reward staff community, employees and are directly related to our ability to meet and barriers to entry to the mainland China through our biannual innovation supply chain partners respond to stakeholder expectations. construction market, further support is competition and include innovation targets provides the springboard of Our customers (and in many cases our needed from the Hong Kong Government to within the balanced scorecard. Our annual customers’ customers), employees, supply support a level playing field. Whilst we still staff survey on innovation shows the opportunity from which to chain and the wider community represent see a longer term future in this market, understanding of and supports the need for integrate the principles of the key stakeholders to our business. Innovative Solutions at present our strengths lie in developing innovation; however, the survey results sustainability. Continuously engaging with these groups materials and supply resources, supported by indicate that we are not proving as and actively working with their interests in To house the extensive ventilation fan a strong supply chain programme that successful in the development and mind are essential management approaches systems at the Eagle's Nest Tunnel project assures quality and integrity of supply. application of ideas. We have therefore used to develop our strategy as a preferred in Hong Kong, approximately 15,000 m2 of prioritised a programme in 2007 to mild steel ductwork is required. The original partner and employer of choice. project requirements demanded continuous Platform for Innovation encourage innovation to flourish by welding and full painting of the steelwork, Proactive innovation is a cornerstone of our establishing innovation champions within Customers despite the cramped and confined tunnel business. Aided by our global reach through middle management. In our strategic vision for 2010, we position environment. The BBE&M team, Balfour Beatty, we stay well informed of new who are subcontracted for the electrical ourselves to be customer focused with a

Procurement and Value SOCIAL Planning Design Construction Operation & Maintenance Differentiation through Innovation RESPONSIBILITY

In late 2006, Gammon and Lambeth won the contract for the removal of a tract of

12 Sustainability Report 2006 structure project delivery in a manner that Workforce such as safety, all staff, including sub- Supply Chain minimises risk, offers opportunity and adds In an industry notorious for its employment contracted site workers, undergo mandatory Focusing on customers’ expectations in the value. We believe these operational changes volatility and its often poor image, training at Gammon's Workers Registration quality of end products prompts us to in work culture will align us more closely attracting and maintaining key staff is an Centres. Through education and training, continuously rethink how we can effectively with sustainable best practice. important corporate goal and risk mitigation we create a uniform work culture and move across the corporate value chains to strategy. Several years ago we acknowledged effectively develop as a sustainable business deliver beyond expectations. Central to this

Partnering the need to encourage and develop new and ultimately, as an industry. is supply chain management, a key driver to ,,Partnering with customers is a key talent for the industry. We now provide our sustainability strategy. component of delivering on our strategic annual Gammon University Fellowships During 2006, we further responded to vision. It involves a long-term commitment (awarding 28 in Hong Kong and five in current workforce challenges through the In 2006, Gammon made headway in Partnering in Singapore based on trust that promotes a shared mainland China during 2006), industrial development of comprehensive succession formalising the strategy to establish a group culture, common goals, respect and the attachments in Singapore (similar to planning. By moving employees out of the of preferred subcontractors and suppliers. The design and construction contract for objective to maximise effectiveness of joint the Fellowships, with two given in 2006) comfort zone of work, we seek to encourage Behind this is the long-term objective to the Giant hypermarket and distribution centre in Singapore gave us full control of resources. Alternative contract models such and scholarships at several leading Chinese multi-tasking, broader project responsibilities meet or exceed customer expectations and the design and ensured proactive as the New Engineering Contract (NEC) and universities (84 in 2006). We back this up by and regional mobility, both recharging to lower the risks to our business. As selected engagement and partnering with the the Guaranteed Maximum Price (GMP) offer ensuring that continuous development and workforce competencies and enhancing businesses sign up to our Supply Chain customer. This provided the Gammon team the potential of such benefits and through training opportunities exist for all staff levels productivity. The plan is designed to be an Management Charter, to be formally with the time and opportunity to explore proven examples have effectively lowered including apprenticeships (20 technical and avenue for individual career advancement established by mid-2007, each company alternatives and value engineer the project, which ultimately offered savings back to the overall costs, improved programme seven craft apprentices underwent throughout Gammon and an incentive for becomes a partner to Gammon and, as with customer and enabled Gammon to carry certainties, increased productivity and training in 2006), graduate training (57 in high performers to advance within the our own internal processes, commits to out additional fitting-out works for the reduced disputes. Despite such evident 2006) and senior management training, management hierarchy. stringent key performance indicators that customer whilst still achieving completion success, the local industry has been slow to which is facilitated by our shareholder, are monitored for continuous improvement on programme. engage in these practices and continues to Jardine Matheson. Community and the ability to meet partnering fail in capturing ,,the opportunity it preaches At Gammon, we consider society as our expectations. Our preferred subcontractors,

as best practice. Industry Succession ultimate customer and beneficiary of our by their commitment, become an extension ,,Whilst taking steps as a company, there is services. However, how we manage and of the Gammon brand and culture. As of Demographics of Workers Passing through also a need for the wider industry to respond engage the community reflects on the the end of 2006, we had 43 preferred Gammon's Worker Registration Centres (based on 32,923 workers) to human resources risks. Data from Hong specifics and evolution of our business subcontractor and suppliers covering 23 Kong’s tertiary education system suggests practices. In the first instance, we must trades and services. 12000 that approximately 30% of engineering ensure we minimise impacts and nuisance 20 or below from our activities, as we describe in later Another area deemed critical to the supply 10000 11,366 students seek careers in other industries upon 21-30 graduation whilst the demographic statistics chapters of this Report. As we seek earlier chain process is wage protection and 8000 8,155 from approximately 33,000 workers who stage project involvement where we take on payment issues when subcontracting. 7,819 31-40 6000 have passed through our own Worker greater design and engineering responsibility, Gammon is a supporter of the voluntary Prefabrication in Macau 5,004 4000 41-50 (1) Registration Centres show that nearly 60% we must consider the needs of the wage protection measures for cleaners and 579 The prefabrication of the bathroom units for

