Sharing Our Journey - Gammon Construction€¦ · (Gammon) to provide a verification statement for...

Sharing Our JourneySustainability Report 2005

Contents

1 ScopeofReport

2 ChiefExecutive’sStatement

3 AboutGammon

4 CorporateSustainability

6 EconomicandBusiness

10 SocialResponsibility

16 HealthandSafety

20 EnvironmentalProtection

24 2005PerformanceSummary

25 Outlookfor2006

VerificationStatement

TheBusinessEnvironmentCouncil(BEC)wascommissionedbyGammonConstructionLimited(Gammon)toprovideaverificationstatementforits2005SustainabilityReport“SharingOurJourney”(thereport).BECconductedsamplechecksofthedataandclaimsinthereportthroughdocumentanddatareview,interviewswithresponsiblepersonnel,andvisitstoselectedsites.Ourfindingsaresetoutasbelow.

Completenessofthereportscope“SharingOurJourney”providesacomprehensiveandbalancedaccountofGammon’scommitmenttosustainabilityacrossitscorebusinessactivitiesandlocationsinwhichitoperates.Thereportalsoexhibitstheincreasingreachofthe“quadruplebottomline”approachinworkingwithbusinesspartnersandthewidercommunitytoaddresssocial,healthandsafety,environmentalandeconomicconsiderations.WeencourageGammontocontinueitsembraceofGlobalReportingInitiative(GRI)principles,andinparticulartofurtherengagestakeholderstohelpdefinethecontent,performanceindicatorsandpresentationoffuturereports.

AdequacyofdataTherelevanceandclarityofthereport’spresentationofeconomicandbusiness,social,health,safetyandenvironmentalperformanceisconsideredadequateforabroadaudienceofreaders.TheselectedcasestudiesprovidearepresentativeoverviewofGammon’ssustainabilitychallengesacrossdifferentbusinessoperationsandlocations,andtheresponsesthattheCompanyhasmadetothese.Theselectedindicatorsprovideasoundbasisforperformancebenchmarkinggivenprevailingconstructionpractices,butwillneedcontinualrefinementovertimeasconsensusonsustainabilitywithintheindustryevolves.

AccuracyofdataTheinformationpresentedinthisreportisconsistentwiththedocumentsanddatareviewed,interviewsconductedandsitesinspectedduringtheverificationprocess.Recommendationstoclarifyminorambiguitiesidentifiedduringverificationhavebeenincorporatedintothisreport.Existingdataandinformationmanagementsystemsareconsideredbotheffectiveandreliable.

OpinionBECconsidersthisreportanaccurateandreliablepresentationofGammon’sinitiativesandachievementstowardscorporatesustainabilityin2005.

KevinEdmundsDeputyDirectorBusinessEnvironmentCouncil

IntroductionTheconstructionindustryispivotaltothefosteringoflong-termsustainabledevelopment.

Economicgrowthanddevelopmentdrivesallaspectsoftheconstructionindustrythroughnewinfrastructure,urbanbuildingsandregeneration,yetatthesametimepresentspotentialenvironmental,socialandeconomicimpactstoprojectproponents,theserviceprovidersandthewiderpublic.Throughthepromotionandimplementationofindustrybestpracticeandinnovation,Gammoniscommittedtoembracingsustainablebusinesspractices.

ScopeofReport

‘SharingOurJourney’coversourperformanceandprogressfortheyear2005,markingthethirdyearofreportingonoureffortstowardssustainablebestpractice.

Thisyear’sReportisthemedtodemonstratetheprogresswearemakinginworkingtogetherwithourcustomers,stakeholdersandthecommunityatlargeinengenderingamindsetofsustainabilityandinnovationwithinourprojectsandactivities.ThecasestudiescitedinthisReportbringthisagendatolifeanddemonstratethesharedsuccessthatsustainablebestpracticebringswhenworkingintheliveenvironmentgiventhecloseinterlinkagebetweenouractivitiesandthecommunitiesandenvironmentwithinwhichweoperate.

Followingonfromour2004SustainabilityReport,theGlobalReportingInitiative(GRI)Guidelines2002haveagainservedasaframeworkforwhatandhowwereport.Thisenablesustobenchmarkourperformanceagainstglobaltrends,aswellasidentifyandtrackinternallyhowwehaveprogressedinestablishingglobalstandardsandaligningourowncurrentpracticeswiththem.Thefollowingpagespresentourperformanceandprogressforthe2005calendaryearandrelatestoallareasoftheGammonGroup’soperations(referredtohereinafterasGammon)asfollows:

• HongKong,whereweprimarilytradeasGammonConstructionLimited, whichincludes: –jointventureprojects; –theGammonTechnologyParkwhichincludesoffices,workshops,ageotechnical laboratoryandvehicleandplantmaintenancefacility; –plantandequipment; –concretebatchingplants;

• MainlandChina,wherewetradeasGammonConstruction(Shanghai)Limitedand GammonConstruction(China)Limited;

• Singapore,wherewetradeasGammonPte.LimitedandGammonConstruction Limited(SingaporeBranch);

• Macau,whereweprimarilytradeasGammonBuildingConstruction(Macau)Limited;

• BBE&MLimited,ourelectricalandmechanicalcontractingservicescompany;

• LambethAssociatesLimited,ourengineeringconsultancy;

• EntasisLimited,whoundertakeinteriorcontractingandthesupplyofhighquality constructionproducts;and

• AsteelfabricationplantinDongguan,ChinatradingasPristine.

SustainabilityReport2005 1

ChiefExecutive’sStatement

WehopethisreportillustrateshowGammonseekstodeliverbestpracticegiventhecloseinterlinkagebetweenconstruction,ourcommunitiesandtheenvironment.

AsdevelopmentpressuresgrowacrossAsia,constructionactivitiesareinterlinkingevercloserwithourcommunitiesandtheenvironment.Operatingincongestedandbusyurbansettingsorincloseproximitytosensitivehabitatsandenvironmentsrequiressustainabilityconsiderationstobegivenabsolutepriorityinconstruction.WethereforehopethatthisReport,ourthirdsustainabilityreport,servestoillustratehowGammonseekstodeliverbestpracticegiventhemanychallengesweface,andhowwearestrivingtobetheindustrypartnerofchoice.

Asaserviceprovider,theextentofcontrolandownershipwehaveforsustainabilityissuesvariesdependentuponthenatureofactivities,theformofprocurementandthedurationofourinvolvement.Embracingsustainabledevelopmentprinciplesthereforerequiresthecontributionofallstakeholders.Byreporting,wenotonlywanttobeopenandtransparent,butwealsohopethatwecandemonstratetheneedforindustry-widecooperationandpartneringandtomaximiseandenhancesustainabilityopportunities.

ForGammon’spart,wehavemadegoodprogressduring2005withrespecttointegratingsustainabilitybestpracticeacrossourbusiness.WehavereinforcedourcorporategovernancethroughstandardisationofourGroupprojectriskmanagementprocessandextendingcertificationtoourmanagementsystemstoourmainlandChinabusiness.WecontinuetopromoteresponsibleprocurementandpartneringandaredelightedtohavereceivedrecognitionforoursustainabilityandenvironmentalperformancethroughseveralprominentawardsinHongKong.

Despiteourgoodandencouragingprogressintheseareas,our2005performancehasbeenmarredbythetragicfatalitieswehavesuffered.Theseaccidentsservetoillustratethehigh-risknatureofourbusinessandthatwemustneverbesatisfiedwhateverourperformancestatisticssuggest.Weremainfullycommittedtothezeroaccidentsvision,andwilllearnfromallincidentstoensurewecandeliverthehigheststandardsofsafetyonoursites.

Wewouldagaininviteyourfeedback,andwelookforwardtothechallengeswefaceinsharingourjourneywithyouaswecontinuetoembracesustainability.

ThomasHoChiefExecutiveGammonConstructionLimitedMarch2006

2 SustainabilityReport2005

AboutGammon

MapofOperations

Wepositionourselvestofosterlong-termsustainablebusinesspracticesinallregionsinwhichweoperate.

GammonisaprivatelimitedcompanyultimatelyownedequallybytheJardineMathesonandtheBalfourBeattygroups.EstablishedinHongKonginthelate1950s,wehavesinceexpandedourpresencebothinHongKongandwithinSouthEastAsia,wheretodayweoperateoutofofficesinHongKong,mainlandChina,SingaporeandMacau.OurMacauoperationsre-commencedin2005.WealsohavecompletedprojectsandhaveGroupcompaniesincorporatedinMalaysia,Thailand,Vietnam,thePhilippines,TaiwanandIndonesia,althoughnoconstructionactivitieswereundertakeninthesecountriesin2005.

