Con Murphy, managing director of PM Group Polska

PM Group was founded in 1973 in Ireland and specializes in complex and large construction projects. It now employs 1,500 staff in Europe with an annual turnover of EUR 115 (zł.447) million.

The company entered Poland in the early 1990s and now employs more than 160 professionals, with headquarters in Wrocław and a second office in Warsaw. To date, it has delivered projects in the public and private sectors in Poland, Russia, Romania and Slovakia. Here the company has worked for NSK Steering Systems, Unilever, Anpharm, Carlsberg/Okocim, Pekao and Ikea to name just a few. Its most recent projects were engineering services for Unilever's new 6,000-sqm plant in Katowice and work for Armeton, which supplies parts to the white-goods sector.

"Most of our clients, unlike commercial investors, want their project to be kept below the radar," says Con Murphy, the managing director of PM Group Polska. "In industrial development, the client is quite often relocating his business from one country to another. Quite often also in Poland they are engaging in commercial and business dealings with the local authority or Polish government, particularly in relation to land purchase and governmental incentives. PM is used to maintaining that confidentiality for long periods after the project has already begun. As a result, our own profile also stays below the radar."

The company might now have plenty on its plate, but business was not always so brisk. "We had two major projects in Russia that we executed using our Polish resources along with several EU-funded projects, which allowed us to keep developing our business in Poland while things turned around," says Murphy. "When we decided to invest here in 1997 we saw Poland as potentially the hub of Central European investment. At times we wondered if this was misguided as we saw Hungary, the Czech Republic and Slovakia move ahead much more quickly, but I think Poland is slowly starting to show that it has much more to offer than those countries. The last four years has been tough going for our business partly due to the Polish economic recession, but also due to the world recession in sectors that Poland is traditionally strong e.g. the automotive industry."

Reaping rewards

The Polish branch is now going from strength to strength. "The last four or five months would almost equate to the last three years in terms of the quantity of quality work that can be won in our business of Engineering Procurement and Construction Management," says Murphy. "We have competed for five or six major projects between 25,000 and 100,000 sqm in the last four months and are reaping the rewards of our long-term investment. That investment is primarily in our employees and we have retained and developed those employees here through thick and thin. I think our employees appreciate this and repay us with their loyalty and hard work. Additionally, if somebody wants to go to England, Ireland, Russia or indeed any of our other CEE offices we can often absorb them into those offices without them moving employer."

The company has even, for example, targeted Poles in Ireland with newspaper advertisements offering them the chance to be part of the current economic recovery at home.  

Murphy believes that using Polish expertise is to succeed in this market: "Many of our competitors have tried to operate here without setting up a permanent presence or with very scant resources on the ground. This has hindered their ability to be serious players or for investors to consider them for projects. Unless you have a presence you have no chance, it's a key factor in any job we are now doing."

Russian roulette

One area in which PM Group has notched up a number of successes where others have failed is Russia. So what's the key to cracking the bear's market?

"Unlike Poland, investors have a major problem in Russia tying down land deals. In our case, in each of the major projects it took two years to sort out the land and permitting issues before construction could start, which for most investors is unacceptable. But [PM Group's clients] have long-term plans to be in the market and were realistic and pragmatic about how long this would take," explains Murphy.

"For us it was a question of selling Polish engineering into the Russian market. Russian engineering is generally of inferior quality and they have poor appreciation of commercial and schedule issues, which are critical to project success. As a result of this, investors are relying almost entirely on expatriate engineering companies that have to charge astronomical rates in Russia due to the high cost of living, project risks and difficulties associated with doing business there. Our Polish engineers could understand Russian codes and could communicate much more effectively using their knowledge of the Russian language."

Tender troubles

Tenders in Poland are a legislative minefield, with even municipal authorities claiming they can't keep up with the regulations, which means a proportionally large number of tenders are prematurely cancelled.

"One of the most prestigious projects we worked on is the National Veterinary Institute in Puławy. PM won the design project and there were four or five [offers in the tender] for that. When it came to the construction contracts only two companies met the qualification criteria required by EU regulations. That is not ideal as normally four or five bids are needed to give the client options for final selection," explains Murphy.

Constructural funds

Applying for EU funds is another bureaucratic jungle, and one of the biggest challenges Polish firms face is knowing how to work the system. "The learning curve that the Irish had, for example, to understand how to benefit from EU funds was quite difficult but they managed it at a time when the regulations probably weren't as refined.  However, now the regulations are extremely strict so I can fully understand how the Polish government is struggling to avail fully of grants available. They are trying to do it in a foreign language, and you have administrators, especially at the local level, who often don't have the fluency required in English or French in order to operate effectively.

"We are entering a stage where we are developing rapidly in Poland," says Murphy. "By the end of 2007, we are aiming to double our profits. This is requiring a steep change for our unit, which will probably increase our overall employee numbers in Poland to over 300 people. This is a very large engineering and project management unit by any European standard."