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Prize performer

After 18 months heading up GE Award-winning Balfour Beatty Ground Engineering, managing director Tony Dixon talks about the changes to the business and looks ahead to the coming year.

Some might say that the judges’ selection of Balfour Beatty Ground Engineering (BBGE) as Contractor of the Year at this year’s GE Awards was a controversial one - and it might be if the award was judged purely on financial criteria. But the new category was established to celebrate technical achievement and, with BBGE’s portfolio covering successful delivery of schemes from £10,000 to £50M and use of innovative techniques, the company’s submission stood out.

“Some companies are pricing for turnover rather than margins - customers are getting very good value at the moment”

Collecting the award at the event in May was managing director Tony Dixon who took over the role in summer 2011. He has spent the last 18 months changing the way the business operates. The results of that are being borne out with the company recording a rise in turnover to £65M last year. Dixon says it is on track to reach £85M this year.

Dixon has been involved with Balfour Beatty since his early days in the civil engineering industry.

“I started my career in construction at 16 in 1981 but progressed on to do my degree in civil engineering part time at Sunderland Polytechnic, while working for Wimpey and then completed it with Balfour Beatty,” he says.

Dixon later joined Birse before finding himself back at Balfour Beatty when Birse was acquired in 2006. “I always held a flame for Balfour Beatty and had a lot of
friends in the business,” he says.

“The acquisition was one of the best handled ones I have seen - at the time of the takeover I had 160 staff in the North West and all those people were kept following the change from Birse to Balfour Beatty.”

Once back at Balfour Beatty, Dixon started work on major schemes and one of the biggest was construction of the A46. His move into the geotechnics business came in 2011 when he was asked to join BBGE.

“I really enjoyed civil engineering as you could see what you’d achieved. It is great to look at Wembley Stadium and the Shard and know the company you work
for helped to deliver those iconic buildings.”

Tony Dixon

Tony Dixon joined BBGE in summer 2011

In geotechnics, Dixon admits that it is harder to see physical results but points to the work on the Jubilee Line at Westminster Underground station as an example of how the diaphragm walling has helped to deliver an awe-inspiring space.

The BBGE name draws together a number of well-known brands, with the main business based on the Balfour Beatty piling operation previously known as Stent.

The company moved into ground improvement in 2005 with the acquisition of Pennine Vibro. It then went into minipiling in 2008 with the addition of Branlow.

“The acquisitions were designed to widen the scope of BBGE rather than to increase market share,” says Dixon. “Previously we were best known for large diameter piling through Stent, but now the largest part of our business comes from precast piling work.”

One of Dixon’s challenges was to properly embed the companies under the BBGE brand and to rationalise the business.

While Balfour Beatty’s recent job losses have been well publicised, Dixon explains that the rationalisation of BBGE has actually only resulted in reduction in staff numbers from 460 to 410: “Half our staff are trade-based and their numbers do fluctuate with workload, but the other half carry out back office services and it is
here that we have reduced numbers by centralising HR and IT services with Balfour Beatty’s own rather than trying to operate separate ones for BBGE.”

Dixon admits that the timing of the acquisitions was a challenge, with the economic downturn, but he says it helped to open up new markets and widen the business.

precast piling

Precast piling is a major part of the business…

Precast piling

…But cast insitu work is still in demand.

“We undertake projects from £10,000 to £50M - covering the house foundation sector to working on Heathrow Terminal 2B. So whichever part of the market is
doing better we can benefit from this,” he says. “We are agile enough to adapt and we have worked hard to maintain sales.”

Dixon believes that there are three tenets to success - sales, margins and customer satisfaction.

“At the moment we have got two out of three right - the area that is suffering is margins,” he explains. “Some companies are pricing jobs for turnover rather than margins - customers are getting very good value at the moment.”

According to Dixon, BBGE, as well as major competitors like Bachy Soletanche and Cementation Skanska, are fortunate in having patient parent companies. “It is very different if you are an independent business right now,” he says.

Despite the parental support, only 20% of BBGE’s business comes from its parent company and Dixon describes BBGE as more of a subcontractor on the open market than a division of Balfour Beatty.

Almost 18 months into his new job, Dixon says that he finds the role exciting on a personal level. “BBGE is a relatively autonomous business and we have a diverse operation with plant yards, precasting factories and construction sites.”

“We generally try to have one major project on the go each year as a backdrop to the rest of the work - this year that project was construction of the Woolwich Box
for Berkeley Homes on Crossrail. At the moment we don’t have another major scheme to start on but there are projects in the pipeline, although there are lots in the up to £3M category on the go.”

Dixon believes that there are three tenets to success - sales, margins and customer satisfaction.

Dixon expresses concern about whether some major projects will get off the ground, with work on 100 Bishopsgate currently stalled and others, such as Chelsea
Barracks and Battersea Power Station, yet to be backed.

“Confidence in the commercial sector is fragile but not weak,” he says. “A lot of the projects now coming onto the market are residential.”

Some of the changes Dixon made to the business are now beginning to help the company. BBGE was previously a regional organisation but has been restructured into five business streams - large diameter piling, CFA, precast, minipiling and ground improvement. The company also operates a testing business.

“We have business leaders for each stream with each responsible for the stream’s P&L so they are focused on the assets and winning work,” says Dixon.

“We have kept business development separate to ensure we can offer the customer the best product and prevent internal competition. The restructuring was based on the skills we had and looking at an individual’s strengths and the company’s strengths to put our abilities to best use. I have been impressed with the adaptation to the new structure - our performance is market driven and every stream has improved over the last year.”

Another change that Dixon introduced was simplified reporting.

“It used to take a month to six weeks to get a clear view of where we were but we now have daily updates delivered by phone to line managers,” he says.

“The intent was to ensure everyone knew what was expected of them and the phone calls provide interaction that allows us to understand the challenges and be
more aware of the issues. There are benefits every day.”

Customer service is something that Dixon believes is important in ground engineering and he has been working on improving BBGE’s standing in this area. “We
get feedback from customers on all projects and last year we were getting an average eight marks out of 10,” he says.

The Gherkin

Restructuring into business streams is starting to pay dividends

“Now we are getting an average of nine and, with 400 to 500 projects undertaken a year, we have a good sample size.

“We can also slice and dice the results to analyse the feedback based on business streams, health and safety and sustainability.”

Dixon’s focus for the coming year is to look at where the growth will come from and ensure the company is right sized and has the right products.

He has ruled out introducing new techniques to the business in the short term. “The only area where we don’t operate is compaction grouting, but there is already a number of major players in that area and most of the main contracts on Crossrail and the London Underground have been let,” he says.

Dixon adds that he is looking to continue the business’s upward turnover trend, but growing the business in a flat market is challenging, and profitability is more
important than turnover. “Parent companies can only be benevolent for so long,” he adds. “BBGE needs to stand on its own two feet.”

Asked if he hopes he has laid the right structure to achieve this, Dixon says that he doesn’t hope: “Results were significantly better last year and we are on the right track to deliver performance that will be profitable. We operate on 26 business metrics, which enable us to see quickly where we are headed, and there is not a single aspect that hasn’t improved.”

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