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Business Plan 2014/2015Trusted to deliver sustainable solutions safely

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CORMAC Business Plan 2014 / 2015 • 3

At the conclusion of CORMAC’s second full year of trading, I am delighted to report that we have broken through the £100m

turnover barrier for the very fi rst time, having reached £103m turnover for the fi nancial year 2013/14. In the last two years we have doubled our turnover but only increased the number of staff for the same period by 17% which has enabled us to reduce the management structure over the same period by 22%.

Although CORMAC has increased its client base both within Cornwall and beyond, our number one priority

is to deliver services for Cornwall Council and to ensure that those services are aligned to the Council’s vision, priorities and business plan.

I am also very pleased to report that the two CORMAC companies have met their collective dividend target and, at the same time, has increased job opportunities for the people of Cornwall. We currently employ in the region of fi fty apprentices, technicians and

graduates which can only be of benefi t to both companies’ growth strategy and the local economy.

I would also like to thank all CORMAC’s staff for all their hard work and dedication in ensuring CORMAC remains successful in times of uncertainty for local government.

Paul Masters

CORMAC Board Chairman

Forewordby our Chairman

Our number one priority is to deliver services for Cornwall Council and to ensure that those services are aligned to

the Council’s vision, priorities and business plan

Dhe worfen a’n nessa bledhen leun a genwerth CORMAC, pur lowen ov dhe dherivas ni dhe derri an lett a dreusyans a £100mv dhe’n kynsa tro, wosa drehedhes treusyans a £103mv rag an vledhen arghansek 2013/14.

Der an diwettha diw vledhen ni re dhewblekhes agan negys mes ny wrussyn ynkressya niver agan meni saw gans 17% der an keth spys, ha hemm re’gan galosegas ow lehe an kesweyth dyghtyans der an keth spys dre 22%.

Kyn foghhas CORMAC y sel kliensek hag a-ji dhe Gernow ha dresti, agan kynsa ragwir yw delivra gonisyow rag Konsel Kernow ha surhe bos an gonisyow ma alinys gans ragwel, ragwiryow ha towl negys an Konsel.

Pur lowen ov ynwedh dhe dherivas an dhew gowethyans CORMAC dhe vetya aga amkan kuntellek budhrann hag, yn kettermyn, dhe ynkressya chonsyow sodhow rag tus Kernow. Ni a arveth a-lemmyn a-dro dhe hanterkans kynser, teknegydh ha gradhesik ha ny yll hemma bos saw dhe les rag strateji tevyans an dhew negys ha rag an erbysieth leel.

Gonn meur ras ynwedh dhe veni CORMAC oll a’ga ober da ha’ga omrians ow surhe CORMAC dhe wortos sewen yn termynyow a ansurneth rag governans leel.

Paul Masters

Kaderyer Kesva CORMAC

4 • CORMAC Business Plan 2014 / 2015

Contents

1. Introduction 6

2. CORMAC Today 8

3. Review of 2013/14 12

4. Moving the business forward 19

5. Our expectations for 2014/15 27

6. Organisational resources and development 30

Appendices

Appendix A: Organisation Structure 37

Appendix B: Our Vision, Values and Objectives 38

Appendix C: Key Performance Indicators (KPIs) for 2014/15 39



Executive

Summary

Our vision and values are very important to us and this Business Plan demonstrates our contribution to Cornwall Council and our communities, by achieving our vision of ‘delivering sustainable solutions safely’ through our values of ‘Safe, Decisive, Progressive, Fair and Trust’.

CORMAC exists to add value to our shareholder, the Council, and Cornwall and we have been very successful in doing this in 2013/14 as demonstrated in section 3.

The fi nancial year has been a very successful one for us, with turnover increasing to around

£103m. By managing costs and increasing productivity, we have been able to return £6m

to the Council to help reduce budget pressures and support front-line services for the residents of Cornwall.

CORMAC has taken social responsibility very seriously and has made signifi cant progress during 2013/14. CORMAC is a value-driven business and this plan demonstrates our social return on investment and the added value of our engagement with partners and local communities. As an example, CORMAC has worked with volunteers to put the equivalent of nearly 90,000 labour hours back into the community.

CORMAC continues to be committed to sustainable working practices and reducing our impact on our local environment. We are actively reducing our carbon footprint and also recycling

80% of waste materials created by the business as a result of new initiatives we have put in place.

In terms of moving the business forward (section 4 of the Plan), we are seeing a much more buoyant construction and building industry, but linked to reducing revenue spending at the local authority

CORMAC is very passionate about making a meaningful positive impact on our communities by contributing to resilient safe communities, sustainable economic growth in Cornwall and respecting and, wherever possible, enhancing the environment in which we live.

level. Cornwall is also at the start of the new seven year EU investment programme from later this year, linked with the Cornwall and Isles of Scilly Local Enterprise Partnership Strategic Economic Plan and Growth Deal. This has and will create its own challenges but equally major opportunities going forward in which we want to be allowed to play our full part in for the benefi t of our shareholder, Cornwall Council, and the people of Cornwall.

Our delivery programme for 2104/15 is outlined in section 5, together with our fi nancial predictions for the year ahead. We have been able to identify a potential return of around £7.3m to the Council for 2014/15. This is made up from a mixture of reduced charges and rebate for the Council client and a dividend return for our shareholder. However, this is subject to current agreed arrangements remaining in place for the coming year - an issue where there are some signifi cant doubts at the present time.

It is our intention to continue to provide added value in 2014/15 by: delivering desirable outcomes for the Council; working with more Cornish SMEs; contributing to Cornwall’s economic growth by supporting people back into work; and enhancing skills in the workforce. For every £1 we spend, we

will target £0.86 being re-invested back into

the local economy.

CORMAC values its people above all else and continues to invest in them. This will ensure that our people, at all levels, are: encouraged to maximise their potential, to contribute to our future success as a business; and to add value to our communities in a socially responsible and sustainable way.

Arthur Hooper

Managing Director, CORMAC


1.1 The aim of this

business plan

The aim of this business plan is to:

1 provide managers and staff with a clear direction by setting objectives and targets for the next year and beyond;

2 provide fi nancial projections for the overall business and accountability for business divisions; and

3 demonstrate how the company contributes to Cornwall Council’s vision and priorities.

1.2 Business planning

In business planning terms, we have been looking at what is needed to drive the company forward over the coming years. In terms of fi nancial predictions, it would normally be expected to set out a three year fi nancial horizon within the plan. However, with the high level of change and uncertainty currently occurring with Cornwall Council, as both client and shareholder, this plan has focussed on the fi nancial predictions for the coming year to March 2015.

1.0 Introduction

1.3 Business plan layout

The plan sets out in section 2 the background context, the company’s position today and our purpose, vision, aims and objectives.

This is followed in sections 3 and 4 with a review of 2013/14, how we intend to move the business forward in the coming years and the infl uences and threats that prevail.

Our expectations for business trading in the 2014/15 fi nancial year and details of our organisational resources and development are discussed in sections 5 and 6 respectively.

This is followed by a set of Appendices.


2.1 Our background

On 1 April 2012, the operational services carried out by the Council’s direct services organisation - Neighbourhood Services - transferred to a newly-formed company, CORMAC Solutions Limited.

CORMAC Solutions Ltd is a company wholly owned and controlled by Cornwall Council (the Shareholder). It was set up using the well-being powers under section 2 of the Local Government Act 2000 as the essential part of the company’s activities are undertaken for the Council. The company operates under a “Teckal” exemption, providing services through a Contract for Services.

A further element of the re-structuring was the creation of a second company - CORMAC Contracting Limited. This is also wholly owned and controlled by Cornwall Council and was set up under section 95 of the Local Government Act 2003 for the purpose of trading with third party clients and bidding for contracts with the public sector.

