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What would a Balfour Beatty and Carillion deal mean for the industry?

Nick Charlton

Independent commercial property consultant

For Balfour Beatty it is a missed opportunity if the

merger doesn't go ahead. In the current market there is likely to be more merger and acquisition activity and if Balfour doesn't team up with Carillion, then someone else will. Carillion is clearly looking for a partner.

Balfour's half-year pre-tax profi t

dropped 53% to £22m, so it obviously needs a more profi table business and you have to ask how are they going to turn it around? It would be preferable if these two UK fi rms joined forces rather than Balfour Beatty being picked up by a major European or US fi rm. The biggest issue seems to be

Balfour's plan to sell off of Parsons Brinckerhoff, and with consultancy work currently a more profi table area than building, Carillion certainly had a point in wanting to retain that.

Peter Gracia

Director, Gracia Consult I won't have a tear in my eye if Balfour and Carillion don't come together. It would be better for the UK

marketplace if we have more major contractors to choose from and genuine competition rather than it becoming a monopoly run by a few “super

contractors”. Allowing a merger at a time when the government has been saying it wants to direct more and more work towards SMEs and give them 18% of overall spend seems nonsensical. I saw a Treasury document recently which highlighted the fact that around 50% of the majors were using SMEs to deliver most of their projects, so why

Correction — CIAT membership The Chartered Institute of Architectural Technologists would like to point out some inaccuracies in our story "Design managers welcome NVQ route to membership..." in the April 2014 edition, which discussed a new pathway to CIOB membership likely to appeal to non- degree holders. To clarify, CIAT’s chartered membership process, the Professional Assessment,

shouldn't the SMEs get the work directly? In my experience, the largest contractors don't build anything themselves, they only manage the construction process. A merger would also damage

competition within the supply chain, the big boys all tend to draw on a limited pool of specialist subcontractors as well as using the same cost consultants to prepare tender documentation. Ever since the cover pricing scandal emerged, there has been the lingering suspicion there is lack of genuine competition in the marketplace and this would only worsen the situation.

Rob Simmons Director, Fensec Fencing & Security, Devon A possible merger would be a mixed blessing. It might bring more stability to the market by creating a more fi nancially secure entity, but I fear on the other hand it would create an increasingly adversarial culture similar to the worst of the 1970s and 1980s, in which case clients and suppliers beware. As a fi rm, we will not deal with the

large contractors any more due to their behavior towards subcontractors and suppliers over the past few years or so. In 2012 we quoted over £6m worth of fencing work to larger companies at their request, but many wouldn't even respond to us, and those we did do work for were always late in paying or short of payment for spurious reasons. The City has reported that large

corporates have lost 90% of their cash value in two years and at the same time their supplier payments have become increasingly extended each year. Payment terms of 120 days is not unusual and 60 days is commonplace. The big contractors must be very close to disaster, but are likely “too big to fail”.

allows applicants with the relevant competence and experience to qualify as Chartered Architectural Technologists (MCIAT) using evidence from their sphere/s of practice within architectural technology. The discipline of architectural technology is broad and certainly includes the role of design manager. In fact it is a typical role undertaken by many of CIAT’s chartered members. Evidence used to attain the Edexcel

A match made in heaven, or a dangerous move for construction?

Gerard Graham MCIOB Procurement manager, Wilson Construction

I have no objection to a merger — we live in a free

enterprise economy and if two of the UK's largest contractors want to merge they should be able to do so, just as small contractors are able to. This is the advantage of running private sector business in the UK.

The creation of a “super contractor”

could also be a benefi t to the UK on the international stage, creating a higher value export business than the two fi rms currently have separately. This should be welcomed because improving export business is undoubtedly one of the best ways to bring wealth back into the country.

“Allowing a merger at a time when the government has been saying it wants to direct more and more work towards SMEs seems nonsensical.”

Peter Gracia, Gracia Consult

Bernard Keogh MD, Arque Construction Balfour Beatty’s fi gures have been very poor, its share price has slumped, and it’s a known fact that larger companies take longer to turn around, but rather than merge with Carillion I believe getting a new chief executive in place to implement changes and effi ciencies would have been a better course of action. Merging two massive contractors seems

very bad for competition, especially as large clients with multi-million pound projects already struggle to get enough large contractors to tender. Together I doubt they would have as big a market share as they do separately.

Contact us Do you have an opinion on any of this month’s articles? Email: construction- manager@atom publishing.co.uk

NVQ/QCF Level 7 in Built Environment Management and Consultancy Practice could be used by any applicant to complete the Professional Assessment and attain MCIAT upon successful attendance at a Professional Assessment Interview. A degree is not a mandatory

requirement for CIAT membership although CIAT’s standards for chartered membership are equivalent to at least honours degree level and beyond.

CONSTRUCTION MANAGER | SEPTEMBER 2014 | 11