Number of Workers customer’s customer, that is, the end users of security guards introduced in Hong Kong in 2000 (1) are over the age of 40. 50 or above a given project. And then, as we progress to 2006. We directly employ cleaners, and will the Venetian Hotel project in Macau initiated 0 a powerful supply chain opportunity for long-term asset management and be establishing service agreements with our 20 or below 21-30 31-40 41-50 50 or above The current price-driven and confrontational Gammon. In addressing the buildability of Age of Workers culture that abounds in the industry is a maintenance projects, we are not just selected security partner firms to address the the project and responding to local considering end needs but are also directly wage protection issue at the subcontracted skilled labour shortages, we proposed (1) Combined age groups represent 59.3% of workers. deterrent to entry. This culture lowers the financial and intellectual rewards on offer, responsible for managing the public as they level. prefabrication as the optimal solution for the supply and installation of the bathroom and creates a stressful and unattractive use facilities. For example, on our PPP High

fittings. From material sourcing, mock-up

Speed Roads Maintenance contract in Hong career option for young people. We need Wage Protection construction and customer approval through Attendees at Gammon's Worker Registration Centres ,, to collectively redress this imbalance. Kong, road users are our ultimate customer Ensuring that wages are paid to to establishing assembly lines in mainland Only through broad reform in addressing the and all our works must be balanced, planned subcontracted site workers on time is a non- China, we were able to create value for the Subcontractor and executed according to their interests project and customer through improved Workers problems and image of construction will the negotiable responsibility of employers. 9.5% installation rates, reduced wastage, industry be assured of the professional and needs. Good and consistent industry employment consistent quality and improved safety. Direct Gammon leadership and workforce required for future practices not only benefit workers but Workers ,, growth. Gammon takes social responsibility to the mitigate the critical workplace risks and personal level through community consequences to project delivery. 90.5% Our continuous training agenda for involvement, including the support of As guardians to the welfare of their society professionals increasingly includes our sub- charities such as Mindset, the Community and people, governments must act more contractors. Mentoring and skills Chest and the Lighthouse Club, and through decisively on these issues to enforce prompt voluntary participation in community events Note: Based on 36,800 workers passing through centres (as of 31 Dec 2006) improvement programmes on site, payment and prosecute the defaulting,, payers and management training through the by our staff. within the procurement chain. Gammon Academy, help foster the ethos for best practice. In core risk areas of operations

14 Sustainability Report 2006 Sustainability Report 2006 15 structure project delivery in a manner that Workforce such as safety, all staff, including sub- Supply Chain minimises risk, offers opportunity and adds In an industry notorious for its employment contracted site workers, undergo mandatory Focusing on customers’ expectations in the value. We believe these operational changes volatility and its often poor image, training at Gammon's Workers Registration quality of end products prompts us to in work culture will align us more closely attracting and maintaining key staff is an Centres. Through education and training, continuously rethink how we can effectively with sustainable best practice. important corporate goal and risk mitigation we create a uniform work culture and move across the corporate value chains to strategy. Several years ago we acknowledged effectively develop as a sustainable business deliver beyond expectations. Central to this

fittings. From material sourcing, mock-up

14 Sustainability Report 2006 Sustainability Report 2006 15

Promoting a Safety Culture To augment this pioneering effort, we Safety Leadership By fostering safety leadership ,, In response to the tragic and unacceptable significantly revised our health, safety and Improvement of the construction industry’s and bringing accountability loss of life we suffered in 2005, we undertook environmental management systems to safety record requires decisive moral to all staff, employees and an intensive corporate-wide review and ensure we have a series of checks and leadership and its monitoring from both the workers are more attuned to brainstorming of existing processes. balances in leadership that is closely aligned regulatory and commercial sectors combined Subsequently, we have restructured how we with international best practice. A further with an increased focus on site-based the personal behaviour and approach and manage safety through the separate leadership review process is now management. safety culture expected in Step Change in Safety programme launched underway, due to be completed in early Gammon’s safety vision. across all operations in early 2006. 2007, in which an individual manager’s Corporate management needs to consider Its purpose is to put safety as the first priority performance is benchmarked against a series accountability and awareness in safety Safety Standards at the Front Line on everyone’s agenda, as well as introducing of master key performance indicators and through financial incentives that focus on safety-focused changes across a broad monitored directly by the Chief Executive. safety and not just profitability and progress. The industry’s safety performance as a whole confirms that the majority of accidents relate spectrum of management processes Change is needed in rethinking safety as a to a few routine construction activities. In a By adopting such a systematic approach project lifecycle issue, enabling the safety risk and controls. preventative response to minimise such and governance structure to leadership, strategy to commence early in the design accidents, Gammon has developed a set of Leadership and Behaviour we put into place a consistent set of safety process (construction design management), physical safety standards that are to be A principal component of our Step Change standards and the processes to apply move through the construction phase and established and observed at the workplace regardless of location or size of project. programme is to address and create a them uniformly across the organisation. then into the life of the asset. change in human behaviour and to As we progress on our Step Change Gammon's Book of Safety Standards was reinforce and develop leadership in safety programme in 2007, middle management Regulators need to set workable standards published for its Hong Kong operations to make the understanding and application of management. In support of the agenda, and supervisory staff are targeted for that monitor leadership and hold employers the standards graphically simple and 92 of our most senior managers, from the leadership training. across the supply chain punitively responsible practical for all users. Instructions are based Chief Executive to Project Manager levels, for failure and even neglect in safety practice. on best practices and describe the statutory underwent executive-level safety leadership In tandem to implementing safety leadership, requirements, the safety requirements training during 2006. the Step Change programme addresses Good safety is also good business. With and the safety features for all routine construction activities. It reviews typical safety accountability at the front line through commitment and leadership, we believe the ,, plant and equipment used on site and the revision of both our reward and disciplinary zero accident vision is achievable. personal protective equipment to be used by procedures. Bonus schemes and league tables different trades when working. The book encourage performance and accountability, Standards and Procedures serves as a guide for Gammon employees and subcontractors and is now a mandatory and where accidents and incidents do occur, To augment the behavioural side of safety, tool for all on-site personnel. panels of enquiry are held to ensure a we have instigated a comprehensive revision systematic, consistent and fair approach is of our processes and standards for safety risk taken to understanding the root causes and management and control for the physical lessons to be learnt. Clear disciplinary rules environments in which we operate. HEALTH are now in place where negligence or bad This includes all sites, plant and equipment, practice has been established. We have and our resources and supply chain. further empowered our Safety Advisors, who now directly report to a project’s most senior Project risk registers, a functioning component AND SAFETY full-time manager on site. By bringing the of our risk management strategy, identify and appropriate accountability levels to all staff, assess site-specific safety issues and include employees and workers are more attuned to recommendations on preventative response the personal behaviour expected in actions for safety management. The registers Gammon’s safety vision. follow a series of procedures to ensure that the safety culture stays live for the duration of a project. These include workface briefings and risk assessments, Director-level involvement for significant risks, specified management procedures and regular site team reviews of risk registers.