2.0 CORMAC Today

2.2 Our purpose

As explained in section 2.1 CORMAC is designed, through its two companies, to deliver value-

added services for the Council and to trade in the open marketplace. The specifi c purpose of each company is set out below:

CORMAC Solutions Ltd’s (CSL’s) purpose is to:

• deliver services ‘passported’ from the parent authority (Cornwall Council) and its partners, with limited third party trading;

• operate within “Teckal” compliance, where Cornwall Council must exercise control which is similar to that which it exercises over its own departments;

• achieve a defi ned dividend return target to its shareholder; and

• align with Cornwall Council’s corporate and social objectives and maximise the local economic footprint (Commercial Social Enterprise model).

CORMAC Contracting Ltd’s (CCL’s) purpose is to:

• trade for commercial motive with third party clients, initially in civil engineering, environmental maintenance, surfacing/quarry, facilities management and fl eet services;

• compete for services and civil engineering contracts let by Cornwall Council;

• partner or form joint ventures with other public or private sector companies to deliver cost - eff ective and sustainable solutions to complex engineering challenges; and

• generate revenues to provide a sustainable dividend return to its shareholder.


2.0 CORMAC Today

2.3 What we do today

In the time we have been established, CORMAC has progressed to be one of the most highly-regarded, trusted and well-known companies in the South West. We are committed to delivering cost eff ective and innovative solutions which add value to our communities, clients, partners and our people.

We provide a diverse range of services to Cornwall Council, other public bodies and a portfolio of private clients including major civil engineering contractors and consulting engineers.

Today, we have a total workforce of around 1650 across a number of work divisions. Our main offi ces are sited in Bodmin, Scorrier and Tolpetherwin, and we have eight other depots across the county.

The details of the CORMAC structure and key personnel are set out in appendix A. In essence, we are structured into the following business divisions:

Highways and Environment Our Highways and Environment Division consists of a multi-skilled team located across the county which delivers the following services to Cornwall Council: management and delivery of highways, public rights of way and sites and trails maintenance; undertaking the road network management functions; construction services; and landscaping and grounds maintenance. The division also delivers maintenance services to a number of private sector clients.

We also provide the non-core activities of school crossing patrols, beach management and the burials service to assist Cornwall Council delivery.

Surfacing and surface

treatmentsOur Surfacing and Surface Treatments Division provides us with the ability to carry out resurfacing and surface dressing work in a competitive way, using our specialist workforce.

Contracting (this includes both CSL and CCL)Our Contracting Division provides a multi-skilled workforce with specialist expertise operating across Cornwall and south west Devon. It delivers construction and civil engineering solutions and schemes including: highway infrastructure; land remediation; and building construction and refurbishment.

ConsultancyOur Consultancy Division delivers engineering and technical services to the public and private sectors. It includes a strategic tendered partnership with Parsons Brinckerhoff (PB). All infrastructure design and development are off ered in a fully-integrated service, from conception through to a design-and-build service. The Engineering Services Laboratory and Highway Information Service are also provided.

Facilities Services

Facilities

CORMAC Facilities Services (CFS) provides a single point of contact and tailors solutions to a diverse range of facilities management issues.

We provide a diverse range of services to Cornwall

Council, other public bodies and a portfolio of private clients

Our vision is trusted to deliver sustainable solutions safely


Property Maintenance

Property Services off er a multi-skilled team located across the county. A range of property maintenance services are provided, including reactive and planned maintenance, construction works and mechanical and electrical services.

Cleaning

Cleaning Services off er cleaning, full caretaking and on-site security services.

Aggregates and recyclingOur Aggregates and Recycling Division is centred on our quarry at Castle-An-Dinas, near Penzance. This produces a range of products including road stone, aggregates and walling stone for the construction industry. Aggregate storage and transportation services are provided, together with a range of aggregate recycling centres, throughout Cornwall.

Fleet Management and

maintenance Our Fleet Division delivers a comprehensive vehicle and plant maintenance service, fl eet management services and diagnostic servicing including 24/7 365 days a year breakdown cover. It is one of Cornwall’s largest vehicle and plant

maintenance facilities, with four workshops strategically located across Cornwall.

CORMAC CollectiveOur Collective Business Division provides the rest of the business with resources and support services which include: company governance; legal compliance; organisational development; health, safety and wellbeing; training and development; business technology; human resources; communications; and marketing.

We buy some of our support services from the Council, including legal administration, transactional fi nance and employee services, and information technology. Currently, this amounts to £1.7m of investment in to the Council, plus leases for property and other facilities.

2.4 Our Vision, Values

and Objectives

2.4.1 OverviewFrom the defi ned purpose set for us by our shareholder (as set out in section 2.2), we have derived our specifi c CORMAC business vision, values and objectives. These are set out below.

2.4.2 Vision Our vision is.... ‘trusted to deliver sustainable solutions safely’

We will work collaboratively with Cornwall Council, stakeholders and communities to improve the society we live in by focusing on the quality of the services we provide, ultimately contributing to sustainable communities.

2.4.3 Our ValuesThe core values that sum up the way we do our work are:

• Safe - ensuring we operate safely and consider environmental management practices, putting safety at the heart of our activities.

• Decisive - making the right decision to do the right thing in a transparent and timely manner.

• Progressive - constantly moving forward at the right pace and in the right direction.

• Fair - building on our people diversity and treating our staff , customers and partners fairly.

• Trust - believing we will do the right thing for the business, our staff and the wider community.

2.0 CORMAC Today


2.4.4 Our Business Objectives Our objectives are to create a respected, sustainable company by:

• putting safety fi rst in all of our activities and minimising our environment impact;

• achieving signifi cant business growth and a sustainable dividend for our shareholder;

• providing fl exible services which respond to change;

• providing innovation and sustainable solutions thereby creating value for money for customers;

• supporting local communities through employment and skills development to increase our local economic footprint; and

• developing meaningful relationships for the longer term success of the business.

Our vision, values and objectives are visually represented in the diagram given in appendix B.

2.5 Our Credentials

We pride ourselves on the quality of our services and ensure that safety and sustainability are embedded in our delivery model. This is underpinned by the application of an integrated management system, which incorporates the maintenance of nationally-recognised industry standards.

CORMAC has successfully been accredited to the ISO 9001 Quality Standard, the ISO 14001 Environmental Management Standard and the OHSAS Occupational Health and Safety Standard for over ten years. More recently we have been successful in achieving Investors in People (IiP), demonstrating how much we value our people and our commitment to our extensive workforce. This ensures that regular internal and external audits are carried out on all aspects of our work.

We also actively engage with awards and competitions at a local and national level. In the last 12 months, CORMAC has been awarded three

national Considerate Constructor Awards. This demonstrates that our civil engineering and highway maintenance services are of consistent

high quality and use sustainable delivery methods. We have also achieved 11 ‘Britain in Bloom’

prizes including South West and Your Neighbour awards in Cornwall’s gardens and allotments, plus seven Green Flags in gardens and parks. The Parks and Gardens Team in Falmouth also won Cornwall Council’s ‘best team’ award 2013. Our commitment to excellence in training and our apprenticeship programme has also attracted ‘highly commended’ prizes against strong regional competition.

Our credentials are dependent on our people’s commitment and the highly-skilled workforce we have delivering our services. Our staff surveys have consistently shown that 84% of CORMAC’s people are prepared to go the extra mile and are committed to delivering CORMAC’s vision. We are also fortunate to have attracted, developed and retained people and teams who have some of the best qualifi cations and experience in the industries in which we operate. CORMAC credentials are proving to be at least as good as our larger competitors and this puts us in a very credible position for our future.

2.0 CORMAC Today


3.1 Highlights of 2013/14

We have had a very successful 2013/14, demonstrating how important a role CORMAC Solutions Ltd and CORMAC Contracting Ltd play in the Council’s priorities and objectives of delivering services to the communities of Cornwall in these times of austerity.

3.0 Review of 2013/14

It is quite clear that the ‘Teckal’ model that was adopted by Cornwall Council in 2012 was absolutely the right choice. It enables the Council to develop an Alternative Service Delivery (ASD) model that has the commercial strength of the private sector and the service delivery ethic that aligns with the Council’s priorities.

The key highlights are given below:

• We increased our turnover for 2013/14 to £103.1m.