Gammon’sbusinessinterestscoverdesign,projectmanagementandconstructionservicesforbuildings,civilengineering,foundations,electricalandmechanical,maintenanceofinfrastructureandinteriorrefurbishmentsandfitout.Wealsohavecomprehensivesupportservicesincludingalargefleetofplantandequipment,aconcretebatchingbusinessandasteelfabricationserviceprovidedfromworkshopsattheGammonTechnologyParkinHongKongandDongguan,mainlandChina.

SustainabilityReport2005 3

ToGammon,sustainabilityisguidedandmanagedthroughour‘QuadrupleBottomLine’.

SustainabilityatGammonOurapproachandinterpretationofsustainabilityisguidedbythe1987WorldCommissiononEnvironmentandDevelopment’sdefinitionof“Meetingtheneedsofthepresentwithoutcompromisingtheabilityoffuturegenerationstomeettheirownneeds”.Translatingthistoouractivities,sustainabilitytousisthepursuitofourlong-termeconomicandbusinessgoalsinanenvironmentallyandsociallyresponsiblemanner.

Asintroducedinourprevioussustainabilityreports,ourexperienceandworkingapproachtosustainabilityisnotjustaboutthetraditionaltriplebottomlineofEconomic,SocialandEnvironment,butalsoinvolvesafourthfacet,HealthandSafety,representingtheGammon‘quadruplebottomline’.Constructionisahigh-riskandpeopleintensiveindustry,andconsequently,wedemandandaimtodeliveratalltimesthehighestpossiblestandardsofhealthandsafetytoprotectworkers,staffandthegeneralpublic.Theimportanceweattachtohealthandsafetyacrossourbusinessnecessitatesthathealthandsafetyisacornerstoneofoursustainabilityframework.

CorporateSustainability

4 SustainabilityReport2005

DeliveringonSustainabilityCommitmentsWeusetheBalancedScorecardapproachtohelpalignourbroadercorporatestrategywithoursustainabilitycommitments.AGroupBalancedScorecardissetannually,definingtheGroup’sobjectivesandtargetsfortheyearandtheweightingsattributabletoeachfacetofperformance.Thesearethencascadeddownthebusinessthroughdepartmentandregion-specificBalancedScorecards.Wecanthenmeasureandexpressoursustainabilityinitiativesonacontinualbasistotrackaccountabilityofobjectivesandresults.

Gammonwasproudtowinthe2005HongKongAwardsforIndustries:EnvironmentalPerformanceAward,whichrecognisescompany-levelbestpracticeinpollutionprevention,wastereduction,useofresources,legalcomplianceandstaffandcommunityengagement.Inaddition,wealsowonthreeprojectawards–theGrandAwardforNamWanTunnel,aGoldAwardforCastlePeakRoadImprovementWorkandaCertificateofMeritfortheLandmarkEast–attheHongKongEco-BusinessAwards2005.Inresponsetotheawards,Gammon’sChiefExecutiveThomasHocommented:“EnvironmentalprotectionandsustainabilityarecorebusinessimperativesforGammon,andthecompanyisproudtoreceiveprestigiousrecognitionofitsadvancesandachievementsinthisarea.”

Ownership

Asaserviceprovider,ourabilitytointegrateanddeliveronoursustainabilitycommitmentsvariesacrossouroperatingactivities.Wherewehavelong-terminvolvementorownershipofassets,thisconferstousgreaterlevelsofcontrolandenhancestheimplementationofsustainablepractices.Thelevelsofcontrolandownershiparefunctionsofthenatureoftheprojectprocurementandcontractualarrangements.Wearestrongadvocatesofpromotingprocurementprocesseswhichenableconsiderationofthewholeprojectlifecycle.Designandbuildcontractarrangementsforexampleprovideuswithincreasedflexibilityinthedeliveryofsustainablesolutionsand,longer-termprocurementsolutionssuchasPublicPrivatePartnerships(PPP)orPrivateFinanceInitiatives(PFI)provideevengreateropportunitiesduetothelife-cycleapproachtoassetdeliveryandmanagementthattheycreate.

InnovationThedevelopmentandimplementationofinnovativeideasandtechniquesisakeycomponenttoGammon’ssustainabilitycommitments.EncouragingandfosteringinnovationispromotedthroughourCentresforInnovationandTechnicalExcellence(CITE),whichexistacrossGammon’smajordisciplinesandworkareas.Gammonalsorunsaregularinnovationcompetition,whichisopentoourstaffandbusinesspartners.Sustainabilityconsiderationsformthekeyjudgingcriteria.Our2005competitionattracted55entries,withideascoveringawiderangeofareas,fromsafetyandtheenvironmenttonoveldesignapproachesandsuggestionstoimproveefficiency.Thewinnersofthecompetitionincludedarecyclingprocessforconcretewasteandanoveltechniqueforenhancinghydrocarbonbiodegradation.

AchievingRecognition

SustainabilityReport2005 5

Theintegrationofsustainabilityintoourorganizationsupportsusinmeetingtheexpectationsofourshareholdersandcustomers.

EconomicPerformanceHongKonghasremainedourcoremarket,contributingto85%ofourbusinessturnoverin2005withtheremainingturnovercomingfromourmainlandChina,MacauandSingaporeactivities.AlthoughanumberofourmajorcivilengineeringcontractsinHongKongarenearingcompletion,weareseeingexcellentopportunitiesinSingaporeandMacauaswellasinourrailandelectricalandmechanicalbusinesses.Weenter2006withoneofGammon’sbesteverorderbooks.

WecloselytrackandreportonamonthlybasisourproductivityperformanceacrosstheGroup,enablingustoreactaccordinglythroughtheimplementationofproactivehumanresourcesinitiatives.WehavethereforemaintainedourproductivityinrecentyearsdespitethedownturnintheSouthEastAsiamarketsandfindourselveswellplacedwiththeskillsetsandstaffassetsrequiredtomeetnewopportunitiesandmarkets.

MainlandChinaisagrowingmarketforoursupplychainforthesourcingofqualityconstructionmaterials.Itisouraimtolocallysourceandprocureourproductsandserviceswherepossible,andin2005,wecontinuedtopromoteourlocalChinasourcinginitiative,increasingourmaterialprocurementvaluefromChinabyover17%fortheyear.

TurnoverGroup (US$ millions)

2003 200520042002

400

600

800

1200

1000

200

Turnover by LocationGroup 2005 (%)

Hong Kong Macau

Turnover by ServicesHong Kong 2005 (%)

E&M Construction Services

Civil Foundation Building

7.1

3.2

15.7

5816

53

85

7

SingaporeChina

EconomicandBusiness

6 SustainabilityReport2005

RiskManagementByyear-end2005,ourGroupprojectriskmanagementprocesswasstandardisedandfullyoperational.Itcoversactivities,financialmanagement,healthandsafety,environmentalandsocialperformanceattheprojectlevel.Theprocessprovidesasystematicandconsistentmethodologyinmeasuringandassessingriskagainstvariousimpactscalesaccordingtoprojectspecifics.Thisenablesalogicalandconsistentmeansofidentifying,analysing,assessing,treating,monitoringandcommunicatingpotentialriskevents.Quarterlyreportingisrequiredunderthissystem.

Implementationoftheriskprocessisdesignedtoinvolvetheprojectteamtoassessriskandassumeitsresponsibilityduringthelifeofaproject.ItisactionedthroughriskregistersfeedingbacktotheGroupRiskManager,withinvolvementfromtheExecutiveCommitteeonthoseareasdeemedhighpriority.Thewholeprocessempowersaproject’steamwiththeawarenessandthetoolstomanageriskwithintheirsphereofinfluence.

Theseproceduresarealsodesignedtoidentifyopportunitiesaspartofthemanagementprocess.Throughanalysisofrisk,weareabletoidentifyproject-specificopportunitiesthatmayexistfortheuseofalternativetechnologiesandmethodologies,forbetterefficiencies,costsavingsorperformanceimpact.

SystematicriskmanagementbringsGammonclosertosustainabilitythroughmoreefficientandreliableperformance,minimisinglossexposureinprojects,thecapabilitytoseekbroaderoutcomesbeyondfinancialbenefitandabetter,moreroundedassessmentofopportunitiesforfutureactions.Consistentwithourbrandvalues,Gammonineffectbecomesthecustomer’sriskmanagerinaproject.