Sustainability Report 2006 17

Sustainability Report 2006 17 Plant and equipment are of specific Supply Chain and Safety Performance Accident Incident Rate (Comparative Performance) concern to our safety management due to Subcontractors for 2006 the nature of their inherent high-risk and 90 Gammon Our subcontractors and suppliers are an After nearly a full year of the Step Change 80 severity factors in accidents. In addition to Group important part of our Step Change programme in action, our results suggest the 70 maintaining our fleet and plant in the best Hong Kong programme. As they work on our sites beginnings of a new and focused corporate 60 Construction working condition, under the Step Change and supply much of a project’s materials safety culture is taking hold across our 50 Industry programme we introduced several initiatives 40 and equipment, engendering safety operations. During 2006, we recorded Balfour to prevent safety mishaps when operating 30 Beatty awareness into their workforce and consistent monthly reductions in our 20 (1) machinery. These include enhanced visual Group products forms a key element of our accident incident rate (AIR), achieving our 10 and warning sensors on certain types of Observation Design to management strategy. We have taken lowest ever Group level AIR at 7.9 per 1,000 0 Enhance Safety equipment, an inspection and audit Incident Rate per 1,000 Workers 2002 2003 2004 2005 2006 substantive steps in extending the safety workers and no fatalities. This represents a programme for critical parts, a library of (1) Extrapolated from quoted frequency rate per 100,000 man-hours worked culture outside Gammon to these project 31% improvement during 2006. Gammon pioneers the use of real time operating manuals, a series of guides for partners by expanding the Workers The severity rate of our accidents, a measure monitoring techniques on deep excavation safely operating plant and equipment, and a projects to manage risks and enhance safety. Registration Centres. We require sub- of how serious an incident has been, has also crane operator centre. Deep excavations require substantial contractors to attend Gammon-led briefings shown a steady and encouraging decrease. Accident Incident Rate for Gammon's Operating Units temporary supports and strutting, which and workshops on safety thus enhancing our Whilst we perform well against available can be extensive and frequently create 40 Civil Design for Safety supply chain appraisal process. We also relevant benchmark industry results, such as cramped and restricted working areas. (Hong Kong) Consistent with our wider safety Hong Kong's construction industry average 35 Observational monitoring techniques using require sub-contractors’ site agents to carry Building our internally developed data collection commitment, we take a proactive approach out weekly formal safety inspections and, and Balfour Beatty's group average, we 30 (Hong Kong) software, GEOMON, enable us to view and to considering designing for safety. when necessary, we revise sub-contractor maintain the need to remain vigilant and 25 Foundations analyse live real-time data such as support This approach takes safety responsibility (Hong Kong) agreements to align with our enhanced vigorously pursue the zero accident vision. 20 loadings for deep excavation management. Electrical & back to the design stages, where safety and safety programme. Through this method we have the 15 Mechanical health hazards can be mitigated or We set discipline-specific AIR targets and (Hong Kong) innovative means to justify reducing the eliminated before a project reaches the 10 extent of strutting and supports without The Business Case for Safety annually monitor performance to identify Construction compromising their safety function, physical construction site. Designers will areas for improvement. For example, 5 Services Our work culture subscribes to the Incident Rate per 1,000 Workers thus creating safer conditions within deep therefore not only need to consider the safe Macau undeniable moral responsibility to ensure our Macau AIR (11.3 per 1,000 workers) 0 excavations for construction activities. end use of the building or asset, but also its was higher than the 2006 Group average, 2002 2003 2004 2005 2006 Singapore GEOMON has been successfully used on that sites, activities and workplaces are safe buildability. Gammon and our in-house reflecting the more transient nature of this Gammon projects in both Hong Kong safe for our employees and workers. engineering company, Lambeth, have and Singapore. This responsibility links directly to the workforce, which is predominantly established an internal working group to Severity Rate (Hong Kong) business case for safety management. imported labour from mainland China. review and advise the wider Group on using By proactively managing and controlling Seeing the necessity for safety education on 250 the design process to manage safety. In a continuous basis and to address this Hong Kong health and safety, accidents and injuries are Sector addition, our employees, through workforce characteristic, we opened the 200 Figures as at reduced, and as a company, we benefit from 31 Dec 06 professional involvements and institutions, increased productivity, less absenteeism, Macau Worker Registration Centre in publicly promote the need for greater efforts 150 reduced insurance and healthcare premiums late 2005. in design for safety across our industry. and ultimately, a better safety record, 100 Reflecting our zero accident vision, which places us in good stead for securing 50 future projects. we also track project performance in terms Number of Accidents)

