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Costain cuddles up to Skanska

CONTRACTOR COSTAIN is to undergo a major culture change in a move which will take it closer to Swedish engineering giant and part owner Skanska.

Chief executive John Armitt said on Monday that the company would be 're-engineering' its management processes by adopting key elements from Skanska's 'Think Total Time' concept - known as 3T. The announcement immediately fuelled speculation that Skanska is preparing for a full scale takeover.

Costain has had a best practice policy since 1996, but has continued to face criticism for cost and time overruns on high profile projects such as the Newbury bypass and the M5 widening. Armitt admitted that its policy had not been as successful as intended. Skanska claims that the process achieved time savings of 30%, a 70% reduction in accidents and now completes 40% of its projects with zero defects.

Skanska threw Costain a lifeline last October by investing £10.2M to give it a 7.6% stake in the company (NCE 16 October 1997). The Swedish group has a further option to increase its stakeholding to 40% over three years - a move which would trigger a full scale takeover

bid.

But Skanska Europe president Anders Karlsson refused to confirm speculation that the culture change is being pushed through to prepare Costain for a takeover. 'We are not making our future investments public knowledge. What you are seeing today is a sign of confidence for the future,' he said.

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