TheDeepBayLinkNorthhighwayprojectinHongKongischaracterisedbyanumberofchallengingrailwayandnoiseconstraints.Atonepointalongthealignmenttheconstructionoftheviaductoccursdirectlyoveraliverailwayline,allowingonly800mmclearanceaboveoverheadrailwaypowerlines.AstheMainContractorforthisconstructioncontract,Gammonneededtoovercometheseconstraints,whichwereunacceptabletotherailwayoperatorwhenconsideringtheoriginalconstructionproposal.Furtherconstraintsincludedtherequirementforworkstoberestrictedtothreehourspernightduringnon-traffichours.

“Byunderstandingtheconstraintsandriskswewereabletoidentifyanddesignanalternativeandacceptableconstructionmethodologybyconvertingalaunchinggirdertoamobilecantileversuspensionfalseworksystem,”saysRaylandLee,ConstructionManagerfortheproject.“Thissystemisprefabricatedoff-site,significantlyreducingtheworktimeabovetheraillineandofferedwiderbenefitsintermsofbothcostsavingsandthereduceddisturbanceachievedwithuseofquieterequipment.Byensuringwethoroughlyaddressedtheriskprofile,wewerenotonlyabletominimisetherisks,buttoenactaviablealternativesolutionthatwaseconomicallyadvantageousfortheclient.”

ConvertingRisktoOpportunityDeepBayLinkNorthhighway

SustainabilityReport2005 �

GovernanceOurgovernancestructureisvestedintheBoardofDirectors,chairedbyaNon-ExecutiveDirector(ashareholderrepresentative).TheBoardisresponsibleforsettingstrategy,policies,riskmanagementandfinancialperformanceofthebusiness.TheExecutiveCommittee(comprisingExecutiveDirectors)isresponsiblefortheimplementationofstrategyandpoliciesataday-to-daylevel,andareaccountabletoourshareholders,theJardineMathesonandBalfourBeattygroups,viatheBoardofDirectors.AllExecutiveDirectorsarefull-timeemployeesofGammonorareexclusivelysecondedtoGammononafull-timebasis,andhavespecificresponsibilitieswithintheGroup'soperations.

SustainabilitygovernanceataGrouplevelissteeredthroughSafety,Environment,QualityandRiskCommittees,basedinHongKong,supplementedbyregionalSystemReviewmeetingsinChinaandSingapore.Eachofthesecommitteesistaskedwithcascadinginitiativesandcollectingfeedbackthroughoutthebusinessandareresponsibleformonitoring,auditing,analysisandactioningonacontinuousbasis.

CodeofConductGammoncurrentlyfollowstheJardineMathesonCodeofConduct.During2005,wecommenceddevelopmentofourownCodeofConductwhichencompassescorporatepracticesinbusinessethics,compliance,environmentalandsocialresponsibility,employeerightsandprocurementpractices.Itisbasedonasetofkeybusinessprinciplesandtheframeworksinplaceforbothofourshareholderstotheextenttheyareappropriatetoourmarkets.TheCodewillbecomeformalpolicyduring2006andformsapivotalsupporttooltoreinforcegovernancestandardsacrosstheGroup.

CultureofQualitySustainabilityunderliesourestablishedcorporateaimtodeliverahighlevelofqualitytoourcustomersthroughourbrandvaluesofbeingcustomer-centric,resource-rich,innovativeandriskmanagers.Weengenderacrossourbusinessesandstaffaqualityculturethroughasenseofownershipandprideinourwork.Qualityisthereforeatthecoreofourvaluesandextendsfromourmanagementsystemsandprocessestoourpeopleandtheserviceswedeliver.

Risk Managers> environmentally committed> safety compliant> forward thinking> respectful, team players

Resource-rich> design, build, plant> Asian experts> Balfour Beatty and Jardine

Customer-centric> consensus builders> responsive> trustworthy

Innovative> learning organisation> technology enabled

Quality> product> service> social responsibility

Ourbrandvalues

� SustainabilityReport2005

CertificationofManagementSystemsinChina

HSEQManagementSystemsGammon’sHealth,Safety,EnvironmentalandQuality(HSEQ)systemsprovideeffectiveandconsistentmanagementofactivitiesacrossallofourbusinessesandfunctions.Asof2005,withthesuccessfulcertificationofourmainlandChinaoperations,allofourregionaloperationsarecertifiedtooperateunderISO9001forqualitymanagementandOHSAS18001certificationforsafety.ISO14001forenvironmentalmanagementappliestoallregionaloperations,exceptforourPristineworkswhichwillseekcertificationin2006.OurrecentlycommencedMacauoperationsoperateunderHongKong’ssystems.Thesesystemsunderpinothercorporatefunctionsincludingprocurement,humanresources,financeandintegratedmanagementservices.IndependentauditsforISOandOHSAScertificationareundertaken,andduring2005,over30wereconductedonourvariousmanagementsystems,representinga43%increaseover2004.During2005,weconductedover65internalaudits.

Gammoniscommittedtoenforcingconsistenthighstandardsofoperationacrossallitsregionalcentres,irrespectiveofthelocalmarketconditionsandregulatoryobligations.Thesestandardsareunpinnedbyourcorporatebrandvalues,ourqualitycultureandamindsetofcontinuousimprovement.

MainlandChina,asadevelopingeconomyposedasetofnewchallengesinsecuringcertificationforourmanagementsystems.Ourbusinessinthisregionalcentrecomprisesthreeseparateandculturallydiverseoperations,withconstructionteamsinthePearlandYangtzeRiverDeltasandoursteelfabricationfactory,Pristine,inDongguan.Thecertificationprocessbeganwithgainingthebuy-inoftheregionalmanagementteams,followedbyreinforcementthroughtrainingoftheworkforce.Wethenhadtoovercomethechallengeofstandardisingourproceduresandworkprocesseswherepreviouslyvariationsexistedduetoculturaldifferencesandexpectations.

EachoftheseoperationsandourcollectivemainlandbusinessnowbenefitfromstandardisedsystemsandapproachesandtheactionandenforcementofGrouplevelinitiativescannowbemoreeasilyintegratedintoallourChina-basedactivities.

During2005,weenhancedourmanagementsystemsthroughourEnterpriseResourcePlanning(ERP)system,enablingustotrackperformanceinrealtime.Throughtheinputofdatafromsitesandoffices,itprovidesthetoolstoenableanalysisofaprojectintermsofHSEperformance.Incidentsandaccidentsaretrackedthroughouttheirlife,andamechanismexistsformeasuringdata,comparisonanalysis,feedbackandimprovementactionsonactivitiesundertaken.TheERPsystemextendstoexternalperformanceappraisalsoftradesubcontractorsandsuppliersbenchmarkingtheirperformanceagainstinternalstandardsincludingthoseforHSEQ.

SustainabilityReport2005 �

Wepromotesociallyresponsiblepracticesandinitiativestoretainourindustryleadershiproleandbethecontractorofchoice.

Gammon’sStaffGammondirectlyemploysnearly3,600peoplehailingfromsomeover17differentcountries.Over51differentprofessionsandtechnicalbackgroundsmakeupourworkforce.Assuch,ouremploymentpolicyistohirethebestpersonforaparticularpositionregardlessofsex,creedorethnicbackground.

Toensurewehaveasustainableworkforce,wehaveinplaceanumberofgroup-widehumanresourceprogrammes.Successionplanningbeingacriticalbusinessissuein2005,wepublishedcareerdevelopmentpathsforallstaff.In2006,wewillestablishandimplementstructuredsuccessionplanningfortheseniormanagementofthebusiness.Thisprocessensuresnurturingofourtalentacrossallbusinessregionsandactivities.

Anappropriatelife/workbalanceisactivelyencouraged.TheGammonStaffRecreationCluborganisesregulareventsandactivitiesacrosstheregionsandattheendof2005,weintroducedalternativeSaturdayworkinginHongKongasopposedtothenormalpracticeofasixdayweek.WemeasureourperformanceasanemployerofchoicethroughregularStaffOpinionSurveysandopenmeetings.Weencouragedialogueamongstallemploymentlevelsandcontinuetoorganiseregularbreakfastsessionsforyoungeremployeestosharetheirviewsdirectlywithseniormanagement.Internalcommunicationsusingtheintranet,noticeboards,visitsandtourspromotestaffawarenessandthebuy-intoourcorporatevalues.

