30 Sep 2018

Meet the Team - Mike Ellis, Director

From learning his craft in the UK and entering the often bully-boy world of dispute resolution, to getting himself a muddy pair of shoes as a claims consultant in Hong Kong. Mike Ellis, Director of Insite Solutions, explains his career in the construction industry to date.

How did you first get involved in the construction industry?

Very much by accident. I’m an academic sort of person and probably the most non-practical person in the world. Having finished my A-levels I’d had enough of education and just wanted to get a job. With A-levels in History, Geography and Economics a career in construction wasn’t top of my list of options.

I’m also a very ‘outdoor’ sort of person and the career opportunity that appealed to me the most was a Land Surveyor, making maps and the like. Unfortunately, the only route for that was via a degree from North East London Polytechnic, which necessitated a background in maths and science.

I mentioned this to the Careers Advisor at my school and he agreed that Land Surveyor probably wasn’t a good idea and having studied “Surveyor” in his reference book he said what about a Quantity Surveyor instead. I don’t think either of us actually knew what a QS was but he arranged an interview for me with a PQS and the idea interested me.

My strongest A-Level subject was Economics and that also led me to think about a career in banking, although I didn’t relish the thought of being stuck in an office or behind a counter all day long.

To cut a long story short, I got offered the option of two jobs in banking and two in construction as a QS, one-office based and the other site-based on the construction of the M25 motorway. The call of the wild won and I went for the QS job with a medium sized local contractor and started work with them in July 1977.

 

When did you first encounter a formal dispute?

Shortly after starting my first job. There had been a serious incident in the UK in 1968 with the partial collapse of a residential tower block called Ronan Point following a gas explosion in a kitchen in one of the flats. The building was constructed under the recently introduced prefabricated Large Panel System (LPS) method and the collapse of Ronan Point raised a number of safety factors, resulting in the suspension of similar projects. My employer was working on the construction of a number of similar blocks of flats for one of the London Boroughs and the project got suspended pending the formal Ronan Point investigation. The consequences of the suspension ended up as a dispute referred to litigation and as my boss was involved in it I was asked if I’d help doing the research as part of the discovery process. Initially I just viewed it as a source of overtime income but I soon started becoming interested in the case papers and started reading them too.   

 

How did your experience in contracting help you transition into the dispute resolution side of the industry? 

I made a conscious decision right at the start of my career that I didn’t want to work for one of the “big boys”. To me, being a name rather than a number was very important. Whilst my first job saw me predominantly based in the QS Department, I was able to interact closely with the other departments due to the relatively small size of the company. I also spent a couple of years working with the Small Works Department, which enabled me to get experience in estimating and project management. The rest of my contracting career was spent with small and medium-sized contractors with whom I was able to expand into all facets of commercial management, project delivery and overall business management. It was the ideal environment to gain an overall understanding of the extent of delays and disruption on the whole company rather than viewing them as just another task to be attended to. 

As I progressed through my career I became more specialised in resolving contentious final accounts rather than dealing with the day-to-day activities of running live projects and this appealed to my more forensic frame of mind.

 

What made you switch from contracting to claims consultancy work?

I’ve always set very high standards for myself and expect others to do the same in their professions. In the end, I got fed up being treated as a “hairy arsed contractor” who was just trying to “con its clients out of more money”. The standard, stereotypical and generally negative viewpoint of contractors is very biased and, in my opinion, other sides of the industry need to look in the mirror if we are ever to have a truly collaborative approach to successfully executing construction contracts.

One of the small contractors I worked for issued legal proceedings against a major glazing supplier/installer who was totally dismissive of us in the usual David vs Goliath approach. However, having worked closely with our lawyers in the preparation of both our Statement of Claim and witness statements, we totally blew their arguments aside and they settled before going to court

I remember there were two particular events with my last contractor that were the catalyst for moving on.

We used a prominent firm of construction lawyers and I worked closely with them in producing the relevant correspondence and case papers. I researched, prepared and catalogued all the papers for discovery in one particular case we were defending. The lawyers said they had seldom seen anything so detailed prepared by one of their clients, particularly compared to the single page, hand-written and non-chronological list prepared by the claimant. We won the case.

In the second instance, we had a particularly troublesome client who was the proverbial rich bully boy who tried all the usual dirty tricks to avoid paying us. All my letters written as Commercial Director of the contractor were ignored as being “pure fabrication” and were summarily dismissed. We passed the matter to the lawyers and it was agreed that they would write a letter to the client formally explaining the contractual situation. I drafted the letter based on my previous arguments, the lawyers changed about one paragraph and sent it out under their name, and the client settled.

Obviously, contractors can’t afford long drawn out disputes, hence they are often obliged to settle disputes at a massive discount in order to obtain much-needed cash flow and this inequitable bargaining power was at conflict with my professional ethics. I therefore decided to look for opportunities where, on one hand, I could help contractors to redress the imbalance and, on the other, assist Employers where there were clear examples of excessive and spurious claims being submitted.  

 

Finally, what would you say are the highlights of your career to date.

To be honest, there’s been many. Although I got into the industry by accident, I don’t regret my choice of career and there’s been many interesting and rewarding experiences along the way. I think there’s two main reasons for that, both of which are based on my personality.

Firstly, I’m very determined in whatever assignment I’m given and I always like to set myself targets that I aim to exceed wherever possible. The same applied to my career aspirations.

