Balfour Beatty’s new chief exec has wasted no time in trying to change how the firm operates.
INFRASTRUCTURE firm Balfour Beatty’s new chief executive Leo Quinn said yesterday that the company had moved on from the poor business practices of the past.
Balfour has endured a series of well-documented difficulties, with several profit warnings over the past two years, the most recent in January.
Quinn vowed to stop the rot when his appointment was announced in October last year, and 12 weeks into his new role, the ex-QinetiQ boss says he is enjoying leading the construction group’s turnaround.
According to Quinn, the “Build to Last” transformation plan is “looking to drive out £100m of costs and bring in £200m of projects”, and one of the most important facets of this project is changing the firm’s attitude to contracts.
“It’s about not taking on undue risk in contracts,” he said. Balfour’s issues in this regard have made headline news on a number of occasions – a prime example is its deal to redevelop London’s Olympic stadium. The company had to go back to the London Legacy Development Corporation for extra cash to complete the project late last year.
Quinn told City A.M. yesterday that all the contracts Balfour had in place before his arrival would be “burnt off” within the next two years, adding: “And now it’s about bringing in new, better contracts.”
In the past few months, Balfour has won contracts to help build London’s new flood defences, and to construct 1,500 homes at the Olympic village.
“These contracts are marquee deals – they are high profile,” said Quinn. “And in terms of decisions, and the terms of the contract itself, it is more business-like than in previous deals.”
Part of making these more “business-like” arrangements has involved agreeing conditions that are reasonable for the company: “Timetables we can actually meet, things that are important for a good construction company.”
Yesterday, the firm announced it was scrapping its dividend until April 2016, after posting a £59m loss for last year. Shares in the company closed up by 5.54 per cent, and analysts praised the speed of Quinn’s actions in addressing the problems of the past.
Quinn is clear that the turnaround is a huge undertaking for the construction giant – “This is an £8.9bn company, it’s a complex transformation” – but said the firm’s staff is firmly behind the strategy: “At the end of the day, everyone wants to be a part of a successful company.”
And Quinn himself is enjoying his new role. “I still get up every morning and have a skip in my step,” he said. “I have a great opportunity to work for one of the world’s biggest construction companies – you can’t beat that.”