Say sorry and move on

Now that we have the Office of Fair Trading’s verdict, and we know how the £129.5m of fines have been parceled out, no doubt the managers and owners of the 103 firms affected will be feeling a mixture of relief, anger and injured innocence, depending on what they did and how they were punished. But what are we as an industry to make of the verdict?

Some of the confusion may be dispelled in eight weeks or so, when the OFT explains the formulae it used to decide the level of punishment. But for now, the dominant emotion for many is bewilderment at the way the OFT has gone about fitting fine to firm. Balfour Beatty escaped with a tap (£5.2m, or 0.06% of turnover). Well, we know that the offence took place in 2003, before Mansell was bought, and that Balfour took the first opportunity to spill the beans and plead for leniency, but even so the disparity is striking. Then there’s the case of Kier, a well-respected company within the industry, which was found guilty of cover pricing but ended up with the worst of the headlines and the biggest fine – a whopping £17.9m.

The general public is likely to be perfectly clear about how it feels about the news. Mud has been thrown at the industry and my God has it stuck. Try to defend cover pricing to friends outside construction and you end up sounding like a disingenuous apologist for an industry that is perceived as dodgy at the best of times. Unfair as it may be, it sounds as flimsy as Baroness Scotland defending how she ended up employing an illegal cleaner or MPs who expected the taxpayer to pay for their moat cleaning. The public reaction is not surprising given that cover pricing has been endemic in the industry and every column inch reporting the fact has been negative. And in truth, how can it be right for a client to think they had several genuine bidders but in effect had only one? Where’s the trust in that?

It is understandable that some firms may still want to appeal, but on the whole they would be better advised to say sorry and make sure it never happens again: the longer this issue goes on, the more damage is done to their share price, their public image and their relationships with customers. There are already worrying signs that guilty firms will find it hard to work for certain clients. The industry has learned a painful lesson. The best thing it can do now is to stick to its new code of conduct and move on – and hope that clients do likewise.

Balfour’s american dream

One company that never seems to stop moving on is Balfour Beatty. A series of acquisitions during the four years since Ian Tyler took over the business from Mike Welton has turned Balfour into a major player in the US market – one third of its turnover now comes from there – while introducing a low-risk services income stream into its portfolio.

Defend cover pricing to friends outside building and you end up sounding like an apologist for an industry that is perceived as dodgy at the best of times

Tyler’s latest deal, the £380m takeover of Parsons Brinckerhoff, goes beyond any of his others. This one has the potential to turn Balfour into a global player to rank with Vinci, Bouygues and Bechtel. It could be the key that opens the door to increased infrastructure spending in Australia, Asia, America and the UK’s energy sector. The industry doesn’t have many things to sing about this week, but this deal is certainly one of them.

Denise Chevin, editor

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