Thecontinuoustraininganddevelopmentofourstaffisrecognisedasanessentialdriverofimprovementandknowledgedevelopment.TheGammonAcademyprovidesaformaltrainingfacilityforusebyallstaffacrosstheGroupaswellasforsubcontractorsandbusinesspartnersonselectedcoursesandprogrammes.During2005,47separatetrainingcoursesweredeliveredbytheAcademy.Site-basedtrainingisdeliveredthroughmorningassemblies,toolboxtalksandclassroomsessions,andtheWorkerRegistrationCentresfacilitatecriticaltraininginsafetyandenvironmentalissuestoourworkersaswellasthoseofoursubcontractors.WealsoprovideannualscholarshipsfortheMasterofInterdisciplinaryDesignandManagementofferedbytheUniversityofHongKong.In2005,threestaffwonscholarshipsandcommencedtheprogrammeandin2006,afurtherfourstaffwillparticipate.

Sincetheearly1980swehaveofferedapprenticeshipsandgraduatetraininginconjunctionwithprofessionalinstitutionsincludingtheConstructionIndustryTrainingAuthority(CITA),HongKongInstitutionofEngineers(HKIE),InstituteofCivilEngineers(ICE)andHongKongInstituteofSurveyors(HKIS).In2005,Gammonawardedcompletioncertificatestoninetechnicianapprenticesand13graduatetrainees.

SocialResponsibility

10 SustainabilityReport2005

PartneringtoOvercomeChallenges

ApplyingthePPPModeltoHongKong’sHighSpeedRoads

PartneringGammonpromotesthepracticeofpartneringasakeystepforwardtoimproveefficiencyfortheindustry.Partneringfostersasharedvision,promotingcommunicationamongstprojectparticipants,championsbestpracticeindesignanddeliveryandultimatelyimprovesoverallperformance.WehostregularPartneringForumstowhichweinvitekeyindustryfiguresandleaderstodebateandpromotetheneedforlastingpartnershipswithintheconstructionindustry.During2005,wehosted14sucheventswithover100differentcompaniesandorganisationsattending.Inparticular,wearestrongadvocatesofthelong-termpartneringapproachtoassetdeliveryandmanagementthroughprocurementmethodologiessuchasPublicPrivatePartnerships(PPP).

TherenovationoftheMandarinOrientalHongKong,aprestigiouslandmarkinthecoreCentralbusinessdistrictofHongKong,involvesnewcurtainwallingtothe26-storeytowerandretailpodium,reconstructionofguestroomsandtherenovationofrestaurant,spaandpublicareas.Inadditiontoaseven-monthclosureperiod,theprogrammeconstraintsincludeaperiodwhenthehotelwillbepartiallyopenforearlyoccupancyandtheconstructionandrefurbishmentundertakenwithindenselyutilisedandnarrowcityblocks.

Early-stageinvolvementonthepartofGammonhashelpedstewardbestvalueindesignsolutionsandthemitigationofnegativeimpactsarisingfromprojectdelivery.Withactiveinvolvementintheprojectforovertwoyears,GammonleadsastheManagementContractorandthroughthepartneringapproach,includingworkshopsandmock-upexericises,seekstoensureaninclusivesupplychainprocessdeliveringvalueformoneyaswellastimelyandinformeddecision-makingtokeeptheprojectontimeandwithinbudget.Thisproactiveapproachtoriskeffectivelyprovidesacomprehensiverisk-basedmanagementprocesstotheprojectonbehalfofthecustomer.

In2005,Gammoncommencedalong-termhighwaymaintenancecontractinHongKongwhichintegratesaPrivatePublicPartnership(PPP)contractapproach.ThecontractisbasedonclearlystatedperformancerequirementsandencouragesarealpartnershipwiththeHighwaysDepartmenttodeliverbettervalueandservice.

ThePPPmodeladoptedprovidesalong-termapproachtothemanagementandmaintenanceofHongKong’shighwayassets.Morestrategic,life-cyclebaseddecisionscanbemadeinrelationtoassetmaintenanceandmanagement.Thelongercontractdurationalsoallowsgreaterinvestmentinspecialistplant,materialsandmethods.Althoughtheprojecthasonlyrecentlycommenced,Gammonhasinitiatedstudieslookingatthelongertermopportunitiesforpromotinginnovation,energyconservationandwastemanagementaswellastheplanningtoolstominimizedisruptiontoroadusersandensuresafetythroughmoreeffectivetemporarytrafficmanagementmeasures.

SustainabilityReport2005 11

RepeatbusinessthroughCustomerSatisfaction

CustomersUnderstandingcustomerneedsandexpectationsispivotaltocorporatestrategyandourlong-termviabilityasabusiness.Asprimarystakeholderstoourbusiness,wecontinuouslyengagetheirinterestswiththeobjectivetounderstandcurrentexpectationsandforourbusinesstorespondtofuturerequirements.WeundertakearegularCustomerSatisfactionSurveytogaugeourstrengthsandidentifygapsinourperformance.Theseundertakingsprovideperformanceindicatorsforcomparisonwithannualsettargets.WecontinuetoseeintheresultsofthesesurveysthatGammon’sbrandvaluesconsistentlymirrortheprioritiesofourcustomers,andmoreimportantly,thatwedeliverintheseareas.FromourpublicsectorcustomersinHongKong,representingasignificantnumberofourprojects,wealsogainfeedbackthroughtheContractor’sPerformanceReports.Forthepastfiveyears,wehaveseenconsistentimprovementinourperformance,whichsignificantlyexceedsthemedianindustryaverage.

GammonandHuaweiTechnologies,amainlandChinesetelecommunicationscompany,haveestablishedalong-termworkingrelationshipfosteredbythemindsetofpartnering.Thisrelationship,builtonmutualtrustandopendialogueinunderstandingeachother’sexpectationshelpsensurecost-effectiveconstructionsolutionsaredeliveredforprojects.

Sinceourfirstcooperationin1999withtheconstructionofHuawei’sresearchanddevelopment(R&D)facilityinShenzhen,mainlandChina,wehavesincebeenretainedforaseriesoffurtherprojectsincludingalterationandadditionsworkstotheoriginalfacility.Thelong-termpartneringrelationshipenablesustofullyunderstandHuawei’sasset(theR&Dfacility)andtheexpectationsoftherelevantstakeholders,namelythecustomerprojectteam,endusersandtheestatemanagementteam.ByunderstandingtheseexpectationsandwiththeknowledgeandexperienceoftheHuawei’sprojects,Gammonisabletofast-trackprojectworkresultingincost-effectiveconstructionmanagementsolutions.

Customer Satisfaction Survey*Overall (including both Public and Private Sectors)

2003 2005200420022001

4

4.5

4.25

3.75

3.5Overall SatisfactionUsing Gammon on Next Project

* Survey results based on a scale of 1– very unsatisfactory to 5– very satisfactory

12 SustainabilityReport2005

SupplyChainManagementinMainlandChina

SupplyChainOurapproachtosupplychainmanagementisunderpinnedbyourbrandvaluestoensurethedeliveryofhighqualityproductsandservicesandtomeetcustomerexpectationsinaconsistentmanner.Acomprehensivesupplychainsystemisoperatedtocontrolandminimiserisksbyembracingalife-cycleapproach,wherewetakeresponsibilityforthefullprocurementprocessfromsourcing,negotiation,contractmanagement,testingandverificationthroughtologisticsanddelivery.Bymanagingrisksatallstagesofthesupplychain,weensuremoreeffectiveandefficientcontrolandareabletominimiseandeliminatenegativeimpacts.

Werecognisetheintegrityofproductsiscriticaltoourreputationandapivotalcomponenttoproductstewardship.Wethereforeseektooffercustomersbetterproductsbyworkingcloselywithoursupplychainonquality,durabilityanddelivery.OurCentresforInnovationandTechnicalExcellence(CITE)helppromotethisthroughdevelopmentofinnovationsandtechniquesinsupportofbestpractice.

Withsuppliersandsubcontractors,weseektoengendersustainabilityasabusinessethicinoursupplychainmanagement.In2005,weconductedthreeSupplyChainPartnerSharingsessionsattendedbyover40ofourbusinesspartnersinHongKongandShenzhen,withtheaimtodiscusspartneringissuesandtoraisestandardsofmanagementacrosstheindustry.Wehavereceivedexcellentfeedbackfromthesesessionsandarealreadyseeingthebenefitsthroughclosercooperationandworkingtogetherincertainareas.Wehavealsoidentifiedtheneedforourapproachtofocusonoursubcontractors.Thisisapriorityareafor2006.