of consecutive accident-free man-hours Man-days Lost/ Severity (Total 0 2002 2003 2004 2005 2006 worked. At the end of 2006, we had a number of strong performing projects Avoiding Injury through Innovation achieving over 500,000 accident-free man- Safety Performance for 2006 Noise, dust and flying debris are potential hours, and one project exceeding 1,000,000 health hazards and sources of injury to accident-free man-hours. Top Performing Projects Consecutive Accident-free Man-days workers operating in the vicinity of rock- (at 31 Dec 2006) breaking machinery. • Drainage Term Contract DC/2003/04, 1,063,920 Hong Kong An innovative design by Gammon’s Plant and Foundations teams pioneered at the • Giant Hypermarket, Singapore 918,930 Tai Hang Road project in Hong Kong • Three Pacific Place, Hong Kong 808,340 incorporates a water spray system onto the rock breaker arm directly above the chisel. • High Speed Roads Contract, Hong Kong 623,220 This eliminates the need for a worker to manually water down the works area. • Kowloon Southern Link Contract KDB200, 570,440 As well as separating the worker from the Hong Kong workface and hence improving safety, • Mandarin Oriental, Hong Kong 505,960 the design also minimises the amount of water required for dust suppression.

18 Sustainability Report 2006 Sustainability Report 2006 19 Plant and equipment are of specific Supply Chain and Safety Performance Accident Incident Rate (Comparative Performance) concern to our safety management due to Subcontractors for 2006 the nature of their inherent high-risk and 90 Gammon Our subcontractors and suppliers are an After nearly a full year of the Step Change 80 severity factors in accidents. In addition to Group important part of our Step Change programme in action, our results suggest the 70 maintaining our fleet and plant in the best Hong Kong programme. As they work on our sites beginnings of a new and focused corporate 60 Construction working condition, under the Step Change and supply much of a project’s materials safety culture is taking hold across our 50 Industry programme we introduced several initiatives 40 and equipment, engendering safety operations. During 2006, we recorded Balfour to prevent safety mishaps when operating 30 Beatty awareness into their workforce and consistent monthly reductions in our 20 (1) machinery. These include enhanced visual Group products forms a key element of our accident incident rate (AIR), achieving our 10 and warning sensors on certain types of Observation Design to management strategy. We have taken lowest ever Group level AIR at 7.9 per 1,000 0 Enhance Safety equipment, an inspection and audit Incident Rate per 1,000 Workers 2002 2003 2004 2005 2006 substantive steps in extending the safety workers and no fatalities. This represents a programme for critical parts, a library of (1) Extrapolated from quoted frequency rate per 100,000 man-hours worked culture outside Gammon to these project 31% improvement during 2006. Gammon pioneers the use of real time operating manuals, a series of guides for partners by expanding the Workers The severity rate of our accidents, a measure monitoring techniques on deep excavation safely operating plant and equipment, and a projects to manage risks and enhance safety. Registration Centres. We require sub- of how serious an incident has been, has also crane operator centre. Deep excavations require substantial contractors to attend Gammon-led briefings shown a steady and encouraging decrease. Accident Incident Rate for Gammon's Operating Units temporary supports and strutting, which and workshops on safety thus enhancing our Whilst we perform well against available can be extensive and frequently create 40 Civil Design for Safety supply chain appraisal process. We also relevant benchmark industry results, such as cramped and restricted working areas. (Hong Kong) Consistent with our wider safety Hong Kong's construction industry average 35 Observational monitoring techniques using require sub-contractors’ site agents to carry Building our internally developed data collection commitment, we take a proactive approach out weekly formal safety inspections and, and Balfour Beatty's group average, we 30 (Hong Kong) software, GEOMON, enable us to view and to considering designing for safety. when necessary, we revise sub-contractor maintain the need to remain vigilant and 25 Foundations analyse live real-time data such as support This approach takes safety responsibility (Hong Kong) agreements to align with our enhanced vigorously pursue the zero accident vision. 20 loadings for deep excavation management. Electrical & back to the design stages, where safety and safety programme. Through this method we have the 15 Mechanical health hazards can be mitigated or We set discipline-specific AIR targets and (Hong Kong) innovative means to justify reducing the eliminated before a project reaches the 10 extent of strutting and supports without The Business Case for Safety annually monitor performance to identify Construction compromising their safety function, physical construction site. Designers will areas for improvement. For example, 5 Services Our work culture subscribes to the Incident Rate per 1,000 Workers thus creating safer conditions within deep therefore not only need to consider the safe Macau undeniable moral responsibility to ensure our Macau AIR (11.3 per 1,000 workers) 0 excavations for construction activities. end use of the building or asset, but also its was higher than the 2006 Group average, 2002 2003 2004 2005 2006 Singapore GEOMON has been successfully used on that sites, activities and workplaces are safe buildability. Gammon and our in-house reflecting the more transient nature of this Gammon projects in both Hong Kong safe for our employees and workers. engineering company, Lambeth, have and Singapore. This responsibility links directly to the workforce, which is predominantly established an internal working group to Severity Rate (Hong Kong) business case for safety management. imported labour from mainland China. review and advise the wider Group on using By proactively managing and controlling Seeing the necessity for safety education on 250 the design process to manage safety. In a continuous basis and to address this Hong Kong health and safety, accidents and injuries are Sector addition, our employees, through workforce characteristic, we opened the 200 Figures as at reduced, and as a company, we benefit from 31 Dec 06 professional involvements and institutions, increased productivity, less absenteeism, Macau Worker Registration Centre in publicly promote the need for greater efforts 150 reduced insurance and healthcare premiums late 2005. in design for safety across our industry. and ultimately, a better safety record, 100 Reflecting our zero accident vision, which places us in good stead for securing 50 future projects. we also track project performance in terms Number of Accidents)

