Contractor John Mowlem is joining forces with its in-house facilities management business Aqumen and British Aerospace Aviation and Construction Consultants to form a new prime contracting unit. Its new service will cater for all capital works and pre-planned maintenance.
And FM group Building & Property, the biggest player in the MOD property market, is considering splitting its business in half to avoid potential conflicts of interests thrown up by prime contracting procurement.
Building & Property intends to bid only for FM contracts but, as chief executive Clive Groom explained, his company could find itself acting as both adviser and service provider to the ministry on certain types of contract. This would mean that one part of the firm would be auditing the work of another.
He said: "As we move to prime maintenance contracts, you find much larger contracts where we could both consult and manage.
"One of our options is to separate the ownership of our consultancy business from our procurement and property management business. It seems to me that that solves the problem in one stroke because it means the client doesn't have to take anything on trust any more."
WS Atkins carried out a similar division in 1994 when it separated its strategic property consultancy, WS Atkins Consultants, from its works services management business.
Building & Property said it will announce details of its reorganisation later this year.
The group logged a pre-tax profit drop of 41% to £12m for the year to 31 December 1998. Turnover fell 34% to £202m over the same period.
Groom put the shortfall down to the completion of MOD contracts awarded before the company – then the Property Services Agency – was privatised in 1993.
He said he still intended to float the group on the stock exchange, but added that the company would need to diversify into the commercial market to make itself an attractive proposition.
During 1998, the group secured major contracts with Railtrack, Compass Group and Cheshire Borough Council. It also won a number of private finance initiative FM contracts.
Forward orders grew 80% to more than £750m last year. Groom forecasts an order book of £1.5bn by the end of this year.