MainlandChina,althoughbeingamajorsourceofconstructionmaterials,presentsnumerouschallengesinmeetingGammon’sminimumsuppliercriteria.Securityofsupply,qualityofproductandspecifiedstandardsinsafetyandenvironmentforfactoryoperationsrequirethehands-oninvolvementofourProcurementteaminthisdevelopingmarket.GammonundertookapilotauditingprogrammewithGuangxiHuahongCementCo.Ltdtoinitiateanewsourceforcementsupply.Factoryvisitsandauditswereundertakentoinspectoperations,interviewmanagement,reviewexistingenvironmentalpracticesinregardstocommunityimpact,assesstheprospectsforGovernmentassistanceinupgradingtheexistingfacilitiesandalsotoinspecttheirtransportandlogisticsfacilities.SubsequentmeetingsandtheformulationofanimprovementprogrammeledtothequalificationofthecompanyanditsGuangxi-locatedfactorybecomingaregularsuppliertoourMacauoperationsduring2005.Regularauditswillcontinuetoassuresupplierintegrity.

SustainabilityReport2005 13

Weoperateunderapolicyofresponsibleprocurementacrossourbusinessesaspartofthesupplychainmanagementprocess,withimplementationthroughadecentralisedframeworkforregionalcentres.Nevertheless,allofficesshareacommonmethodology,whichlooksbeyondpricealoneintheselectionprocessforsuppliers.Considerationisgiventohealthandsafetyissues,environmentalcomplianceandtreatmentofworkers,throughduediligencesiteandfactoryvisits.In2005,wecommencedunifyingsupplierinformationfromourregionalcentresforfutureconsolidationandcomparisonofdata,policydevelopmentandactionsonbestpracticeforprocurement.

In2005,wealsoconsolidatedamechanismtobenchmarktheperformanceofindividualtradesuppliersandsubcontractorsworkingonGammonprojects.Thisinformationisnowpublishedviaourextranet,accessiblebyourvendors,sothattheycanunderstandandbenchmarktheirrelativeperformanceagainstothersametradecompaniesbeingusedbyGammon.Thisinformationwillalsobeusedforreviewanddiscussiontoinstigatecontinuousimprovement.

CommunityWithintheurbanareaswherewework,wemustmeetthelocalcommunities’andstakeholders’increasingexpectationsinprojectdelivery.Engagingandeducatingontheworkweareperformingcontinuingthroughthelifecycleofourprojectsisaprioritytous.Onandoff-site,wecloselymanagesafety,environmentalandnuisancefactors.Forexample,during2005weundertookacomprehensiveappraisalofpublicriskarisingfromouractivitieswithanumberofareasforactionidentified.

Throughactivestakeholderengagementandthevoluntaryadoptionofstringentperformancestandards,GammonhasbeenabletoidentifyandmanagepotentialnegativecommunityimpactsarisingfromthecomprehensiveupgradeoftheLandmarkretailandcommercialcomplex.LocatedinHongKong’scorebusinessdistrictofCentral,theshoppingcomplexposesnumerouspublicconstraintstotheworkingstrategy,sequenceandtimingoftheworks.Theseincludeaccesstothecomplex,asitremainsopentothepublicthroughouttheworks,theofficesadjacenttothesideandanewluxuryboutiquehotelrecentlyopenedinthecomplexitself.

Throughregularclientandtenantmeetings,goodplanningandeffectivecommunications,potentialconflictsareanticipatedandproactivelymanaged.Forwardplanningandworkssequencinghasensuredpublicareasandworksitesareclearlydelineatedandaresafeforpedestriansandgeneralpublicuseand,thatdisruptionstotheheavilycongestedstreetlevelareasareminimised.Nuisancefactorstotenants,theexistingbuildingandsurroundingpropertieshavebeenreducedwiththeadoptionofstringentvoluntarynoiseandvibrationstandards.Regularengagementensurespromptattentiontoallcomplaintsandenquiresonsiteworks.Todate,responsesfromstakeholdershavedemonstratedthatthebusinesseswithinthecomplexhavenotbeenmarkedlydisturbedduringtheworks.

ALandmarkChallenge

14 SustainabilityReport2005

WiththeexpansionofourPristinesteelfabricationfactoryinDongguan,noisegenerationfromtheextendedproductionyardposedapotentialnuisanceimpactduetotheadjacentlocationofahostel.Pristine’smanagementandstafftookaproactiveandvoluntaryapproachtothispotentialproblem.Followingdetailednoiseassessments,bothfordayandnight-timesituations,theresultswereusedforthedesignandconstructionofanoiseenclosuretoensurethatthenoiselevelsatthehostelarereducedtowithinacceptablestandards.Subsequenttestinghasconfirmedthis.ThisexercisewasundertakenaspartofGammon’scommitmenttotheFederationofHongKongIndustries’1-1-1ProgrammeaimedatencouragingenvironmentalimprovementandstewardshipinthePearlRiverDelta.

Ourcommitmenttothecommunityreachesbeyondourworksitesandtheirimpacts.Wearearegularcontributorandparticipantinlocalcharitiesandevents.GammonrunsaMindsetprogramme,whichpromotestherehabilitationofmentallyillpatientsthroughemploymentandalsoworkscloselywithlocalschoolsthroughourstaffwhovolunteerasambassadorstotheMindsetprogramme.Weactivelysupporttheconstructionindustry’sowncharity,theLighthouseClub,forthoseaffectedbyconstruction-relatedincidents,andregularlysupporttheCommunityChest,theChristinaNobleChildren’sFoundationandothercharities.Ourstaffarealsoregularparticipantsandvolunteersincommunityeventsthatpromotesocialandenvironmentalissues.

During2005,GammonsponsoredaMindsetprojectwhichinvolvedtheconversionoftheoldstaffandwelfareclubatCastlePeakHospital,HongKong,intoamulti-functionalcommunitycentre.Thecentre,comprisingsome7,000squarefeet,isopentotheHospital’spatientsandtheirfamilymembers,servingasavenueandprovidingfacilitiesforvariousactivitiessuchasvocationaltrainingandself-helpgroups.Gammonundertooktheoverallmanagementandtherenovationservice,ensuringeffectivecoordinationwithallpartiesinvolvedandsuccessfulcompletion.

Gammoncontinuestopromoteandsupportthenextgenerationofengineeringandconstructionprofessionals.In2005,atotalof28undergraduatesfromeightuniversitieswereselectedtojointheGammonUniversityFellowship.TheFellowshipsprovidepersonalmentoring,training,sitevisits,involvementinGammonactivitiesandprioritytoapermanentcareerwithGammon.Wehavealsowell-establishedscholarshipprogrammeswiththreeleadingChineseUniversities:TsinghuaUniversityinBeijing,TongjiUniversityinShanghaiandtheSouthChinaUniversityofTechnologyinGuangzhou.Eightyonescholarshipshavebeengiventostudentsattheseinstitutionsprovidingthemtheopportunitytocompletefurthereducation.

MindsetatCastlePeakHospital

CommunityResponsibilityinChina

SustainabilityReport2005 15

HealthandSafety

Asthefourthfacetoftooursustainabilityvision,Health&Safetyismanagedasapriorityfunctiontoourbusiness.

ZeroAccidentVisionWedonotcompromiseincreatingthebestinaworkingenvironment,equipmentmaintenanceandstafftrainingtosupportourzeroaccidentvision.Acomprehensiverangeofinitiativestocreateacultureofsafetythatminimisesrisk,seekstoeliminateaccidentsandstrivesforfullcomplianceonsitesunderpinsourvision.

Inalloperatingareas,initiativesaresupportedbycertifiedsafetymanagementsystems(toOHSAS18001standard),site-specificriskregisters,regulartrainingtoallstaffandon-sitemanagementbycertifiedsafetypersonnel.Weannuallysetprimaryandsecondarytargetstotrackourperformanceinsafety.Primarytargetsrelatetoissuessuchasaccidents,incidentratesandnon-compliances,whereasoursecondarytargetsintroduceaseriesof‘nearmiss’measurables.

TheSentosaCoveArrivalplazaprojectislocatedonSingapore’sresortislandofSentosa.TheGammonprojectteamfacedsafetychallengesduetothelargeareaoftheprojectsite,themultipleconcurrentworkfronts,andtherequiredextensivescaffoldingtoprovideworkingplatformsandaccess.Inaddition,aculturallydiversesubcontractorworkforceneededtobemanaged.

Tomeetandovercomethesafetyrisks,theprojectteamimplementedacomprehensivesafetymanagementsystem,whereallsupervisorystaffandsubcontractorswerepartytoitsimplementationandachievingtheproject’ssafetygoals.Theactioningofanareamanagementscoringscheme(seecasestudyonpage18),whichtoourknowledgeisthefirstapplicationofsuchasysteminSingapore,provedtobeakeycomponentofthesite’ssafetysuccess.

During2005,theprojecthadnoreportableaccidentsorlosttimeincidentsdespiteover380,000man-hourshavingbeenworked.