18 Sustainability Report 2006 Sustainability Report 2006 19 Environmental stewardship is Taking Ownership Performance Monitoring (the formal performance monitoring scheme directly promoted through When managing our environmental impacts, We treat regulatory compliance as the for Government projects). Such inconsistency we acknowledge that the degree of control minimum performance standard expectation does little to promote and encourage,, management of our own and ownership varies depending on the in our business. During 2006, we received environmental improvements. activities and processes and actual activities being undertaken and the four legal non-compliances, three in Hong Kong and one in Singapore. All four Waste Management by the engagement with our delivery processes. With respect to our own offices, production facilities and plant incidents were of a minor nature in terms of We improved waste management customers and supply chain and vehicle assets, we have total ownership the impact created, and caused no on-going performance in 2006 compared with to further extend our and therefore the responsibility to optimise long-term environmental damage. previous years, substantially exceeding our footprint of responsibility. lifecycle environmental performance. However, as compliance breaches, they 5% reduction target. Whilst the waste In our project operations, our scope for remain unacceptable. We responded so as charging scheme introduced in Hong Kong environmental stewardship is often a to ensure lessons are learnt and prevent may have had some influence, we believe function of the procurement process and repeat occurrences. We also continued our that management awareness and the near specific to contract requirements. environmental data gathering, principally completion of our major civil projects are Nonetheless, we actively seek improvements covering energy, waste and water, responsible for the observed reductions. in site management performance and enabling us to quantify our direct annual The lower value for Singapore reflects a minimise impacts where we have control. environmental impacts in a comprehensive profile of projects more focused on building Where procurement solutions offer us design and coordinated manner for better construction, which typically creates less control and influence, and in some cases the management and Group target setting. waste compared to civil projects. Our target subsequent operational responsibility, of a 5% reduction will continue into 2007. by using value engineering and sustainable The year-on-year absolute totals will vary design solutions we can demonstrate based on our workload, the nature of the We view waste control and management as a more comprehensive management projects we undertake and specific customer strategic business process, acknowledging of environmental issues such as needs. Consequently, we standardise our the extent of opportunities frequently being energy efficiency, waste management data to enable direct performance the function of project-specific constraints and water and resource consumption. comparisons through a set of key and contractual requirements. If we have the performance indicators (KPIs). Our performance and the respective KPIs for our Landfill Waste Generation KPI 2006 focus areas of waste management and

energy conservation are discussed below. 6 Hong Kong 5 5.2 In monitoring our water consumption, Singapore our 2006 KPI performance shows a 16% 4 improvement compared to 2005 for our 3 2.9 ENVIRONMENTAL Hong Kong operations. 2 0.9

Landfill Waste KPI Landfill Waste 1 1.5 0.6

Incentivising Environmental per HK$100,000 Expenditure)

3 0

2003 2004 2005 2006

Performance (m PROTECTION ,,We use our environmental data to track Note: Data presented applies to landfill waste only, as opposed to all wastes reported in previous reports internal performance; however, we struggle to find comparable local and regional data to scale ourselves against the wider industry. Water Consumption KPI With successful benchmarking initiatives used in the international markets, the regional 16 Hong Kong industry has the models to promote its own 14 benchmarking programmes. 12 13.5 Singapore 10 11.6 9.7 In addition, looking at performance at the 8 local level, industry functions at an apparent 6 4 5.3

disconnect in terms of recognition and ter Consumption KPI 2

reward for environmental performance. Wa per HK$100,000 Expenditure)

3 0 For example, in Hong Kong, several of our 2004 2005 2006 (m projects have won prestigious environmental awards, yet these same projects fail to score above average for environment in the Government’s Contractor Performance Rating

