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Galliford Try set to recruit for water business

Construction company Galliford Try is set for a recruitment drive in the next year as the firm’s work in the water industry increases.

Commenting after it posted pre-tax profits for the six months to 31 December 2010 of £17M, the company’s construction group managing director Ken Gillespie told NCE that as the regulated asset management programmes for the eight regulated water companies that Galliford Try has contracts with were stepped up in the next 12 months, the company was “going to be taking people on”. These contracts, known as AMP5, run from 2010 to 2015.

The company’s profits for the six months rose by 29% on 2009, on the back of a growth of £5.9M in group revenue, up to £575.9M from £570M in 2010.

The company reported a 2.5% construction margin, compared to 2.4% in 2009, and Gillespie said that this was due to the company making the decision early in the recession not to “chase volume” of work, instead looking at what they could retain and  “working very hard to look at what we can bid and win”.

The company has not had a single project in its order book cancelled due to the government’s spending cuts or the Comprehensive Spending Review, he added, saying that this led to a margin “that is certainly upper quartile if not leading in the industry, so it’s about project selection in a very difficult time”.

The company reported a construction order book of £1.75bn, of which nearly half is in the water industry. However, Gillespie expressed concern that what he called the “pipeline” of projects from Government is “getting less and less populated, and we will feel the impact of that further down the line”, following the spending review.

“That said, the argument for infrastructure investment is unquestionable in my mind, in terms of supporting the recovery in the economy. I think the government should be investing but I’m seeing less in the pipeline,” he said.

Establishing a pipeline is vital “because it takes a long time to projects to market”, he added.

In the last year the company saw a decline in revenue from its Private Finance Initiative (PFI) investments, down to £1.3M from £2.5M for the same period in 2009 due to the sale of its interest in the Worcester library and history centre. 

Gillespie said the company saw “little change” likely to the current lack of PFI projects, after the spending review “reduced significantly the number of opportunities available in the immediate future”.

However, he said that the company was seeing “a good pipeline in Scotland particularly in roads” of both government and PFI work. Galliford Try owned Morrison Construction is bidding as part of one of two shortlisted consortia - the Forth Crossing Constructors group - to build the Forth Replacement Crossing.

He added that the company faced only a “quite limited” exposure to the Treasury’s plan to seek cost savings in operational PFI contracts, which is set to start with a pilot project at the Queen’s Hospital in Romford.

Gillespie said this would look at ongoing management and operation of facilities, but the facilities management business at Galliford Try is small, focused only on its own PFI schemes.

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