Ray O’Rourke plans for expansion

Laing O’Rourke, the UK’s largest privately owned contractor, has revealed the full extent of the cash that it has ploughed back into the business as part of its ambitious expansion plans.

As revealed in Building last week, Laing O’Rourke suffered a 56% dip in pre-tax profit to £26.4m for the year ending March 2005, compared with £60.8m in 2004. As a result of the dip, staff bonus payments will be frozen. It was also revealed that profits had suffered because of rising global steel prices, which has affected O’Rourke’s Dubai airport project.

In response to the news, Ray O’Rourke, chief executive of Laing O’Rourke (left), has pointed out the investments that the company has made over the past year.

Speaking to Building, he said: “If you take into consideration that we’ve paid £15.3m in bonuses to staff in the reporting period, invested £30m in PFI and invested heavily in training and research and development, we’ve had a terrific year.”

Turnover in the period rose 25% to £2.1bn from £1.7bn in 2004.

O’Rourke dismissed speculation that the company was in conflict with its clients over the Dubai airport project, and pointed out that the terminal building would be completed in two weeks’ time.

Speaking of the company’s expansion plans, he said that he saw opportunities in Australia, and added that the company was investing £4m in people, projects and opportunities there.

We’ve paid £15m in bonuses to staff in the reporting period

Ray O’Rourke

Over the past year, Laing O’Rourke Australia has established offices in Sydney and Brisbane. It has targeted design-and-build projects for large retail, commercial and government institutions.

It has also entered the Indian market and made a number of acquisition.

The company’s annual review, seen by Building this week, said the move into Australia signalled its interest in working as a development partner in joint venture with landowners, property funds and institutional and private property investors.

Despite reporting a fall in profit, the annual review also revealed that the company was focusing on the development of its in-house capabilities to ensure greater reliability and performance.

The review also pointed out that Laing O’Rourke had diversified its operations into the utilities market.

A further change in the company’s business approach this year is that it has become a major employer of design consultants, which it claims “facilitates a greater influence of buildability [of a project] and component-thinking right from concept stage”.

The review said that Laing O’Rourke aimed to stay at the forefront of design technologies.

Our ability to overcome challenges is rooted in our ability to foresee those challenges

Ray O’Rourke

It said: “Advances in object modelling enable both certainty about what is to be built before construction starts and greater input of design information from the supply chain.”

In an effort to enhance its design development and detailing, Laing O’Rourke is expanding its technical services division in New Delhi, India. The division has also been positioned to provide integrated support services for construction companies throughout the world.

Writing in the annual review, O’Rourke was upbeat about the company’s future.

He said: “Laing O’Rourke is creating a lean and agile company. Our passion for changing the image of construction is driving our initiatives in safety, people, development, diversification and expansion.”

He added that as the business has grown it has cultivated a leadership team to take it into new markets and the development of new systems, products and services. He said: “I am confident we will succeed because of the people who are Laing O'Rourke.

“Our ability to overcome challenges is rooted in our ability to foresee and understand those challenges.”

Alongside the annual review O’Rourke has published its first-ever human capital report on the development and investment in workforce issues, such as health and safety.