• We added signifi cant value to our shareholder by returning a large dividend to Cornwall Council of £6m in 2013/14, which can be used to help reduce budget pressures and support frontline services for the benefi t of residents in Cornwall.

• We worked constructively with the Council in partnership in the delivery of services without the threats of compensation claims and contractual arguments that would otherwise aff ect the Council’s budgets.

• We have created even more value in Cornwall by working in partnership with our key client to drive down costs and continue to improve services.

• Our Safety First strategy ensured we put safety at the forefront of everything we did, avoiding unnecessary risks, promoting a safe working environment for our staff and the people of Cornwall.

• We have a highly-trained, experienced and dedicated workforce that successfully delivered challenging engineering or service delivery problems they were quite often faced with.

• We have successfully expanded the contracting business, winning some major contracts throughout Cornwall and Devon, all against major competitors, showing that CORMAC is a market leader.

• Our successes in tendering last year resulted in winning £19.7m out a possible of £25.5m of work in 2013/14 giving a percentage of 77%, which is substantially higher than the norm in the industry.

• We won 90% of the work tendered by Cornwall Council in 2013/14 through the Civil Engineering Framework for projects under £1m.

• We regularly market tested the local supply chain for the provision of plant, equipment and construction materials.

Case study 1

Flood damageIn response to the high levels of fl ood damage caused by severe weather conditions, CORMAC teams worked tirelessly to keep the county operating and to quantify and prioritise repairs. A fl exible and responsive approach was taken in the planning and adjusting of fi nal work programmes to accommodate high priority works as and when they arose.


• Our surface dressing rates were compared with a large market supplier, the results of which demonstrated that CORMAC rates were 5% cheaper.

• Our surfacing rates were regularly compared with competitors and have generally proved to be between 10% and 20% cheaper.

• We regularly won tenders for town and parish councils who market test for some of the services devolved such as grounds maintenance, parks and gardens and toilet cleaning and maintenance. The work value was in excess of £500,000.

• Our quarry at Penzance acted as a market regulator for dry stone and bituminous materials, without which the Council would be put at considerable risk in the commercial market. It is estimated that our approach to procurement of these products off ers upwards of £500,000 savings per annum.

• We managed 145,000 litres of bunkered fuel on behalf of the Council, which provides signifi cant resilience, especially in times of emergency.

• We received twice the amount of compliments for our services in the community than complaints.

• We have been proactive in responding to community needs and have trialled new ways of repairing potholes which are cheaper, quicker, greener and longer lasting than traditional methods.

• We have made signifi cant strides in enhancing our brand awareness and reputation by proactively engaging with the media and building a public presence in the region.

• We progressed our commitment to promoting fairness and opportunity, by working towards developing good practice around equality and diversity outcomes.

• We contributed to the Council’s social objectives of promoting social and economic goals: e.g. reducing long-term unemployment and promoting skills and training initiatives. We have grown our workforce by 10% since 2012, which includes over 50 trainees (see case study 2).

• We supported the local community through volunteers and groups and this has added value by providing nearly 90,000 volunteer hours worth £1.3m, to support local community improvements (see case studies 3 and 4).

Case study 2

ApprenticeshipsSix apprentice horticulturalists and two apprentice countryside rangers have been recruited by CORMAC in an attempt to attract more young people into employment.

The eight new apprentices, aged 17 to 27, were enrolled from February 2014 to maintain parks, gardens and nurseries throughout Cornwall. The new trainees will be employed for 18 months and will be given the opportunity to become full-time employees if they are successful and if CORMAC continue to maintain the majority of Cornwall’s parks and gardens.

Case study 3

Sustrans PartnershipWorking in partnership with Sustrans, the countryside rangers run a monthly programme of volunteer opportunities, where members of the public can get involved in the practical maintenance of off -road multi-use trails such as the Mining Trails Network and sections of the National Cycle Network.

The benefi ts of this type of community engagement are to:

•• assist individuals in fi nding out about their local environments;

•• contribute to the communities where they live;•• provide physical exercise; •• fi nd out about the countryside and create ‘local

ownership’; and •• build social links.

Case study 4

Devon and Cornwall

Probation Trust (DCPT)CORMAC has been working with DCPT engaging low level off enders in community-based projects with real outcomes as part of their community payback hours.

Across CORMAC there are a number of opportunities to assist within local communities, and help to reduce reoff ending by working with DCPT to give meaningful work and experience, as well as helping develop individual’s new skills.


• We worked with over 100 local and national conservation and countryside groups to protect and enhance our local natural environment (see case study 5). These include Clean Cornwall, Eden Project, Britain in Bloom and local In-Bloom organisations, Keep Britain Tidy, RSPB and the Woodland Trust.

• As part of our aspiration to meet a ‘zero waste to landfi ll’ target we opened the Helsbury Quarry Recycling Centre (see case study 6). We have also signed up to the WRAP Utilities Industry Agreement in line with South West Highway Authorities and Utilities Commitment (SW HAUC), which promotes waste reduction and resource effi ciency.

3.2 Key Performance

Indicators (KPIs)We have identifi ed a number of key performance indicators (KPIs) which help the board to determine if resources and performance are on track with predetermined targets. The measures relate to our people, fi nance, innovation, customers and compliance. A summary of last year’s performance is outlined below, with the KPIs set out in Table 3.1.

People KPIsSafety is our top priority. As a result of an improved recording system, accident reporting has improved considerably over the last 12 months, as has ‘near miss’ reporting. Detailed analysis shows that minor injuries are being more readily reported and good news is that more serious accidents have decreased. This is borne out by the reduction in days lost to injury over the course of the year. We recognise that manual handling remains the highest risk to personal injury and we have instigated a new training programme to help people avoid being injured.

Whilst we have a relatively low level of sickness at less than 6 days per employee and we continue to try and reduce this further. 65% of all absences are attributed to staff who are on long term sick. Throughout the year, we have worked with staff to support them through sickness occurrences and help people back into work as soon as practicable.

Finance KPIsWe have performed well against our fi nancial indicators, having achieved our turnover and dividend targets. This has been done by increasing our external workload through winning tendered contracts, which has compensated for a decline in the level of ‘passported’ work as a result of reducing client budgets in the Council.

We have also been able to increase our spend in the local market place and support SMEs in Cornwall. CORMAC’s fi nancial success has meant it can return £6m to the shareholder.

Case study 5

Red River Local

Nature ReserveOver the last 12 months CORMAC has supported the formation of a new community/volunteer group which is focusing on habitat management in the Red River Local Nature Reserve. CORMAC has assisted the group by ensuring that suitable health and safety practices were in place, passing on expertise and knowledge, as well as loaning tools to assist the interim work. The group is now fully operating its own practical work sessions and has acquired funding for its own equipment. It has achieved 300 hours of voluntary work over 12 months, which has inspired greater community interest in the reserve, alongside valuable habitat restoration work.

Case study 6

Helsbury Quarry Recycling

CentreWe are always looking for innovative and suitable solutions for the disposal of other wastes such as gully emptyings.

As a solution CORMAC’s Helsbury Quarry Recycling Centre is now being developed to incorporate an ecological treatment system (ETS) and the green waste composting system (a three stage reed bed system) for gully wastes. The works are approved and CORMAC has also been permitted to accept inert wastes from other sources. This is a pioneering scheme and will be the only one of its type in Cornwall.

3.0 Review of 2013/14


3.0 Review of 2013/14

Innovation KPIWe are keen to ensure we continue to gain a competitive advantage by managing our resources effi ciently. One such initiative we have developed is a Logistics Hub to increase visibility of the movement and use of vehicles, plant and materials.

The Hub is a central operational unit which uses cutting-edge technology to manage and track resources. In the fi rst year of operation, the Hub has achieved around £0.226m of effi ciency savings by increasing the use of our own resources, reducing the use of external fl eet and plant, and off -hiring plant and equipment eff ectively. The Hub will continue to achieve effi ciencies in the coming years by improving fl eet management and the procurement of materials.

Customer KPIsWe have been using customer satisfaction surveys within the highways and environment service for some time. During 2013/14, the results have been consistently high. To substantiate this further, it is worth noting that compliments have outstripped complaints at almost 2 to 1. CORMAC will continue to develop measures for other services across the business.

