Change is in the air. This long, hot summer has brought a rash of announcements coming from main contractors reacting to being battered by a perfect storm of problem jobs, creeping price hikes and supply chain pressures. There is now a sense that after a period of crisis management and a mapping out of where the most serious problems stem from, some are at last emerging with management teams and business plans they hope will augur well for the long-term outlook.

As our Top 150 contractors and housebuilders league table last month laid bare, contractors’ business models are failing to keep pace with the runaway success of housebuilders – the latter making up only 30% of the companies listed but being responsible for 42% of the revenue and 87% of the pre-tax profit. Contractors’ margins by contrast are miserable at 1.7% on average, but the very biggest firms struggle to hit even 0.5%. As KPMG’s Jan Crosby observed: “Contracting feels like hard graft for the return you get.”

It’s a pretty grim picture for contracting generally, but individual firms are mounting a fight back. Kier, the country’s second-biggest contractor with a £4bn turnover, has just appointed a new chief operating officer, while announcing the departure of its construction and development bosses. This reshuffle at board level reflects a wider effort launched this summer to reinvigorate the business, which it has dubbed Future Proofing Kier.  As an aside, it seems most efficiency drives demand a suitably inspiring title to rally the troops, Interserve’s is known as Fit for Growth and has a similar focus on cost cutting.

“There is an industry consensus that main contractors need to take a serious look at the way they do business and to have frank conversations with clients about risk and how to share it.”

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