AchievingtheZeroAccidentVisionSentosaCove,Singapore

16 SustainabilityReport2005

In2005,Gammonachieveditslowest,mostimprovedaccidentrateeverrecordedandthehighestlevelsofcompliancetoHealthandSafetyregulations,with29%and33%improvementsrespectivelycomparedwithour2004performance.UsingtheGovernmentproducedfiguresfortheHongKongconstructionindustryaverageaccidentincidentrate,werateamongstthetopperformingcompaniesinourindustry.Ourperformancehasbeenrecognisedbyindustrythroughanumberofawardsforsafety.

Despitethesebesteffortsandperformance,constructionremainsahigh-riskbusinessandwehaveyettototallyeliminatesafetyriskexposure.In2005,fourfatalitiesoccurredonoursites.Ourresponsestotheseaccidentshavebeenswiftwithimmediateinvestigationsandreviewsundertakenofbothmanagementandequipmenttounderstandtheapparentdisconnectcomparedwithourimprovedoverallperformance.Thefindingsoftheseinvestigationsarenotjustfocussedonidentifyingtherootcausesoftheseunfortunateaccidents,butaddresswhereandhowtoeliminatesimilarsituationsinfuture.Aseriesofhigh-levelinitiativeswillbeundertakenin2006tofurtherimprovesitepracticesandaccountability.

TargetingHighRiskActivitiesCertainactivitiespresenthigherthanusualrisksonourconstructionsites.Baseduponourprojectworkandactivitiestobeundertaken,wearecontinuallyreviewingareaswhereweneedtobevigilantandreinforcesafetymessagesandexpectations.Anexample,our‘WorkingatHeightSafetyCampaign’,waslaunchedin2005toenhanceandpromoteworkingatheightsafetyawarenessandtorewardoursites,workersandforemenforoutstandingperformance.TheWorkingatHeightCharterwassignedinJune2005byGammon’sseniormanagementtocommitourselvestothisinitiative.Itisplannedtotracktheeffectivenessofthispromotionalactivityandundertakefurthercampaignsin2006.

InOctober2005,toreinforcesafetyawareness,weheldGammon’sfirstHealthandSafetyFamilyDayinHongKong.Thedayattractedover700visitors,includingstaffandtheirfamilies,subcontractors,clientsandGovernmentofficials.Inadditiontogamesboothsaimedatreinforcingthesafetymessage,anawardpresentationwasheldforthewinnersofthecompetitionsfortheBestSafetySite,theBestSafetyForeman,theBestSafetyWorkerandtheBestSafetySlogan.

Accident Incident Rates (per 1,000 workers)*2001–2005

30

25

20

15

10

5

0

Hong Kong SectorChinaSingaporeGroup excluding ChinaInternational2001 2002 2003 2004 2005

* For comparison, the latest available incident rate for the Hong Kong construction industry (For 2004) was 60.3 per 1,000 workers.

30

25

20

15

10

5

0

ReinforcingSafetyAwareness

SustainabilityReport2005 1�

Behavioural-basedSafetyBehavioural-basedSafety(BBS)introducesasystematicon-goingapproachtosafetymanagementbyobservingworkerbehaviourandsafetyawarenessonsiteandassessingwhyworkersbehavethewaytheydo.Behavioural-basedsafetyisabottom-upapproachfocusingonfront-lineworkers,supervisorsandmiddlemanagers,whereincriticalbehavioursareidentifiedandtargetedforchange.Theseactionsincludegoalsettingandopendiscussionwithworkersontargetsforsafety,regularsitevisitsbyDirectorsandseniormanagementtoenforcecorporatecommitmenttosafety,andtheintroductionofrewardschemesforworkersinbestsafetypractices.

In2004,GammonembarkedonapilotstudywiththeOS&HCouncilinHongKong,whichidentifiedanumberoffocalareastoimprovesafetyawarenessandbehaviour.In2005,wefollowedupbyworkingjointlywithTsingHuaUniversityonafurtherresearchstudy.ThreeofGammon’smajorconstructionsitesinHongKongwereselectedtoparticipateinthisstudyandthefindingshavereinforcedthenecessityofhighlevelinvolvementinsafetymanagementandthebenefitsofgoalsetting.AlthoughtheuseandapplicationofBBSintheconstructionindustryremainsatapreliminarystageofunderstanding,forGammontheestablishmentoftheAreaManagementschemealongwiththetrainingofoursub-contractor’smanagementareimportantoutcomesofourBBSstudiestodate.

Safetyisbothapersonalcommitmentandtheresponsibilityofallworkersatalltimesonsite.Tobringthisunderstandingtobothemployeesandsubcontractedworkers,in2005weintroducedtoallofoursitestheAreaManagementscheme.Thisisamethodologywherebyappointedindividuals,knownasAreaManagers,aremeasuredandscoredontheperformanceoftheirrespectivesite-basedteamsforHealth,Safety,EnvironmentalandSecurity(HSES)basedonobservedphysicalconditionsonsite.ThisisachievedbydividinganygivensiteintoclearlyidentifiableareasinwhichboththeAreaManagersandtheirteamsareassignedwithoverallresponsibilityforHSES.

WeeklyinspectionsandscoringoftheseareasisundertakenbyGammon’ssafetystaff,withtheperformanceresultsreportedbacktoseniorsitemanagementforreviewandaction.Inaddition,anindependentauditorcarriesoutperiodicauditsofallsitestoensureaccuratescoringandthuscreateamorecomparativestandardacrosstheCompany.During2005,theAreaManagementschemewasinitiatedacrossallprojectsitesinclusiveofallourregionaloperations.Thisisasignificantadditionalperformancemonitoringandbenchmarkingschemewhichwebelieveisuniquetotheindustry.

AccountabilityattheWorkSiteAreaManagement

1� SustainabilityReport2005

WorkerRegistrationandTrainingDuring2005,weaddedtwofurtherWorkers’RegistrationCentrestoouroperations,oneinMacauandafourthinHongKong,tosupplementtheexistingthree.Inadditiontotheirfunctionasregistrationfacilities,thesecentresprovidecompulsoryhalf-daypracticalsafetyandenvironmenttrainingcoursestailoredtotheneedsoffrontlineworkers.Bytheendof2005,atotalof13,180workersfromGammonsitesanddirectGammonstaffhadattendedourregistrationcentreswithover86%ofthesebeingsubcontractorworkers.

WorkingwithSubcontractorsandSuppliersGammonacknowledgesthatinordertomaintainconsistentlyhighhealthandsafetystandards,thetrainingandeducationofoursubcontractors’managersisacriticalcomponentofthesafetycultureandmindset.In2004,theGammonAcademylaunchedafulldaytrainingcourseentitled‘HSEManagementSystemforSubcontractors’,whichwastargetedatoursubcontractors’seniormanagersanddirectors.In2005,31subcontractors’managementstaffattendedthiscourse.

EnsuringaHealthyWorkingEnvironmentAllGammonprojectsitesarerequiredtomeetminimumstandardsofhealthandhygiene,whichareinspectedroutinelyduringinternalauditsandwhenundertakingAreaManagementinspections.Protectionagainstmosquitoes,rodentsandotherpestsisroutinelyundertaken.

InresponsetothepotentialforAvianFlu,during2005weprovidedPersonalHealthProtectionKitstoeachmonthlyanddailypaidmemberofstaff.Thepurposeofthekitistoactasapreventionmeasureagainsttheoutbreakoftheinfectiousdiseases.Furthermore,ahealthpromotioncampaignwasorganizedtopromotehealthawarenessamongstaffincludingrecommendedpersonalhygienetraining.

Attendees at Gammon’s Worker Registration Centres(at 31/12/05)

Direct Gammon Workers (1,786) Subcontractor Workers (11,394)

13.6

86.4

SustainabilityReport2005 1�

Westriveforcontinuousimprovementandleadershipinenvironmentalprotectionthroughinnovationandbestpractice.

ManagingImpactsWetackleenvironmentalmattersthroughourcompany-wideenvironmentalmanagementsystems.Byfirstquantifyingandmeasuringourperformance,weareabletoimplementandadoptappropriatemitigationmeasurestominimiseandmangetheimpactsofourbusinessactivities.Werecognisethattheextenttowhichweareabletomanageandcontroltheseenvironmentalimpactsisafunctionofthedeliveryandprocurementprocess,theextentofownershipandtheactualprojectspecifics.Toreachbeyondtheselimitations,wepromotepartnering,earlystagedesigninvolvement,buildabilitystudiesandotherinitiativesandmeanstopromoteandadoptbestpractice.