Compliance KPIsCompliance with CORMAC’s accredited industry standards has remained high throughout the year. As a result of three reportable incidents, investigations have taken place by government agencies but no action has been taken as they have been fully satisfi ed with our responses on the ground.

A dynamic risk register is maintained by CORMAC as part of its business continuity strategy and whilst there has been some fl uctuation throughout the year, only one signifi cant risk remained at year end. This relates to securing and implementing the right fi nancial system to support CORMAC going forward. This is being resolved in partnership with the Council.

Overall, we have had a good year in most areas and KPIs will continue to be monitored.

The Hub is a central operational unit which

uses cutting edge technology to manage and track resources


Table 3.1: Key Performance Indicators for 2013/14

3.0 Review of 2013/14

Key Performance IndicatorsPeriod:- Year 2013/14

April 13 – Mar 14

Annual

Target

2013/14

ActualStatus

People

Number of near misses reported - 96

Number of accidents (incidents) <55 98 Action

Days lost to accidents <400 350

Sickness days per head <5.5 5.93 Action

Sickness days excluding long term sick per Head <1.65 2.09 Action

Financial

Business profi le (turnover) excluding intra trade £99m £103.1m

Return to the shareholder (before tax) £6.0m £6.0m

Spend with Cornish SMEs (value) £12m £14.8m

Innovations

Logistics HUB effi ciency savings £75,000 £226,623

Customer Satisfaction

Composite satisfaction score -

Surfacing satisfaction survey – % of responses excellent to good

75% 80%

Compliments v complaints (% split) 60:40 64:36

Compliance

Standards compliance 86 - 100% 87.61%

Number of EA/HSE reports 0 3 Monitor

High severity risks (not dealt with in 3 mths) 0 1 Monitor


3.3 Added value for

Cornwall Council

During our second year of trading (2013/14) we spent valuable time working with our people and stakeholders, enhancing CORMAC’s purpose and consolidating the way we wish to work.

As demonstrated in section 3.1, by managing costs and increasing productivity we have been able to return a dividend of £6m to the Council, which is used to help reduce budget pressures and support frontline services for the benefi t of residents of Cornwall.

In addition, we purchased around £2.7m worth of support services from the Council last year, which helped to support a substantial number of jobs within the authority. We also contributed an additional £1.54m towards the Council’s pension defi cit.

3.4 Added value for

Cornwall

CORMAC adds value for Cornwall by continuing to deliver solutions for local people, by local people, in a cost-eff ective, sustainable and safe way.

Being one of Cornwall’s largest employers with a locally-based workforce of over 1600 full and part time posts, we generated positive impacts on people’s lives and together worked towards delivering a brighter future for our communities. The close working relationship that CORMAC has with Cornwall, coupled with its service roots and intrinsic local knowledge also adds considerable value which cannot be replicated by its competitors.

We promoted further education, skills and employment opportunities through the following:

• A workforce development strategy to up-skill our employees.

• An apprenticeship programme for a wide range of apprenticeships.

• Technicians and graduates programme.

• Engagement with schools, colleges and universities.

• Collaboration with Social Enterprises and the Probation Service.

We have an established training and development framework to up-skill our local suppliers and contractors, which all contribute to delivering Cornwall Council’s employment objectives.

Our approach generates wealth/income which is redistributed to our local community via our locally-based staff and by our shareholder, Cornwall Council. We have supported Cornish SMEs (Small, Medium Enterprises) by spending over £14.8m during 2013/14 on local supplies and services. Overall, for every £1 we spent, £0.86 was re-invested back into the local economy.

3.0 Review of 2013/14

We have been able to return a dividend of £6m to the Council


3.5 Our community

contribution

CORMAC is a value-driven business. Demonstrating social return on investment is very important to us in showing the added value of our engagement with partners and local communities. We strive to put our stakeholders, partners and local communities at the heart of the work we do and seek innovative ways to create solutions and measure impacts.

We are committed to continuing to develop community initiatives which build capacity for resilience and self-reliance at a local level and create employment and skills development

3.0 Review of 2013/14

opportunities within SMEs and the voluntary sector. We do this by:

• embedding localism and community involvement;

• building capacity in the community; and

• providing local employment opportunities and skills development.

It is very important to us to be investing in our local community, as demonstrated by the case studies set out in section 3.1 and section 6.4.

Communication

and engagement

Local communities

Ethical

solutions

Health

and safety

Community

and voluntary

sector

Responsible

procurement

Sub contractors

Our

employees


4.0 Moving the business forward

4.1 Our Industry Environment

The UK construction and building industries are now seeing a signifi cant national recovery from the overall economic recession.

In addition, there have been the recent announcements made by the Department for Transport, which were aimed at the Highway Term Maintenance Association (HTMA). These announcements have stated that the government is planning to invest £6bn in the strategic network (trunk roads & motorway) and a further £6bn in the local authority network over the next six years. There is also the national commitment to a number of major infrastructure projects such as high speed rail.

Hence, in overall terms, our market environment is becoming far more buoyant and it is likely that Cornwall will become less attractive to national contractors due to its geographical isolation and the abundance of work available nationally.

It is well known by the sector that there will be a lack of skilled people in the industry to deliver contracts over the next few years. Hence, an impact of the recovery is that CORMAC is currently experiencing a loss of highly-qualifi ed staff from our contracting business, who are being tempted by improved salaries elsewhere.

4.2 Public sector

funding

There is a diff ering picture in terms of local authority spending, with the reduction in the government grant system meaning that there will be continued pressures on revenue budgets spending.

As a result, we have witnessed a desire from a number of other local authorities to look for collaboration opportunities with other like-minded authorities. CORMAC is at the forefront of this initiative, as demonstrated by the recent announcement from the DfT’s Highway Maintenance Effi ciency Programme (HMEP) that our development in Cornwall has resulted in our ‘case study’ being accepted in an effi ciency toolkit on the HMEP programme.

This is likely to produce opportunities to work collaboratively with others, with the potential to bring much needed additional revenue back to Cornwall.

There is potential to bring much needed additional

revenue back to Cornwall.


At the local level, Cornwall Council spending in the highways, transportation and environment areas will, in overall terms, be maintained this year with the additional capital money for surfacing compensating for the reduction in other revenue- lea budget areas. However, we see the fi scal challenge developing post April 2015 as one-off government monies disappears.

On the positive side, Cornwall is at the start of the new seven year EU investment programme from later this year, linked with the Cornwall and Isles of Scilly Local Enterprise Partnership Strategic Economic Plan and Growth Deal.

Overall, it is a mixed picture which has and will create its own challenges but, equally, major opportunities.

We want to be allowed to play our full part in delivery for the benefi t of our shareholder, Cornwall Council, and the people of Cornwall.

4.3 Core and non-core

activities review

As part of the process of moving the business forward, we have carried out a review of all our business activities during 2013/14.

As a result, CORMAC is now organised into eight distinct Business Divisions, together with two activities classifi ed as non-core. The Contracting Division spans CORMAC Solutions Ltd (‘passported’ projects) and CORMAC Contracting Ltd (tendered/external projects).

Table 4.1: Core and non-core business

activities

Core business activities

• Highways and environment

• Surfacing and surface treatment

• Contracting

• Consultancy services

• Facilities services; Facilities Cleaning Property maintenance

• Aggregates and recycling

• Fleet

• Collective (inc Notter Bridge Training Centre)

Non-core business activities

• School crossing patrols

• Burials Service

• Beach management



4.4 Prospects for the

coming years

We have reviewed our business prospects for the coming years in terms of market opportunities and threats. These are set out below by business division.

Highways and environment

Highways

Revenue funding for highway maintenance has experienced a signifi cant annual reduction over the last few years. However, given the amount of public and political interest generated as a result of the storm damage, the highway maintenance budget has been positioned in the top fi ve budget areas that need to be protected in Cornwall Council four year budget plan review. This may help to cushion further reductions in the revenue budget.

