Sharing Our Journey - Gammon Construction€¦ · (Gammon) to provide a verification statement for its 2005 Sustainability Report “Sharing Our Journey” (the report). BEC conducted

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.


ToGammon,sustainabilityisguidedandmanagedthroughour‘QuadrupleBottomLine’.

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

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

CorporateSustainability


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


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


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


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.


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


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.


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


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


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


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


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


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


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


2005PerformanceSummary

Economic&Business

1 CertificationinmainlandChinaofourmanagementsystems SubstantiallyAchieved

2 Standardisegroupriskmanagementprocessandprovidetraining Achieved

3 Simplifyinternalmanagementandgovernanceproceduresthroughtheconsolidationofmanagementmanuals NotAchieved2006target

4 ImplementHumanResourceprogrammestofurtherimproveproductivityandstaffengagement Achieved

5 Developadedicatedsustainabilityintranetsiteaccessibletoallstaff Achieved


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


1 Achievetargetsandobjectivessetin2005EnvironmentalManagementProgramme Achieved

2 Achieveimprovedperformancewithrespecttowastegenerationandresourceusageasmeasured PartiallyAchieved bythekeyperformanceindicators

3 ExtendbenchmarkingactivitiestoallofGammon’soperationsinChina,Singapore,MacauandConstructionServices Achieved

4 Implementanenergymanagementandconservationprogramme NotAchieved

5 ImplementtheProcurementEnvironmentalAwarenessProgramme(PEAP) Achieved

Asummaryofourprogresswithrespecttothe2005targetssetinourlastSustainabilityReportisprovidedbelow.


ForfurtherinformationonthisReportandGammon’ssustainabilityactivities,contactourEnvironmentalandSustainabilityManager:

t +�522516��56e [email protected]

FurthercopiesofthisReportareavailableuponrequestandcanalsobedownloadedfromourcorporatewebsite:

w www.gammonconstruction.com

Outlookfor2006

Economic&Business

1 UpdateandissuenewGammonCodeofConducttoreflectourshareholders’expectations

2 ConductEnterpriseResourcePlanningusercertificationtoallrequiredstaff

3 SeekISO14001certificationforPristine

4 Ensureaveragestaffproductivityismaintained

5 Continuetopromoteanddeveloprelationshipsforrecurringandlifecycleearningsopportunities


1 GaugeinternalstaffmoraleandengagementthroughconductingOpinionSurveys

2 Implementstructuredsuccessionplanningforseniormanagement

3 Increaseoverallcustomersatisfactioninprivatesector

4 Selectstrategicpartnersforeachtradefortenderingthroughasystematicassessmentprocedure

5 Engagesubcontractorsforenhancedsupplychainmanagement

Health&Safety

1 MeetGroupPrimaryandSecondarytargetsforhealthandsafety

2 Implementroutineplantandequipmentsafetychecks

3 Implementmeasurestoenhancethesafetyriskmangementprocess

4 Undertakehigh-levelinitiativesinvolvingalllevelsofmanagementtofurtherimprovesitepracticeandaccountability

5 Structuredsafetytrainingprogrammeforallstaffgrades Achieved


1 Achievetheobjectivesandtargetssetinthe2006EnvironmentalManagementProgramme

2 MeetperformancetargetsforenergyandwaterusageandwastegenerationinHongKongbasedonestablishedkeyperformanceindicators

3 FulfillobligationsofBCECleanAirCharter

4 Implementastructuredenvironmentaltrainingplanforallstaff

5 ImplementperformancetargetsacrossthedifferentGammonbusinessunitsandregions Achieved

GammonhassetthefollowingtargetsataGrouplevelfor2006tofurtherreinforceourcorporatesustainabilitycommitments.


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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

Documents

Sharing Our Journey - Gammon Construction€¦ · (Gammon) to provide a verification statement for its 2005 Sustainability Report “Sharing Our Journey” (the report). BEC conducted