PerformanceMonitoringEnvironmentalregulatorycompliancerepresentstheminimumexpectationforourbusiness.During2005,wereceivedtwolegalnon-compliances,oneforaprojectsiteinHongKongwhereanillegalwaterdischargeoccurredfollowingtheaccidentalturningoffofacontrolpump,andthesecondforanoiseissueinSingapore.Actionsweretakentoimmediatelyrectifytheseproblemsandtotakemeasurestohelpensurenosimilarbreachesinthefuture.

In2003wecommencedenvironmentaldatacollectionfromourmajorHongKongprojectsfocusingonwastegeneration,waterconsumptionandenergyusage.Thisprogrammewasextendedin2004toallHongKongprojectsandin2005toallofGammon’soperations,activities,offices,supportservicesandregionalbusinesses.ThismostrecentexerciseprovidesthemeanstoquantifyourdirectenvironmentalimpactsinacomprehensiveandcoordinatedmannerforbettermanagementandGrouptargetsetting.

Performancefor2005 HongKong Singapore* China Total (includesMacau) (includesPristine)

Landfillwaste(m3) 244,274 7,152 634 252,060

WastetoPublicFill(m3) 416,130 Nodata Nodata –

ElectricityUsage(kWh) 19,695,029 459,371 1,766,896 21,921,296

DieselandPetrolUsage(litres) 26,888,659 873,101 158,390 27,920,150

Waterconsumption(m3) 545,860 15,997 44,313 606,170

* Singapore data has been extrapolated for the year based upon August to December returns.

TheNamWanTunnelprojectgeneratedover800,000m3ofrockspoilinexcavationwaste.Withourproactiveapproachtomanagement,theprojectteamundertookprocessingofthespoilintoreusablematerialviaaGammon-establishedsortingfacility.Then,throughcollaborativeeffortsinvolvingbothGammonandothermanagedconstructionsites,theentirevolumewassuccessfullydistributedacrossprojectsinHongKong.This100%recyclingrateattractedwide-spreadindustryattentionforbestpracticewiththeGammonteambeingawardedhighesthonoursatthe2005HongKongEco-BusinessAwards.

EnvironmentalProtection

CollaborativeWasteRecycling

20 SustainabilityReport2005

FundamentaltothecollectionofenvironmentaldataistheestablishmentofKeyPerformanceIndicators(KPI)forourHongKongoperations,wheretimeseriesdataexistsforwaste,waterandenergyusage.In2005,theefficiencyofuseofenergyandwaterimproved,howeverwastedisposedtolandfillincreased,thereforepartiallymeetingour2005targets.Thisincreaseinlandfillwasteisduetoaspecificcontractrequiringsubstantialexcavationsandlandfilldisposalofreclamationsoils.WithacomprehensivedatasetnowexistingforalloftheGammonregionsandactivities,GroupKPI’swillberolledoutaccordinglyin2006andbeyond.TheseKPI’swillenableperformancetobetrackedandspecificenvironmentaltargetstobesetinthefuture.

TakingResponsibility:GreenhouseGasesandAirPollutionInSeptember2005,GammonsignedthevoluntaryCleanAirCharterpromotedbytheBusinessCoalitionontheEnvironment(BCE)inHongKong.ThisCharterrepresentsthefirststepsbythelocalbusinesscommunitytoaddresstheairpollutionproblemsthatthegreaterPearlRiverDeltafaces.Asasignatory,wehaveestablishedanin-houseworkinggroupcomprisingrepresentativesfromourdifferentoperatingunitstoformulateanactionplantoreduceourairqualityimpacts,whicharisefromavarietyofactivitiessuchastransportation,on-siteplantusage,electricityconsumptionandchemicalsusage.Animportantaspectofourplanistoquantifythedirectgreenhousegascontributionourbusinessmakesasacarbondioxideequivalent.The2005yearmarksamilestoneforenactingtheprocesstomeasureandreportongreenhousegasemissionsacrossallofourregionalbusinesses.

GammonpossessesandmanagesthelargestplantfleetinHongKong,comprisingover1,300piecesofplantassets.Toresponsiblymanagetheenvironmentalimpactsassociatedwiththisfleet,particularlyairemissionsandnoise,weemployacomprehensivePreventiveMaintenanceProgramme(PMP)foreachitemofplantandequipment.ThePMPismanagedbyacomputerisedinformationmanagementsystem,promptingandtrackingtoclosurenecessarymaintenanceworks.Plantperformanceintheareasofnoisegeneration,exhaustemissionsandfuelconsumptionisalsoroutinelyassessedsothatthePMPensuresareliable,well-maintained,quieter,efficientandmoreenvironmentally-friendlyfleet.

18.04

2004 2005 2004 2005 2004 2005

16.27

13.47

11.55

8.6410.11

Water KPIWater used (m3) per HK$100k Expenditure

Waste KPIWaste generated (m3) per HK$100k Expenditure

Energy KPIEnergy used (GJ) per HK$100k Expenditure

Hong Kong Sector

PollutionControlthroughAssetManagement

Group Greenhouse Gas Emissions 2005CO2 Equivalent (%)

Hong Kong and Macau(80,014 tonnes)

China (including Pristine)(1,184 tonnes)

Singapore (2,537 tonnes)Note: Calculated based on Greenhouse Gas Protocolpublished by WBCSD / WRI (excludes air travel)

95.6

31.472,669

2004 2005 2004 2005

68,537

6,7619,333 Transportation

(excludes air travel)

Support(offices, concreteand steel)

Operations

Comparable Performance (Hong Kong Sector)CO2 Equivalent (tonnes)

2,1442,297

PollutionControlthroughAssetManagement

SustainabilityReport2005 21

PromotingInnovationandGreenConstructionAsaconstructionserviceprovider,wearecontinuouslypromotinginnovationindesignandconstructiontechniquestodrivebetterenvironmentalperformanceandefficiencies.Atthebasiclevel,allourprojectsitesmustadoptandfollowenvironmentalandwastemanagementprogrammestonotonlyensurecompliance,butalsotodemonstratecontinuousimprovement.

Opportunitiesatthedesignstageofprojectsenablesenvironmentalprinciplesandintentionstobeintegratedsuchasoptimisingenergyefficiency,minimisingresourceusageandthedesigningoutofwaste.Thesubsequentconstructionmethodologiesadopted,orbuildability,alsoformsakeyconsideration.Precastandprefabricatedsolutionshelpreduceon-siteimpactssuchaswastegenerationandconstructionplanningandmethodologiespromoteenvironmentalsavingsandbenefits.Gammonadvocatesconsiderationoftheseapproachesonallprojects.WealsosupportschemeswhichrateandquantifysubsequentenvironmentalperformanceofprojectssuchastheHongKongBuildingEnvironmentalAssessmentMethodology(HK-BEAM).

TheawardoftheDesignandBuildContractforCastlePeakRoadinHongKongpresentedanexcellentopportunitytoembraceandimplementenvironmentalandwastemanagementprinciplesattheprojectdesignstage.UsingLambethAssociates,ourin-housedesigners,redesigncombinedwithleanconstructiontechniquesenabledanumberofinnovationsandenvironmentalimprovementstobemadetoenhanceproposalsmadeattenderstage.Theextentofconstructionactivitiesandmaterialshavebeenreducedthroughdesignchangestotheroadalignmentandpilecaps.Seawalldesignchangesreducedtherequiredextentofdredgingbyapproximately30%.Aswell,significantwastemanagementgainswereachievedthroughthereuseof47,500m3ofdredgedmaterialsforreclamationandseawallconstructionandthroughinter-projectcollaboration,50,000m3ofresidualfinesarisingfromGammon’sNamWanTunnelprojectwereutilised.

BalfourBeattyE&M,awhollyownedsubsidiaryofGammon,injointventurewithBalfourBeattyPowerNetworksundertookseveraltowerlinerefurbishmentcontractsduring2005.ThemajorityoftowerlocationsinHongKongaresituatedinthecountryparks,whichimposesignificantenvironmentalsensitivities.Traditionalapproachestomaintenanceandrefurbishmentwouldrequiretheneedforaccessroutesandworkingspacestobeconstructed,damagingthelocalecology.Inresponse,theBalfourBeattyE&Mprojectteamdevelopedaninnovativesolutiontousehelicoptersasskycranestoremovetowertopsectionsduringreplacementworks,representingafirstforHongKong.Theassociatedhelicopternoiseissuewasappraisedbutthelocalisedshort-termnoiseimpactswereoutweighedbythelong-termecologicalbenefits.Thisinnovativealternativeprovedverysuccessful,acceleratingtheprojectprogrammeandensuringminimaldisturbanceofexistingvegetationwithintheparks.