Over the past two years we have built up a sound and regular client base for external minor construction work, to the value of £0.75m in 2013/14. The target turnover has been increased to £1m for 2014/15 and we are confi dent that we can continue to grow this year on year.

Environment

We currently deliver £5.7m of environmental services to Cornwall Council. However, this service is revenue funded and it is anticipated that the level of funding will reduce year on year. A fundamental review will be carried out in collaboration with the commissioning team over the next nine months, with an expected increased amount of work in this area being devolved to town and parish councils.

A future element of these activities will be to work in collaboration with local communities, local groups and the voluntary sector to provide new innovative solutions. These solutions will reinforce public support and enhance our reputation and hence attract more potential business.

There are a number of opportunities to increase turnover, and we have been working closely with the National Trust. This has resulted in us being one of their preferred suppliers with a potential market share of their £10m budget per year.

The Environment Agency could be another key client. We have recently secured work, which although relatively low value has the potential to increase with a fi ve year deal being promoted across many parts of the South West.

Surfacing and surface

treatmentsThe Department of Transport (DfT) has announced that capital investment in highway maintenance will be increased from 2014/15. It is anticipated that Cornwall Council will be in a good position to receive a share of the additional £200m available nationally per annum over the next fi ve years

As a result, workload is anticipated to increase signifi cantly this coming year with additional DfT capital funding for surface treatment.

Potential new markets are beginning to appear due to the general lack of alternative resources and expertise in the south west. This is an opportunity for CORMAC to expand its surfacing activities through CCL.

There is also a huge potential if the ‘Teckal’ model is expanded with other authorities.

In terms of the private sector, emerging clients include the larger contracting companies such as Balfour Beatty, Carillion and Kiers.

It is anticipated that developers and their contractors will continue with their alliance with CORMAC. We are expecting a healthy order book in excess of £5m per annum.


We will work in collaboration with local communities, local

groups and the voluntary sector to provide new innovative solutions


Contracting businessThrough bid successes in 2013/14, our confi rmed order book looks good and the pipeline strong. In quarter 1 of 2014, CORMAC were 12th in the top 20 UK highway contractors based on tender success, securing £30.8m of contracts.

Strategic targets for 2014/15

Contracting business division has a number of specifi c strategic targets for 2014/15.

These are grouped as:

• Highway infrastructure and civil engineering projects for CC via the Council’s Capital Framework;

• Highway infrastructure for various developer led projects;

• Infrastructure for the Newquay Growth project;

• Coastal defence maintenance and projects;

• Trunk Road improvement maintenance and schemes;

• Large scale or specialist projects in partnership with other contractors.

Longer Term Strategic Targets

(2015/16+)

Identifying future opportunities is becoming increasing important to ensuring we are developing a sustainable business. Medium term opportunities look positive, with our longer term business planning currently being considered through the following opportunities:

• Cornwall and Isles of Scilly Strategic Economic Plan and Growth Deal – infrastructure provision 2015-17;

• European funding programme (2014-2020);

• Highways Agency trunk road maintenance and improvement schemes;

• Plymouth civil engineering market;

• Devon civil engineering market;

• Targeted private sector clients;

• Construction diversity.

Consultancy servicesThe drivers and opportunities for growth will be described by the success and delivery of the European Regional Development Fund (ERDF), Local Transport Plan (LTP) and Strategic Economic Plan (SEP) programmes and the eff ects of political change (nationally and locally) on the work types and the exact skills required to deliver them.

It is hard to predict the actual level of investment that will materialise through the SEP and be developed in Cornwall with support from European funding. Work of this type, if it continues to be developed and designed through CORMAC Consultancy, would this year support any decline in overall workload from the Council’s LTP and revenue budgets.

There are major growth areas being developed including Truro West, Hayle and the completion of the A30 Temple to Higher Carblake improvement works. Developer led work, whilst smaller and less lucrative, will provide some new areas of work.

Our primary route to growth outside of Cornwall Council will be to increase our external work linked to programmes allied to construction (developer / CORMAC / design and build) and to cross Council collaboration that due to the Council’s change in the way it procures its professional services with the development of a multi provider supply chain, there could be a reduction of around £2m per annum in passported turnover with the resultant loss of profi t.



Facilities services

Facilities

The strategic focus for the coming year is the launch of CORMAC Facilities Services, as an integrated service provider.

There will be various elements to this and diff erent strategies adopted, as the business needs to maximise organic growth while at the same time expand the business outside traditional boundaries.

Property maintenance

We have experienced continued growth over the last 12 months with a wider client base being built up over this period. There are a number of opportunities to secure further works and we have a number of key contacts that have potential.

We have a projected growth of around £1.2m for 2014/15, the biggest part of which is the free school meals project, which has been passported to us to deliver by April 2015.

There is further opportunity to provide bundled services to schools, which is an ongoing process that is showing some promising results.

Cleaning services

Cleaning services has undergone a signifi cant change commercially with our operations now having tight control on cost and income. With a turnover of £4.85m annually, it does rely heavily on Cornwall Council for the majority of its income

We are now beginning to turn our attention to Devon and Plymouth, having already secured a contract at Ivybridge and Plymstock. We have set ourselves a target to expand this further as contract opportunities arise.

The most signifi cant opportunities are within the potential ‘Teckal’ with other authorities.

Aggregates and recyclingThe primary role of the Quarry is to support CSL and CCL in the county road surfacing operations and this will continue. We are also supporting development works such as the Camborne-Pool-Redruth East West Link road.

It is anticipated that the Quarry will continue to have a buoyant external trade both on dry and coated stone and we will develop our recycling site at Helsbury quarry to take not only rural but also urban gully waste.

Fleet management and

maintenanceWhilst there are not likely to be signifi cant new markets, there are a number of opportunities that are being followed up:

• Further growth in Quarry road transport.

• Additional vehicles hired to Cornwall Housing.

• Additional vehicles supplied to the Hub Logistics division.

• Potential to supply vehicles to NHS (CHESS) section.

• Additional plant supplied to the Hub as ‘spot hire’.

• Outcome of Area 1 tender – impact on vehicle maintenance.

CORMAC CollectiveThe Communications Hub is central to how we operate. It is designed to create visibility of our resources so decision makers in the workforce can achieve increased use and productivity of our resources.

The Hub operations have been expanded to support the business and bedded in the sourcing, management/monitoring and use/disposal of transport, plant and materials.

In the future, the Hub will be in a position to provide a seamless logistics function to other partner organisations. During this coming year, we will need to develop capacity to deliver to a wider, more geographically-challenge customer base.




4.5 Driving company

change

We have to move forward, develop and improve as a company in the coming years if we are to achieve long term sustainable success. There are a number of areas that we will focus on to drive change, as set out below:

• Meeting client and shareholder expectations.

• Diversifi cation - recognising where we need to diversify in order to adapt to changing circumstances and markets.

• Grasping new opportunities and maintaining fl exibility.

• Delivering business effi ciencies.

• Brand awareness and presence - selling our expertise and ensuring our brand and what we can off er is fully understood.

• Building on the cultural change achieved to date within CORMAC.

• People development - investing in our people and recognising growth potential.

4.6 Strategic business

priorities

In terms of meeting client and shareholder expectations, we have implemented signifi cant changes into 2014/15 for our main customer, Cornwall Council, both as client and shareholder.

4.6.1 Business strategy for

our primary client - Cornwall

CouncilThe Council is CSL’s most important customer and maintaining this relationship for the long term is vitally important to us. Over the fi rst two years of CSL’s trading life the proportion of passported revenue from Cornwall Council as a percentage of total net turnover has been high (2012/13 ….85%; 2013/14 ….77%; 2014/15 ….63.3% projected).

In order to maintain or increase these levels of ‘passported’ revenue, we have introduced new incentives commencing in 2014/15. Overall, we will provide a range of direct and indirect fi nancial benefi ts to the Council, both to the client and the shareholder, as set out below.

a. The Council in its client role

Term Maintenance Contract (Schedule

of Rates) reduction

Given our committment to ensure value for money in the provision of Council services, we have reviewed the Highways Term Maintenance Contract (TMC) schedule of rates.

