Balfour regional offices face closure in consolidation plan

Balfour Beatty has begun a regional office closure and redundancy programme that will result in the closure of up to four offices and potentially 50 job losses, Building has learned.

Sources close to the troubled contractor said a number of offices in the firm’s regional building business will be closed or merged with other offices. The Bristol and Isle of Wight offices are faced with potential closures, while the Newcastle and Southampton offices could be merged with other offices.

Balfour’s regional businesses are also going through a consultation that could result in around 50 back-office redundancies.

Meanwhile, Building has learned a number of senior figures from Balfour’s regional businesses have departed including the head of Balfour’s Southampton office, Andy Duff, and South-west commercial director Keith Trodd, who have both moved to Morgan Sindall to work in its Bristol office.

Separately, Chris Millard, Balfour’s business efficiency director and a member of the firm’s Build to Last cost-cutting and efficiency programme, is understood to be departing at the end of the year.

Balfour Beatty declined to comment on specific changes, but confirmed in a statement that it was implementing “consolidation of a number of our delivery units and local offices in England” that would make “more efficient use of our property portfolio”. It confirmed it is not withdrawing from any regions as part of the changes.

The news come as Balfour rolls out a more selective bidding strategy across its businesses, in an attempt to reduce risks following a three-year period in which it made seven multi-million-pound profit warnings, predominantly caused by cost overruns on construction projects.

Building understands Balfour is avoiding single-stage tenders and instead focusing on two-stage tenders and framework opportunities, as well as shifting its focus to larger jobs.

A source close to the firm said: “You can read between the lines. By only going for those high value jobs they’re effectively closing the [regional] business without saying it.”

Balfour Beatty declined to comment on specifics around its bidding policy and specifically denied suggestions from two separate sources it had set a minimum £40m threshold on the size of new work.

At the time of Balfour’s half-year results for the first half of 2015 - in which the firm made a £150m pre-tax loss – chief executive Leo Quinn said the firm had introduced an “eight stage” contract approval system to help manage risks and ensure “new business is of the
right quality”.

Quinn also said up to 400 back-office jobs had been cut by that time as part of its Build to Last cost-cutting drive and the firm was “stripping out senior layers of management”.

Balfour Beatty added: “As part of our Build to Last transformation programme, we are proposing changes to our regional construction business to make it leaner, reducing our overheads whilst maintaining our ability to deliver projects to clients around the UK.”