When I went for the interview for my first job I was shown around the QS Department of the company, and I guess the Senior Surveyors at that time would be in their mid-30’s to 40’s. The Surveying Director explained that I would start life as a Junior Surveyor before progressing to be an Assistant Surveyor, followed by Senior Surveyor. I asked “then what?”, and was told that was basically as far as career progression in the company went. Whilst I understand that many people are happy to do it, I vowed there was no way I was going to end my career having got no higher than a Senior Surveyor.

The second reason stems from the first. People who know me, know that I don’t do office politics, and I’m not afraid to speak my mind when necessary. This is why I consciously chose the path of working for small to medium sized contractors, which gave me an early introduction into the whole scope of running a construction company and also gave me an opportunity to meet key influencers who I would not have had access to had I been cocooned in the QS/Commercial Department of a larger organisation.

My early experiences were somewhat eye-opening as there was a lot of Middle East money flowing into the UK as the oil Sheiks invested in property and I worked on some truly breath-taking mansion refurbishments and extensions where money really wasn’t a problem. A lot of the client details were highly secret given their high status and we often had to avoid the media circus who were camped outside the grounds looking for photo opportunities.

I would say that one of my key experiences was surviving the ‘boom and bust’ cycle of the 1980’s and 1990’s that saw many companies go out of business. At its worst we were pricing jobs at 10% below cost – and still losing them. Through working very closely as a tight-knit team we managed to survive, but it has always left a lasting impression on me.

Pursuing my initial career targets, I was immensely proud to become Commercial Director of the last contractor I worked for, with overall responsibility for Surveying, Estimating and Procurement functions, and this was another important milestone in my career

I was extremely lucky to be in a management position during the later 1990’s when the Housing Grants, Construction and Regeneration Act, 1996 came into force as I was able to become heavily involved in setting up the procedures to ensure we benefited from the key concepts of Security of Payment and Statutory Adjudication. I was amazed how generally unprepared a number of our clients were and we were able to improve our cash flow by having the necessary procedures in place enabling us to successfully make reference to a suspension of the Works if we didn’t get paid.

This experience was critical once I moved into the consultancy side of the business, where we soon got involved in a number of Statutory Adjudications. One project I was involved in had no less than six separate adjudications and the last one ended up in the UK Court of Appeal where it was set to become a precedent case for determining the definition of a dispute that could be referred to adjudication. Ultimately, the parties settled whilst the Appeal Judges were considering the respective arguments so no decision was forthcoming, but we were reminded that our appeal would not have been allowed had the Court not considered there to be some merit in it.

Moving to Hong Kong in 2003 was obviously a major milestone in my career, which opened up a whole new avenue of opportunities. Gone were the days of the small to medium sized construction projects, which had now been replaced by mega civils works. My standard comment when working on the early projects was that there was more structural steelwork in the hoarding than in most buildings I’d worked on in the UK. However, the important point that I kept telling myself was that the concepts are the same. If a claim is invalid in principle, the value is HK$0.00. If the claim is valid in principle, the evaluation still follows the same core principles, irrespective of the number of zeros at the end.

What I really like about the Hong Kong experience is not only did it get me very heavily involved in mediation and expert witness work, but I also had the opportunity to go back on site and work on live projects, which is something you don’t often get a chance to do as a consultant. That’s something that has changed in my lifetime in Hong Kong as initially consultants were only brought in at the end, to prepare claims and final accounts. However, in my experience, both main contractors and sub-contractors are bringing in consultants earlier and earlier in an attempt to combat the archaic nature of the industry (more about that later).

I vividly remember standing shin-deep in mud many metres below Jordan Road photographing and recording a torrent of water gushing through a pipe pile diaphragm wall much to the astonishment of most of the contractor’s commercial team who preferred to view it through the office window. To me, it is always important to go out to site and see the problems real-time rather than rely on anecdotal documents, photographs and word of mouth. 

It would be remiss of me not to mention a huge debt of gratitude to my mentor, ‘partner-in-crime’ and great friend, Nick Adams, who was responsible for me coming to Hong Kong and who gave me much support, advice and encouragement throughout my long working relationship with him. Indeed, Nick’s confidence in my ability was a major factor in me eventually embarking on the final chapter of my career progression, the establishment of Insite Solutions Ltd in 2013.

This has again opened up a raft of new opportunities, including the chance to work on projects as far-flung as the Philippines and Mongolia, and the opportunity to conquer another major milestone, my first appointment as an Expert Witness.

It’s also important to remember that it’s not all about work. When we first set up Insite Solutions I was living in Tung Chung and many of my acquaintances were associated with the local rugby club. We wanted to put something back into the community so we initially became one of the main sponsors of Tung Chung Rugby Club. When the main sponsor withdrew, we had no hesitation in stepping in. We are extremely proud to now be the main sponsor of the club, and it gives us great pleasure to watch it grow under its excellent leadership.

As Insite Solutions approaches its 5th anniversary I am extremely grateful to my fellow co-founders who first got the company off the ground, to my current co-director and co-owner who shares the same corporate values as I hold, and to the dedicated staff, both past and present, who have worked tirelessly and professionally to expand the business to where it is today.

I hope that I, and the company, can look forward to one more major milestone occurring sooner rather than later. I mentioned earlier about the archaic nature of Hong Kong’s construction industry. I also made reference to my UK experience in respect of Security of Payment and Statutory Adjudication under the 1996 Housing Grants, Construction and Regeneration Act. Both of these safeguards are long-overdue in Hong Kong and, despite extensive consultation, they are still not in place.

It is my fervent hope that the Hong Kong Industry will soon be able to enjoy the same safeguards that have been introduced into vast sections of the world for many years. Having had considerable first-hand experience of them, I know they work. They’re not perfect, and they don’t claim to be, but they are infinitely better than the inequitable position we currently have in place.   

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