For the coming fi nancial year, the client will benefi t from a rate reduction on defi ned activities within the contract. The benefi t of the reduction in the TMC is defi ned in Appendix E.

Rebate on passported work

It has also been agreed to put in place a rebate structure that will both challenge and reward the client to deliver the maximum level of ‘passported’ revenue to CSL.

The rebate will activate once ‘passported’ revenue turnover has achieved an annualised level of £50.0m. As revenue work increases, the rebate percentage increases as milestone targets are achieved.



It is the hope that a rebate incentive of this nature and scale will incentivise the client to commit to maintaining ‘passporting’ for the longer term.

Other benefi ts

There are other benefi ts to the client resulting from its close relationship with CSL. We are very fl exible in prioritising work programmes as required by the client and do not seek to manipulate contractual anomalies for profi table gain. Likewise, the market knowledge we have gained from our aggregates business directly benefi ts the client with a very competitive price on road materials. We also provide a critical resource for emergency response work.

b. The Council in its shareholder

role

The Shareholder will benefi t in 2014/15 from its ownership of CSL through:

• a direct dividend;

• commercial interest on debt;

• a revaluation of the CORMAC vehicle and plant fl eet of £1m resulting from CSL expertly managing and maintaining the fl eet;

• the purchase of support services from Cornwall Council;

• the maintenance of the property assets used by CSL; and

• a fi xed annual contribution to the pension fund to address the historical defi cit.

This will result in direct and indirect fi nancial benefi ts in 2014/15 for the shareholder of around £7.3m, depending on the level of passported revenue work values.

4.6.2 Capitalising on CSL’s

intellectual capital through a

collaborative Teckal approachWith the changing public sector environment, we need to recognise where we need to diversify in order to adapt to changing circumstances and markets. New opportunities can and need to be grasped.

CSL is a leading Teckal business with over two years trading history. There is much that CSL can off er to the emerging Teckal sector with regard to:

• advice;

• back offi ce and systems collaboration;

• merging business areas to drive effi ciency and scale;

• combined buying power;

• more effi cient use of specialist plant; and

• potential joint ownership.

The CORMAC model has a potential to expand to include other councils and public bodies as shareholders. It would off er these authorities a fl exible alternative to either outsourced or DSO service provision, with direct control over the way services are delivered.

The company is in discussions with a number of local authorities who are actively investigating the potential of a collaborative Teckal.

This will provide an additional revenue stream in to CSL in the short term and could also provide the potential for positive growth in the business going forward.

We are very fl exible in prioritising work

programmes as required by the client and do not seek to manipulate contractual anomalies


4.6.3 Competing externally

within the Teckal restrictionThe Teckal rules now allow for Teckal companies to trade externally up to a ceiling level of 20% of total turnover. The level was previously 10%.

The challenge for CSL is to drive business effi ciency and external growth through the CSL business units without compromising the company’s teckal status.

For fundamental operational reasons of fl exibility, creating additional income streams, and achieving economies of scale, CSL will continue to exploit external trading up to the maximum of 20% of the ‘teckal’ allowance.

4.6.4 Brand awareness and

presenceWe have grown signifi cantly since our inception and provide many more services than the people of Cornwall may know about. It is important that CORMAC builds a lasting relation with its public, who consume many of our services, and also builds sustainable relationships with our supply chain.

Consequently, we have developed a marketing strategy which seeks to raise brand awareness with key stakeholders. It is focusing on relationship management to engage with stakeholders and this is being underpinned by content management, where social media and other technologies are being used to support key messages and address key issues raised by stakeholders. We are also making use of more traditional media such as radio and the press.

We are fully committed to Cornwall and our communities and are seeking to demonstrate through the media and other marketing opportunities how our services deliver additional value and contribute to society and community resilience. ‘CORMAC cares about Cornwall’ is our marketing campaign designed to show the people of Cornwall that we are part of the community and care about our contribution.

By engaging our stakeholders and improving awareness of what we can do for Cornwall, we will increase our market presence and be able to continue to grow our business and turnover, thus increasing the dividend we can return to the Council to help support other front line services.

4.6.5 Building on

organisational changeWe will continue to support our people through organisational change through coaching and mentoring, and appropriate investment in competencies and skills. This contributes to our maintenance of Investors in People (IiP), which demonstrates our commitment to developing our people in line with our longer-term business vision and objectives.

Building on the principle of embedding services and expertise within CORMAC, we need to review cross-functional service provision with other ASDs. This will seek to improve the effi ciency and eff ectiveness of support services.



5.0 Our Expectations for 2014/15


5.1 Business delivery

Our wide-ranging delivery programme for 2014/15 is set out below:

Highways and Environment: will be delivering through multi-agency agreements:

• £17m highways and £5m environment revenue-funded programmes, delivered through the term contract as specifi ed by the Council’s Highway Maintenance Manual and evolving environment service standards;

• £4m programme of capital and highway asset schemes including drainage, footways and LTP transport schemes, as specifi ed by the Council client; and

• external contracts amount to £1m.

Surfacing Programme:

• The Cornwall Local Transport Plan capital surfacing programme fully specifi ed by the Council Client through a contract of service. This will consist of schemes across the county with a total value of £19m.

• External surfacing programme of £4m will be delivered for third party clients.

Contracting Business: will be delivering a £30m plus programme made up of tendered and ‘passported’ work for multi-clients, including:

• A391 Carluddon improvement;

• Truro East District Centre park and ride;

• Cornwall Archive Centre (Redruth Brewery) public realm works;

• Porth promenade environmental improvement;

• residential and commercial developer’s section 278 highway works;

• phase 1 infrastructure for the Newquay Growth Area;

• bridge strengthening programme; and

• Highways Agency maintenance works in Devon and Cornwall.

Consultancy: even though the Council will change its procurement model, the residual work agreement will result in a £9.5m programme specifi ed by the client for the CORMAC and PB partnership (£6.2m will be delivered by our own consultancy service).

Facilities Service: through our integrated facilities management, property maintenance and cleaning services we will be delivering a £10.3m contract programme through multiple public sector service level agreements for numerous clients.

Aggregates and Recycling: the quarry will be producing 250,000 tonnes of materials, of which 40,000 tonnes will be going to our bitumen plant. We will also continue with our policy of zero material going to waste. The expected turnover is £5.8m.

Fleet Management and Maintenance: will continue to manage and maintain the Council’s fl eet of vehicles and plant through a specifi ed contract with the Council and an expected turnover of £9.5m.

CORMAC Collective: Notter Bridge Training Centre will continue to support a range of clients with a turn over amounting to £406k.

Non-Core Activities: the school crossing patrol service, the burial service and beach management will be delivered in accordance with the contract specifi ed by our Council client.


5.2 Fundamental business

assumptionsOur fi nancial predictions set out in Appendix E are based on the following fundamental business assumptions:

• No fundamental changes in the Council clients method for passporting and tendered works (Council’s Capital Framework lots 3 and 4).

• Current residual agreement maintained for the consultancy business for 2014/15.

• A minimum level of passported work from the Council.

• SLA charges and pension defi cit remain at 2013/14 levels but with amendments to the property element.

• No allowance included for redundancy costs brought about by changes in the level of passported work.

5.3 Key Performance

Indicators (KPIs)Going forward in to the new year, we will continue to seek ways of increasing productivity through staff engagement and the use of technology to improve our visibility of information and processes. We will also continue to reduce costs and ensure we are effi cient in our service delivery and back offi ce functions.

Our KPIs for 2014/15 refl ect this by increasing the level of performance required and by continuing to focus on cost and productivity. The KPIs for 2014/15 are set out in Appendix C.

5.4 Risk managementWe constantly seek to identify, mitigate and/or manage risks which could impact on our delivery and objectives (as set out in section 2). The dynamic risk register is updated as necessary and reviewed on a monthly basis and consequently it changes throughout the year. Given the nature of our business, there are a number of safety-related risks as well as a considerable number of fi nancial risks. The risk register is set out in Appendix D.