Sustainability Report 2006 21 Environmental stewardship is Taking Ownership Performance Monitoring (the formal performance monitoring scheme directly promoted through When managing our environmental impacts, We treat regulatory compliance as the for Government projects). Such inconsistency we acknowledge that the degree of control minimum performance standard expectation does little to promote and encourage,, management of our own and ownership varies depending on the in our business. During 2006, we received environmental improvements. activities and processes and actual activities being undertaken and the four legal non-compliances, three in Hong Kong and one in Singapore. All four Waste Management by the engagement with our delivery processes. With respect to our own offices, production facilities and plant incidents were of a minor nature in terms of We improved waste management customers and supply chain and vehicle assets, we have total ownership the impact created, and caused no on-going performance in 2006 compared with to further extend our and therefore the responsibility to optimise long-term environmental damage. previous years, substantially exceeding our footprint of responsibility. lifecycle environmental performance. However, as compliance breaches, they 5% reduction target. Whilst the waste In our project operations, our scope for remain unacceptable. We responded so as charging scheme introduced in Hong Kong environmental stewardship is often a to ensure lessons are learnt and prevent may have had some influence, we believe function of the procurement process and repeat occurrences. We also continued our that management awareness and the near specific to contract requirements. environmental data gathering, principally completion of our major civil projects are Nonetheless, we actively seek improvements covering energy, waste and water, responsible for the observed reductions. in site management performance and enabling us to quantify our direct annual The lower value for Singapore reflects a minimise impacts where we have control. environmental impacts in a comprehensive profile of projects more focused on building Where procurement solutions offer us design and coordinated manner for better construction, which typically creates less control and influence, and in some cases the management and Group target setting. waste compared to civil projects. Our target subsequent operational responsibility, of a 5% reduction will continue into 2007. by using value engineering and sustainable The year-on-year absolute totals will vary design solutions we can demonstrate based on our workload, the nature of the We view waste control and management as a more comprehensive management projects we undertake and specific customer strategic business process, acknowledging of environmental issues such as needs. Consequently, we standardise our the extent of opportunities frequently being energy efficiency, waste management data to enable direct performance the function of project-specific constraints and water and resource consumption. comparisons through a set of key and contractual requirements. If we have the performance indicators (KPIs). Our performance and the respective KPIs for our Landfill Waste Generation KPI 2006 focus areas of waste management and

Landfill Waste KPI Landfill Waste 1 1.5 0.6

Incentivising Environmental per HK$100,000 Expenditure)

3 0

2003 2004 2005 2006

disconnect in terms of recognition and ter Consumption KPI 2

reward for environmental performance. Wa per HK$100,000 Expenditure)

Sustainability Report 2006 21 opportunity to influence and manage the waste management, we are now embarking Energy Management and Understanding the reach of our energy design, substantial opportunities are on a number of initiatives to influence and Air Pollution footprint within a project aids us in presented to minimise waste in the delivery change our approach to managing waste. managing the direct impacts we create. Energy management and air pollution grew process. As an example, through re-design One pilot programme is exploring with Where we have full ownership, as with our as significant regional issues during 2006. and value engineering of the road a key customer the waste reduction plant, equipment, offices and workshops, Gammon’s response to these issues has alignment, piling solutions and the sea-wall possibilities at source through design and we address and manage energy for long- been consolidated through our commitment construction of our design and build procurement strategies, with the zero waste term performance efficiency. With projects, as a signatory of the Clean Air Charter. contract for Castle Peak Road in Hong Kong, project as the ultimate goal. In addition, we as our footprint increases, we have the This Charter, promoted by the Business we prevented an estimated 100,000m3 of are working with our supply chain to both opportunity to work with customers to Coalition on the Environment in Hong Kong, waste which may have otherwise been reduce waste and maximise reuse and reduce energy consumption of buildings Supply Chain Collaboration seeks to advance regional cooperation generated during the course of the project recycling opportunities. and facilities through energy-efficient amongst businesses and governments to Wire and cable drums can represent a under alternative contractual arrangements. designs, looking at factors such as passive proactively manage the air pollution significant source of waste on project sites, ventilation, building envelopes, solar gain especially since these drums are typically Waste Management problems that the greater Pearl River Delta Where the opportunity for re-design is ,, made of cardboard and plywood, which are During 2006, we invited expressions of faces. easily damaged and cannot be reused. not possible, we focus our efforts on interest for waste management partners in Group Energy Consumption KPIs Gammon and BBE&M have jointly engaged reducing construction stage waste through Hong Kong to increase the scope of recycling Whilst the focus of the Charter is on the with our cable and wire manufacturers to education of workers, site management 4000 and reuse of waste materials. We found, Pearl River Delta, we have elected to track all 2005 encourage the use of more durable plastic processes, and construction methodologies. 3500 drums, which can be returned to the however, that opportunities are limited on of our regional activities for transport, 3,601 As working examples, Gammon seeks to 3000 2006 manufacturers for re-wiring thus offering a this front as there appears to be little plant usage and electricity consumption, 2500 3,027 more sustainable waste management employ and promote modular, pre-cast and incentive given to encourage integrated which are our identified principal sources of 2000 2,507 solution. We have been able to recycle prefabrication construction processes, solutions to the construction waste 2,163 emissions. During 2006, we undertook a 1500 approximately 1,400 drums on the Eagle's and where in-situ work is required, seeks to management dilemma both at local series of activities and measures seeking to 1000 Nest and Nam Wan Tunnel projects, where apply reusable and systemised formwork to this initiative has been piloted. and regional levels. To change this, firm understand our energy demands and 500 125 minimise the use of timber, which typically 77 commitment from regulators is needed in improve efficiency internally and for our 0 ends up as waste. Energy Consumption KPI promoting a responsible waste recycling customers. The introduction of these Annual Electricity Annual Diesel Total Energy (GJ) Consumption Consumption industry and the actions from customers in

systems allows us to comparatively track our (per HK$1 million Project Expenditure) (kWh) (litres) To seek further opportunities, in 2006 we terms of how they procure and specify works energy efficiency and performance through established an internal waste management to encourage genuine,, waste minimisation KPIs. working group. Looking at both the and recycling. Energy Consumption (12-month Rolling Average KPI) for 2006 - Group Operation upstream and downstream influences on Our overall energy management improved during 2006, showing a 38% total reduction 140.0 Hong Kong in energy consumption from the previous & Macau Energy Management Initiatives for 2006 120.0 ( Including year. Contributing to this overall reduction Penny's Bay 100.0 Vehicles, Plant and • Preventative maintenance programme to ensure efficient operation was an improvement of 17% in electricity Project) Equipment • Continued collection of fuel consumption data consumption and a substantial reduction in 80.0 Hong Kong • Working with fuel supplier to provide improved fuel consumption and diesel fuel usage due principally to the fall in & Macau efficiency rates for individual items 60.0 ( Excluding demand for an individual project, Penny’s • Exploration of alternative fuel types such as biodiesels and ultra-low sulphur Penny's Bay 40.0 Project) diesels Bay Reclamation Phase 2 in Hong Kong.