MinimisingWasteThroughDesign

ProtectingBiodiversityThroughInnovation

22 SustainabilityReport2005

Life-CycleEnvironmentalManagementWhereweownassets,aswithourconstructionsupportservicesinHongKongandourPristinesteelfabricationfactoryinmainlandChina,weseektoresponsiblymanagetheassociatedupstreamanddownstreamenvironmentalimpacts.Allassetsarecoveredbyenvironmentalmanagementsystemsandweemploycontinuousreviewprocedurestopromoteandintegratebest-practicemeasurestoensurewegobeyondlegalcompliance.Long-termprojectandassetmanagementcontractswillsimilarlytransfertheownershipandhenceopportunitiesoflife-cycleenvironmentalissuestothecontractingteams.

Duringtheconcretebatchinganddeliveryprocess,wastageofsomefreshconcreteisinevitable.In2005,werevisitedthelandfilldisposaloptiontoseekamoresustainablesolutionforwastetreatment.Aswastefreshconcreteideallylendsitselftobeingrecycled,wehaveinvestigatedandinstalledaconcretereclaimeratourmainbatchingplantinHongKong,whichenablesphysicalseparationofsandandaggregatesfromfinesthroughtheuseofwater.Immediatewastebenefitsfromthereclaimerincludeareductionbyover60%inthevolumesofwastebeingsenttolandfillaswellasresourcesavingsthroughthereuseofaggregatesandriversand.Thesebenefitsreducetrafficmovementsassociatedwithtransportationofwastetolandfillsandnewaggregatestothebatchingplant,generatinglocalcommunitybenefitsofreducedroadtrafficandairemissions.

EnvironmentalManagementintheSupplyChainThislife-cycleapproachisreflectedinourstrategyforaresponsibleandaccountablesourcingprogramme.During2005weimplementedtheProcurementEnvironmentalAwarenessProgramme(PEAP)tointroducebestpracticetooursupplychainthroughin-housetrainingandexternaldiscussionswithourbusinesspartners.Inaddition,thePEAPestablishedaframeworkforassessingandrespondingtotheupstreamanddownstreamimpactsassociatedwiththemajorprojectsuppliersandmaterialsweuse.Thisisanon-goingprocessgiventhequantityandvariationofmaterialswesource.

During2005,productappraisalsofthecementwesourcehasdefinedtheauditprotocolweneedtofollowforaproposednewsupplier.Appraisalsundertakenjointlywithourfuelsupplierin2005haveestablishedanactionplantopromotemoreefficientdieselusageonsiteaswellasidentifyingopportunitiesfortheuseofmoreenvironmentally-friendlyalternativefuels.

SustainableConcreteWasteManagement

SustainabilityReport2005 23

2005PerformanceSummary

Economic&Business

1 CertificationinmainlandChinaofourmanagementsystems SubstantiallyAchieved

2 Standardisegroupriskmanagementprocessandprovidetraining Achieved

3 Simplifyinternalmanagementandgovernanceproceduresthroughtheconsolidationofmanagementmanuals NotAchieved2006target

4 ImplementHumanResourceprogrammestofurtherimproveproductivityandstaffengagement Achieved

5 Developadedicatedsustainabilityintranetsiteaccessibletoallstaff Achieved

SocialResponsibility

1 BuilduponPartneringinitiativesstartedin2004withstrategicbusinesspartnersthroughservices, Achieved venderperformanceappraisalsandopinionsurveys

2 Continuetopromotepartneringandsustainabilitywithinthewiderconstructionindustry Achieved

3 Improveoverallsatisfactionofcustomers PartiallyAchieved

4 ContinuetopromotecommunityengagementonexistingandnewGammonprojects Achieved

5 Publishcareerdevelopmentpathsforallstaff Achieved

Health&Safety

1 MeetGroupPrimaryandSecondarytargetsforHealthandSafety NotAchieved

2 ImplementtwonewinitiativesandprogrammestopromotetheZeroAccidentsVision Achieved

3 ImplementonallHongKongsitesanAreaManagementSystemtomanageandcontrolHSEissues Achieved

4 Ensurethat100%ofGammonandsubcontractorworkforceonGammonHKprojectshaveattended Achieved theWorkersRegistrationCentres

5 Implementtransparenthealth&safetystatisticsanddatarecordinginChina Achieved

EnvironmentalProtection

1 Achievetargetsandobjectivessetin2005EnvironmentalManagementProgramme Achieved

2 Achieveimprovedperformancewithrespecttowastegenerationandresourceusageasmeasured PartiallyAchieved bythekeyperformanceindicators

3 ExtendbenchmarkingactivitiestoallofGammon’soperationsinChina,Singapore,MacauandConstructionServices Achieved

4 Implementanenergymanagementandconservationprogramme NotAchieved

5 ImplementtheProcurementEnvironmentalAwarenessProgramme(PEAP) Achieved

Asummaryofourprogresswithrespecttothe2005targetssetinourlastSustainabilityReportisprovidedbelow.

24 SustainabilityReport2005

ForfurtherinformationonthisReportandGammon’ssustainabilityactivities,contactourEnvironmentalandSustainabilityManager:

t +�522516��56e environment@gammonconstruction.com

FurthercopiesofthisReportareavailableuponrequestandcanalsobedownloadedfromourcorporatewebsite:

w www.gammonconstruction.com

Outlookfor2006

Economic&Business

1 UpdateandissuenewGammonCodeofConducttoreflectourshareholders’expectations

2 ConductEnterpriseResourcePlanningusercertificationtoallrequiredstaff

3 SeekISO14001certificationforPristine

4 Ensureaveragestaffproductivityismaintained

5 Continuetopromoteanddeveloprelationshipsforrecurringandlifecycleearningsopportunities

SocialResponsibility

1 GaugeinternalstaffmoraleandengagementthroughconductingOpinionSurveys

2 Implementstructuredsuccessionplanningforseniormanagement

3 Increaseoverallcustomersatisfactioninprivatesector

4 Selectstrategicpartnersforeachtradefortenderingthroughasystematicassessmentprocedure

5 Engagesubcontractorsforenhancedsupplychainmanagement

Health&Safety

1 MeetGroupPrimaryandSecondarytargetsforhealthandsafety

2 Implementroutineplantandequipmentsafetychecks

3 Implementmeasurestoenhancethesafetyriskmangementprocess

4 Undertakehigh-levelinitiativesinvolvingalllevelsofmanagementtofurtherimprovesitepracticeandaccountability

5 Structuredsafetytrainingprogrammeforallstaffgrades Achieved

EnvironmentalProtection

1 Achievetheobjectivesandtargetssetinthe2006EnvironmentalManagementProgramme

2 MeetperformancetargetsforenergyandwaterusageandwastegenerationinHongKongbasedonestablishedkeyperformanceindicators

3 FulfillobligationsofBCECleanAirCharter

4 Implementastructuredenvironmentaltrainingplanforallstaff

5 ImplementperformancetargetsacrossthedifferentGammonbusinessunitsandregions Achieved

GammonhassetthefollowingtargetsataGrouplevelfor2006tofurtherreinforceourcorporatesustainabilitycommitments.

SustainabilityReport2005 25

Des

igne

d by

Sed

gwic

k Ri

char

dson

www.gammonconstruction.com

Prin

ted

on t

otal

ly c

hlor

ine

free

env

ironm

enta

lly r

esp

onsi

ble

pap

er

HONG KONG

HeadquartersGammon Construction Limited28/F., Devon HouseTaikoo Place, 979 King’s RoadHong KongTel: 852 2516 8823Fax: 852 2516 6260

MACAU

Gammon Building Construction(Macau) Limited168 EDIF Tong Nam Ah Centre Com19/R MacauTel: 853 827 789Fax: 853 827 938

SINGAPORE

Gammon Construction LimitedSingapore Branch102F Pasir Panjang Road #07-02Citilink Warehouse ComplexSingapore 118530SingaporeTel: 65 6274 3622Fax: 65 6275 0622

CHINA

Gammon Construction (China) LimitedShenzhen33/F United Plaza5022 Binhe Avenue, FutianShenzhen 518026People’s Republic of ChinaTel: 86 755 8373 2902Fax: 86 755 8291 1915

ShanghaiRoom 8, 8/F., East Ocean Centre, Tower II618 Yan An Road EastShanghai 200001People’s Republic of ChinaTel: 86 21 5385 5258Fax: 86 21 5385 4241

BeijingNo. 604 Diyang TowerH2 Dongsanhuan Bei LuChaoyang DistrictBeijing 100027People’s Republic of ChinaTel: 86 10 8453 7688Fax: 86 10 8453 7699