CORMAC has actively sought to resolve these risks by introducing the Safety First initiative and the new fi nancial management system SUMMIT. Some of the risks which CORMAC continues to face are to varying degrees out of our control and this means we have to fi nd solutions by working with others. This includes: the reduction in Council client funding; changes in methodology for passported and tendered work; and changes in cost of the Councils SLAs for support services.

5.5 Adding value for Cornwall CORMAC exists to add value to the Council and Cornwall and we have been very successful in doing this as demonstrated earlier in this plan. It is our intention to ensure added value in 2014/15 by continuing to:

• deliver value outcomes for the Council;

• work with more SMEs; and

• contribute to Cornwall’s economic growth by supporting people back into work and enhancing skills in the workforce.

5.6 Our sustainable working

practicesWe are committed to respecting and enhancing Cornwall’s natural and built environment underpinned by our vision of delivering sustainable solutions safely. Through our clearly-defi ned procedures, training and communications we make sure that our environmental objectives are embedded within our company culture.

We recognise our legal duty under all environmental legislation to minimise the impacts our activities have on the environment and to provide competent advice to our employees regarding environmental issues.

The information given below highlights some of our key environmental initiatives:



Land use and wildlife

CORMAC is committed to managing its operations to the highest environmental standards. We continue to work with our established local and national conservation and countryside groups to protect and enhance our local natural environment.

Carbon reduction

We are committed to reducing carbon emissions across our fl eet, buildings and projects. We will:

• review our fl eet in order to improve effi ciency and reduce carbon emissions;

• focus on reducing unnecessary travel; and

• set fuel reduction targets, thereby improving our mpg.

During the coming year, we will also collect information on our building and construction project emissions in order to set reduction targets for 2015/16.

Waste reduction

We are aspiring to a ‘zero waste to landfi ll’ target and will continue to develop the Helsbury Quarry recycling centre concept and other initiatives.

Sustainable materials

We will work closely with our supply chain to source sustainable materials, seeking to:

• procure sustainable materials wherever possible and promote environmental initiatives on reducing use of natural resources; and

• source all timber products from Forest Stewardship Council managed forests or suppliers ensuring our timber comes from responsibly-managed forests.

Sustainable water

We will continue to be committed to sustainable working practices and reducing our impact on our local environment, as shown with the opening in 2014 of the Helbury Quarry recycling centre. Going forward, we will continue to manage our carbon footprint, reduce waste and recycle materials used. CORMAC is committed to supporting wildlife and enhancing the landscape and this will be evident during our work in coming years.


We are committed to respecting and

enhancing Cornwall’s natural and built environment underpinned by our vision of delivering sustainable solutions safely.

Cornwall Council

ShareholderRepresentative

CORMAC Contracting Ltd

Board of DirectorsCORMAC Solutions Ltd

Board of Directors

Business Strategy

Investment and

Innovations

Committee

Finance, Resources,

Audit and

Performance

Committee

People, Culture and

Reward Committee

Health, Safety

and Welfare

Sub Committee

Renumeration

Sub Committee


6.0 Organisational resources

and development6.1 Governance

CORMAC is owned and controlled by the Council and operates under the Companies Act (2006). This means there are specifi c requirements to be fulfi lled under governance. The companies (CSL and CCL) have Articles of Association which set out the limitations of the board’s decision making powers and the matters which are reserved for the shareholder. The board meets quarterly and is supported by the work of itscCommittees. The structure is set out below and this framework shows how the various committees and internal management teams service the board’s needs.


6.0 Organisational Resources and Development

Internal control is provided by an integrated management system which has been designed to ensure the companies fulfi l their legal and fi nancial obligations, and their ethical responsibilities. These include business, fi nancial and HR policies and procedures. Underpinning these are a wide range of operating and safe working procedures to ensure the workforce can comply with the companies’ legal obligations and effi cient ways of delivering.

The internal controls are subject to a signifi cant level of assessment each year. The companies’ benefi t from inspections by the external auditors, the Council’s Internal Auditors, CORMACs internal assessors and measurement technicians and also BSI, our third party auditors. These interventions seek to test the eff ectiveness of our internal controls and where non-compliance or risk of failure is observed, a management action plan is produced and implemented immediately.

CORMAC’s management team, committees and boards review performance and risk on a monthly and quarterly basis, respectively, and this actively contributes to the assurance sought by the board for internal control. A recent internal audit (June 2014) led by the Council has confi rmed that CORMACs internal controls are eff ective and that there are no failures in governance.

6.2 Valuing our peopleCORMAC is a value-based business and we rely on our people to represent our values in the workplace and in the community in which we work. We have around 1650 people who largely reside in Cornwall and who operate across Cornwall and across the border into Devon.

Our operational front-line workforce represents

87% of our total staff , with 8% engaged in

technical activities and 5% supervisory,

management and leadership. 41% of our

employees are female and increasingly they are found in prominent senior management roles. Our workforce has an average age of 48, spanning from 16 to 74 years.

In order to achieve our vision and deliver our objectives, key areas of development activity are being progressed. These are aligned with and derived from this business plan and the emerging longer-term commercial strategy. They include:

• promoting health, safety and wellbeing through ‘Safety First’, and meaningful policies, procedures and processes, leading to positive behavioural changes;

• correlation between company values and employee engagement leading to organisational commitment and improved

performance;

• consolidation and advancement of

attainments in leadership and management

styles in line with 21st century requirements, including a recognition of the role of leadership in ethical challenges;

• understanding the benefi ts that diversity brings from within the business and local community, through richness of ideas and innovations, and ensuring equality in the workforce supports and sustains our business;

• fi nancial planning and surety of investment

decisions, including accountability and the use of most appropriate fi nancial decision metrics, e.g. return on investment, and cost-benefi t analyses;

• understanding of our business’s capabilities and ability to make connections across the business (and supply chain) in order to deliver solutions in the market place; and

• marketing capabilities to promote eff ective

and strong customer relationships that bring value to the business and market research capabilities to gain competitive advantage.


Providing training and development opportunities to our workforce is not simply a matter of getting more from our people. We know that work should be challenging, rewarding and stimulating, which in turn provides new opportunities to overcome obstacles and develop skills.

With this in mind, we make sure that all staff across every part of the business, have regular opportunities to learn and grow to keep them safe and further engaged. We have a dedicated training budget of £0.5m which supports development activities and the on-going investment we make in skills maintenance for the workforce.

Cultivating the next generation of talent is also vital to our success. Instead of waiting for young people to learn the skills we want, we strive to provide those opportunities, with schemes like trade apprenticeships and our graduate/technician programmes to ensure the future agility and sustainability of our business. We are proud to support 50 trainee roles including graduates, technicians and apprentices and it is hoped that upwards of 70% of these will go on to secure permanent positions in this business and become our future.

We also off er our people competitive employee reward packages. We value our people resources above all else and need to retain high-performing teams and individuals.

Succession planning is a key focus in our workforce development plan and we continue to invest heavily in leadership competencies and coaching skills. Going forward, we are supporting key staff


in media training and relationship management to underpin our marketing and brand strategy. We are very proud of our workforce and the work they do in our communities, and we will continue to invest in their development.

6.3 Safety, health,

environment and qualitySafety is CORMAC’s number one priority, enabling us to continue to play our part in improving workplaces for our employees, clients, partners and the public.

‘Safety fi rst’ can best be described as a core value and needs to be embedded in the culture of the company. It is something which everyone believes in - from the managing director to the newest employee. That belief needs to be visible, and means incorporating safety in everything we set out to do, from the start, fi rst time and every time.

Safety is CORMAC’s number one priority, enabling us to continue to play our part in

improving workplaces for our employees, clients, partners and the public



CORMAC’s Safety First strategy is to:

• put safety at the forefront of everything we do, avoid unnecessary risks, promote and create a safety fi rst working environment;

• act and behave so that we stay safe and keep the environment and people around us safe;

• ensure safety is everyone’s responsibility - don’t walk by. We must challenge and report anything we think is unsafe or wrong;

• continually improve our safety, health and environmental performance, through “no blame”, honesty and reporting of incidents, near misses, and unsafe situations;

• “design in” safe working practices (avoiding

risk) and plan our health, safety, welfare and environmental management before we start our work and continually monitor progress;

• understand and comply with our policies, procedures and rules, ensuring all people have the necessary support, training and competencies to do their job safely; and

• aspire towards ZERO injury accidents and environmental incidents.