• Investigation of high fuel efficiency vehicles and equipment Energy Consumption KPI 20.0 China • Use of GPS to manage concrete truck deliveries to optimise travel time As well as tracking annual performance, 0 Singapore and mileage

we have started to monitor monthly energy (GJ per HK$1 million Project Expenditure) JJJASONDAMF M trends (based on a 12-month rolling Site Offices • Investigation of available green office technologies. During 2006, trials on site offices were conducted and will be formalised into company average), which provides us with the policy during 2007. opportunity to implement management Energy Consumption (12-month Rolling Average KPI) for 2006 - Group Operation • Promotion to customers of green site offices for construction sites action on a timely basis. During 2006, our Hong Kong and Macau monthly 18.0 Concrete Production Facilities • Establishment of 12-month rolling average energy consumption data to performance showed a falling trend. 16.0 Production ensure performance can be managed and tracked (Energy 14.0 Singapore followed suit in this trend, whilst Consumption 3 Renewable Energy • Commenced detailed investigation for the application of renewable energy in mainland China we saw a slight increase 12.0 per 1,000m of concrete) options at our fixed facilities in Hong Kong and mainland China due to the reduced construction workload 10.0 8.0 and a subsequently greater influence from Steel Design • Promotion of energy efficiency in design including building orientation, our Pristine Works steel fabrication activities. 6.0 Fabrication envelope treatments, building services and building management systems 4.0 (Energy With our production facilities for concrete Consumption

• Exploration of renewable energy options and lifecycle considerations Energy Consumption KPI (GJ per rate of production) 2.0 • Support of schemes such as the Hong Kong Building Environmental and steel fabrication, we continue to track per 10,000 Assessment Methodology (HK-BEAM) and Singapore’s Green Mark 0.0 tonnes trends in order to understand where energy JJJASONDAMF M of steel) can be better managed. For 2007, we have placed a 15% reduction target across all

22 Sustainability Report 2006 Sustainability Report 2006 23 opportunity to influence and manage the waste management, we are now embarking Energy Management and Understanding the reach of our energy design, substantial opportunities are on a number of initiatives to influence and Air Pollution footprint within a project aids us in presented to minimise waste in the delivery change our approach to managing waste. managing the direct impacts we create. Energy management and air pollution grew process. As an example, through re-design One pilot programme is exploring with Where we have full ownership, as with our as significant regional issues during 2006. and value engineering of the road a key customer the waste reduction plant, equipment, offices and workshops, Gammon’s response to these issues has alignment, piling solutions and the sea-wall possibilities at source through design and we address and manage energy for long- been consolidated through our commitment construction of our design and build procurement strategies, with the zero waste term performance efficiency. With projects, as a signatory of the Clean Air Charter. contract for Castle Peak Road in Hong Kong, project as the ultimate goal. In addition, we as our footprint increases, we have the This Charter, promoted by the Business we prevented an estimated 100,000m3 of are working with our supply chain to both opportunity to work with customers to Coalition on the Environment in Hong Kong, waste which may have otherwise been reduce waste and maximise reuse and reduce energy consumption of buildings Supply Chain Collaboration seeks to advance regional cooperation generated during the course of the project recycling opportunities. and facilities through energy-efficient amongst businesses and governments to Wire and cable drums can represent a under alternative contractual arrangements. designs, looking at factors such as passive proactively manage the air pollution significant source of waste on project sites, ventilation, building envelopes, solar gain especially since these drums are typically Waste Management problems that the greater Pearl River Delta Where the opportunity for re-design is ,, made of cardboard and plywood, which are During 2006, we invited expressions of faces. easily damaged and cannot be reused. not possible, we focus our efforts on interest for waste management partners in Group Energy Consumption KPIs Gammon and BBE&M have jointly engaged reducing construction stage waste through Hong Kong to increase the scope of recycling Whilst the focus of the Charter is on the with our cable and wire manufacturers to education of workers, site management 4000 and reuse of waste materials. We found, Pearl River Delta, we have elected to track all 2005 encourage the use of more durable plastic processes, and construction methodologies. 3500 drums, which can be returned to the however, that opportunities are limited on of our regional activities for transport, 3,601 As working examples, Gammon seeks to 3000 2006 manufacturers for re-wiring thus offering a this front as there appears to be little plant usage and electricity consumption, 2500 3,027 more sustainable waste management employ and promote modular, pre-cast and incentive given to encourage integrated which are our identified principal sources of 2000 2,507 solution. We have been able to recycle prefabrication construction processes, solutions to the construction waste 2,163 emissions. During 2006, we undertook a 1500 approximately 1,400 drums on the Eagle's and where in-situ work is required, seeks to management dilemma both at local series of activities and measures seeking to 1000 Nest and Nam Wan Tunnel projects, where apply reusable and systemised formwork to this initiative has been piloted. and regional levels. To change this, firm understand our energy demands and 500 125 minimise the use of timber, which typically 77 commitment from regulators is needed in improve efficiency internally and for our 0 ends up as waste. Energy Consumption KPI promoting a responsible waste recycling customers. The introduction of these Annual Electricity Annual Diesel Total Energy (GJ) Consumption Consumption industry and the actions from customers in

