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Turning the supertanker

Interview - John Moss is committed to improving performance at Amec's struggling construction business. Bernadette Redfern asks how he intends to do it.

Whether it's because of a rejected takeover bid, reported losses in its infrastructure business, success on a £500M National Grid framework, the appointment of a new chief executive or speculation over whether its infrastructure arm will be sold off, Amec has rarely been out of the headlines recently.

Most interest centres on the future of the company and the business review now under way, headed by new chief executive Samir Brikho. Will it keep or will it sell its 4,500 strong infrastructure business?

'I couldn't possibly say, ' says Amec's construction boss John Moss. 'But the important thing is that we get it back to being a viable business in its own right, where the people are secure and protected irrespective of what happens around us.' Moss was drafted in as MD of Amec Design & Project Services just over a year ago to stabilise the civil engineering contracting arm of the business, Construction Services, which was severely under performing.

Having been at Amec for over 30 years - most recently running the now sold off Amec Spie - he was well aware of the enormity of the challenge.

'We recognised we had considerable problems in Construction Services. I was bought in to steady the ship. We needed to turn the supertanker around, but there were big holes in the hull that needed to be plugged as well, ' he explains.

Holes such as losses being made on major road projects such as the A13 and the A1, which were partially responsible for £80M in write downs during the rst six months of 2006.

'PFI road jobs were a problem.

Amec can build roads better than anyone, but we had a culture of building them under traditional forms of contract. When we took on PFI roads there was no way back. The form of contract had changed, but we hadn't changed our mindset, ' says Moss, explaining that Amec was shouldering all the risk, but not pricing the job accordingly.

'The first site I ever visited after taking the helm was one of these. I got the lads round and asked them about the site.

They all said 'it's a great job' and technically it was, but no one mentioned that it was losing money. The issue wasn't dealt with until it was too late. That doesn't happen any more.' It doesn't happen any more because Moss has restructured the management team and updated the company's tendering processes to ensure that realistic bids are put in for the right projects.

'The commercial team carrying out reviews has been strengthened. We have tightened the tender processes and a new management team reports directly to me. We have also got a performance manager who ensures that areas of risk are properly identied.

'Of the 15 senior managers now in place, 10 are new to the company or the post. We want people who are prepared to take ownership and there has been some removal of under performers. We had to get into the right mindset with lots more communication.' Like many major contractors, Amec has become increasingly discerning about who it will work for and under what forms of contract. 'We were doing a lot of the wrong sort of work. We were turnover driven and feeding the structure and regional spread of the company rather than the other way around - winning work that matched our capabilities.

'We have moved away from clients that try and drive down value by using fixed-price lumpsum contracts. It all revolves around being more selective and balancing risk with opportunity; we are moving into markets with intelligent clients, ' he says.

'We are only bidding design and construction, and of that it will be almost exclusively two stage contracts.' Amec plans to go for more high-end consultancy work through the design business, which was merged with civil contracting in October 2005 as part of Moss's restructure.

'Construction Services was too far in the commodity end doing low-margin work.

'We had to lift our game and start winning high-end, high-value work. The design business wasn't getting its share [of work] from the rest of the company. Ninetyve per cent of our design work was going outside when we had an ofce of over 400 designers, ' he says shaking his head.

'Regionally, people had companies they were used to working with, so would automatically give them the job before looking internally.' Moss intends to focus on five key areas: education, health, manufacturing, transport and defence where the work seems to fit best with the contract arrangements and opportunities Amec is looking for.

Recent project wins include private nance initiative (PFI) schools in Scotland, facilities design for chemical giant Urenco, store refurbishment for Marks & Spencer, and work building manufacturing facilities for the Airbus A380, a job Moss is condent will still go ahead despite Airbus' recent troubles.

Despite the NHS pulling the plug on Colchester General Hospital, Amec is sticking with the health sector and continues to pursue the £7M it spent bidding the job. 'We are in negotiations with the trust to get money back from that, and we are still bidding PFI health, although general cuts in spending do make it a less attractive market, ' he says.

Of the 120 contracts Amec Design & Project Services has under way, only two are losing money. 'Six projects accounted for 80% of the losses and they are all written off now. In construction there will always be jobs that lose money. But that has to be controllable and offset from the benets of other jobs, ' Moss says.

Looking ahead, Moss is condent that Amec has an exciting future and hopes that projects such as Crossrail will feature on the company's project list. 'We are stable now. We have plugged all the holes and the tanker is moving in the right direction. In another six months we will be back on stream.'

Brief history

July 2005 - John Moss takes over Amec construction services.

Review of UK business underway October 2005 - Amec construction services merges with Amec's design business creating Amec Design and Project Services November 2005 - Amec announces sale of Amec Spie for £707M January 2006 - Amec moots splitting the company into two businesses focused on energy and infrastructure March 2006 - Sir Peter Mason conrms his retirement April 2006 - Restructuring into two businesses gets underway, management teams appointed July 2006 - Sale of Amec Spie nalised August 2006 - Samir Brikho appointed as chief executive November 2006 - Amec rejects takeover bid from US private equity rms December 2006 - Announcement expected on future of Amec

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