CORMAC measures the impact of the ‘Safety fi rst’ strategy and the following summary shows progress to date. It should be noted that reporting has increased considerably which is an indication that everyone is more aware of safety issues.

Every leader and manager to commit to Safety First and inspire their people to make it their personal priority

We engage and involve everyone who works for us to make safety personal – contributing to Safety First through all that they do

We make sure our systems and processes help people maintain Safety First, not get in the way

We look at what we do with fresh eyes, challenge the status quo, and re-engineer how we do it to eliminate the risks

We seek out and deal with poor practice, and share what works well adapting it for our own environment and making it what we do

We identify where we can improve, close the gap by building in safe practices and understand the impact on

Lead and

Commit

Engage

and Involve

Simplify

and Comply

Rethink and

Prioritise

Feedback

and Learn

Measure

and Track

Accidents

over 3 days

Accidents

over 7 days

Total

days lost

Dangerous

occurrences

Major

injuries

100%

50%45%

25%20%


6.4 Corporate social

responsibilityWe are committed to making a positive contribution to our communities, through supporting the local economy and facilitating healthier communities, building resilience and working in partnership to sustain our communities. This gives greater access to essentials for living and being stewards of Cornwall’s assets. Our


Case study 7

Jobcentre PlusCORMAC has worked with Jobcentre Plus for the past 18 months providing eight week ‘work experience’ placements in environment operations, highways operations and network management. A number of individuals engaged through this programme have since joined existing teams within our Company. As well as this, CORMAC has worked in partnership with Penzance Jobcentre Plus off ering the opportunity to work on live projects in the community.

This has off ered those seeking employment the unique opportunity to gain valuable work experience and to develop important skills for the workplace whilst also gaining an insight into working for a large local employer.

Martin Williams, Employer Engagement Manager for Jobcentre Plus, said:

“CORMAC have been champions of our work experience programme and this has given many jobseekers the chance to gain new skills, an up to date reference and a chance to get back into the routine of work. Work experience has been a highly eff ective springboard for jobseekers to return to work.”

The summary shows that in spite of the increased reported accidents, there is a signifi cant reduction in days lost, indicating accidents are less severe.

Reduction on previous year

social responsibility agenda extends from ethical considerations at board level through to our delivery practices on the front line.

We have a Corporate Social Responsibility (CSR) sustainability strategy which highlights our contribution to our local economy, society and environment. Case studies 7, 8 and 9 demonstrate some of our activities which promote economic activity and social inclusion.



6.5 Communication strategyWe have a communications and engagement strategy in place which focuses on internal communications and mirrors our approach in our external marketing strategy. We are seeking to build and maintain good long term relationships with our stakeholders including our staff , the Council and the public. To do this we are using a range of media including social media, to communicate key messages and address issues, whilst encouraging feedback and dialogue from interested parties.

We have made signifi cant improvement to our communications platforms which can be found at:

www.cormacltd.co.uk

CORMACltd

CORMACltd

Case study 8

CORMAC 6‘Pluss’ is a social enterprise organisation that inspires individuals into work. They are currently delivering the ‘work choice programme’ through Jobcentre Plus, which is specifi cally focused towards individuals with disabilities and long term health conditions e.g. mental health problems.

CORMAC is engaging with ‘Pluss’ from April 2014 to deliver an eight week programme of work, within our company, for six selected individuals who are from similar disadvantaged backgrounds.

Case study 8

Home Farm Trust (hft)Hft works closely with people with autism, and it has members who enjoy and want to perform jobs and tasks such as washing cars and picking litter. It is highly benefi cial for them to perform these tasks, as they are doing something which they enjoy, while benefi ting society and increasing their social interactions, as well as having a fi t and productive lifestyle. CORMAC off ers suitable placements to members of hft to engage in activity with the various divisions of CORMAC.

We are seeking to build and maintain good long

term relationships with our stakeholders including our staff , the Council and our public


Appendices:

Appendix A: Organisation Structure 37

Appendix B: Our Vision, Values and Objectives 38

Appendix C: Key Performance Indicators (KPIs) for 2014/15 39

Arthur HooperManaging Director

Robin FisherDirector of Resources

Simon DeaconOperations Director

Dominic BostockCommercial Director

Joe KeohaneDirector of Finance

Nick JamesContracts Manager

Andy JamesHead of Highways and

Environment

Ian BounsallHead of Surfacing

Paul NevattFacilities Operational

Manager

Andy BartleHead of Aggregates

and Recycling Division

David ShereVehicle and Plant

Manager

Richard Taylor Technical Services

Manager

Tracey Woodhams Company Secretary


Appendices

Appendix A: Organisation structure

CORMAC structure and business divisions

TRUSTED TO DELIVER sustainable solutions safely

Our vision drives strategy and policies, and helps everyone, at every level of the Company understand what we are trying to achieve.

at the right pace and in the right direction

PROGRESSIVECONSTANTLY MOVING FORWARD

to do the right thing in a transparent and timely manner

DECISIVEMAKING THE RIGHT DECISION

and treating our staff, customers and partners fairly

FAIRBUILDING ON OUR PEOPLE DIVERSITY

and consider environmental management practices, putting safety first at the heart of our activities

SAFEENSURING WE OPERATE

SAFELY

TRUSTBELIEVING WE WILL DO THE RIGHT THINGfor the business, our staff and the wider community

Our values create the cultural context which CORMAC wishes to operate and we are all committed to achieving. These values define how we behave with each other, how we interact with our communities, private and voluntary sector partners and our stakeholders.

CORMAC’s objectives give us clear targets and help us understand what we need to achieve.

ACHIEVING SIGNIFICANT BUSINESS GROWTHand a sustainable dividend for our shareholder

PROVIDING FLEXIBLE SERVICESwhich respond to change

PUTTING SAFETY FIRSTin all our activities and minimising our environmental impact

DEVELOPING

for the longer term success of the business

MEANINGFUL RELATIONSHIPS

through employment and skills development to increase our local economic footprint

SUPPORTINGLOCAL COMMUNITIES

thereby creating value for money for customers

PROVIDING

Our Vision

Our Values

Objectives

INNOVATION AND SUSTAINABLE SOLUTIONS


Appendix B: Our vision, values

and objectives

Appendices


Appendix C: Key Performance

Indicators (KPIs) for 2014/15

Key Performance IndicatorsPeriod:

Year 2014/15

Accumulative target for the period Annual Target

People

Accidents

Number of Lost Time Personal Injury Accidents <20

Accident Frequency Rate-RIDDOR <0.4

Days lost to Personal Injury Accidents <300

Sickness

Sickness days per head <5.5

Sickness days per head excluding long term sick <1.65

Sickness days per head–CORMAC signed <4.4

Sick days per head – CORMAC not signed <8.5

Cost of sickness <£300k

Staff Levels

Staff turnover rate all (starters) <23%

Staff turnover rate exc. Cleaners (starters) <6%

Finance

Business Turnover (excluding internal trade) - one month in arrears £102m

SMEs (value) >£16m

Innovation and Improvement

SUMMIT Project – Phase 1 Status RAG - Green

SUMMIT Project – Phase 2 Status RAG - Green

HUB logistics savings £TBA

Customer

Composite satisfaction score -Surfacing satisfaction survey – % of responses excellent to good 75%

Compliments v Complaints (% split) 60:40

Compliance

Standards Compliance >87%

Number of internal safety warnings 0

Number of internal stop notices – H&S Inspections 0

Risk

High severity risks - target = high for over rectifi cation period 0

Appendices

Printed on recycled paper. JN34185 August2014

CORMAC Solutions Ltd and CORMAC Contracting LtdHead Offi ce, Castle Canyke Road, Bodmin, Cornwall PL31 1DZ

Tel: 01872 323 313Email: [email protected]

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