22 Sustainability Report 2006 Sustainability Report 2006 23 THE DIALOGUE and building services. Longer-term asset Climate Change management opportunities take our role a As a company, we are committed to step further through the need to consider FOR CHANGE reducing our carbon footprint. From our the importance of lifecycle costs and energy consumption data, which represents maintenance, which naturally extends our our principal carbon source, we can estimate We have demonstrated through this and previous reports that, influence on energy impacts to the whole of our own direct contribution to climate as a company, we have made a firm commitment to the project’s life. change by calculating the carbon dioxide equivalent. embedding sustainability as a driver to our business practices.

Energy Efficiency Leadership For 2006, we have presented our performance and our ,,Promoting effective long-term energy During the year, we reduced our total objectives going forward, acknowledging that whilst we management requires the consideration carbon footprint by over 11,000 tonnes of energy efficiency throughout a project's (a 15% reduction from 2005) through believe we are making good progress, we have only just lifecycle, from design through construction energy efficiency improvements, despite a started on the sustainability journey. through to the final end use and occupation. substantial increase in our workload and Gammon supports initiatives that seek to activities for the year. In relation to Just as importantly, we have used this Report to reach out to promote this approach, such as the Hong managing our footprint, Gammon has yet Kong Building Environmental Assessment to formalise a climate change policy. the wider industry and encourage more coordinated and Method (HK-BEAM) and the Singapore Green Further study on our carbon footprint collective action. The commentary we put forward in regards Mark scheme. In particular, we welcome the will be undertaken with the intention of to change and reform, we believe, is necessary to highlight proactive stance the Singapore Government establishing a practical climate change is taking in making energy efficiency policy in future, ideally in conjunction with those areas within current practices in need of resolution in mandatory and rewarding the achievement the wider industry and our customers. In order to advance sustainable development within the industry. of higher Green Mark ratings. Whilst HK- support of our present efficiency drive, we have set a further 5% reduction target in BEAM is successful in its own right, its impact Throughout this Report, we have demonstrated that either through our own performance carbon dioxide emissions for 2007. needs to be more widespread, and we would example or through best practices used in international markets, there are sustainable encourage all industry stakeholders,, to alternatives available and achievable for construction practice. Taking them into the engage in and practise its uptake. Materials Management mainstream requires the “dialogue for change“, involving an understanding of how and where Under our Procurement Environmental value and innovation can best benefit stakeholders. As cited throughout this Report, Awareness Programme, in 2006 we we believe this can best be observed when adopting new and progressive practices within the Gammon's Direct Contribution to Global Warming for 2006 continued our focus on fuel management by procurement process. exploring Ultra-low Sulphur Diesel (ULSD) 80,000 Singapore opportunities with our supplier as well as 70,000 In addition to utilising progressive practices is the ability to foster and drive innovation. seeking improvements in Direct Machine 60,000 Innovation concerns thinking differently about industry practices and standards that benefit China Refill (DMR) operations to enhance our fuel 50,000 (including sustainability. This involves consideration of the broader perspective such as contract Pristine Works) consumption data collection. 40,000 structures, procurement process and stakeholder partnering. Gammon pointedly advocates 30,000 Hong Kong putting alternatives that affect the industry on the table, knowing that the drivers of adopting During the year, we also examined 20,000 & Macau new practices require education, consensus and effective change management. opportunities in using environmentally 10,000 friendly paints in our steel fabrication 0 Through this year’s Report, “Dialogue for Change“, we look forward to engaging the industry

Carbon Dioxide Equivalent (tonnes) Carbon Dioxide Equivalent process, and will continue these initiatives 2005 2006 and working with the community to advance sustainable development. • Calculated based on Greenhouse Gas Protocol published by WBCSD/WRI into 2007. We will also focus on timber, • Excluding air travel and landfill waste another construction resource that can be better managed through sustainable practices. During 2007, we propose to Carbon Dioxide Equivalent from Hong Kong Operations for 2006 appraise the usage of, sources for and

2.2% alternatives to timber consumption, 1.2% 11.1% Plant & and possible recycling opportunities. Equipment Fuel Usage

9.6% Vehicle Fleet Fuel Usage Electricity 75.9% Consumption on Site Concrete Batching Process • Data in tonnes of Carbon Dioxide Equivalent Permanent • Calculated based on Greenhouse Gas Protocol published by WBCSD/WRI Offices • Excluding air travel and landfill waste

24 Sustainability Report 2006 Sustainability Report 2006 25 THE DIALOGUE and building services. Longer-term asset Climate Change management opportunities take our role a As a company, we are committed to step further through the need to consider FOR CHANGE reducing our carbon footprint. From our the importance of lifecycle costs and energy consumption data, which represents maintenance, which naturally extends our our principal carbon source, we can estimate We have demonstrated through this and previous reports that, influence on energy impacts to the whole of our own direct contribution to climate as a company, we have made a firm commitment to the project’s life. change by calculating the carbon dioxide equivalent. embedding sustainability as a driver to our business practices.

2.2% alternatives to timber consumption, 1.2% 11.1% Plant & and possible recycling opportunities. Equipment Fuel Usage

24 Sustainability Report 2006 Sustainability Report 2006 25 Sustainability Report 2006

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