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It is a truth, almost universally acknowledged, that operating as a medium-sized company with a major focus on public sector work is really not the place to be at the moment. Especially one specialising in health and education. But Bob Bond, chief executive of South-west-based contractor Rydon, which falls into every one of these categories, insists life in the middle doesn鈥檛 have to equate to a death wish: 鈥淚t鈥檚 not a bad place to be if you have a good business model.鈥� He does concede, though, that there is a serious flipside to being a faster-moving, more 鈥渁gile鈥� smaller firm: 鈥淵ou can react more quickly if you are a speedboat but if you hit a rock, you know you鈥檝e hit it,鈥� he smiles.

Rocks there are aplenty: cuts in public sector work, a flailing education sector and the uncertainties of health reforms. But Bond has a strategy in place that charts a safer course: he is steering the 拢127m-turnover company away from being a straightforward contractor. Instead he has other specialisms including regeneration and urban renewal, housing and education and he has been pushing ahead with implementing a health investment model. The firm also has a fast-growing maintenance division with an order book worth 拢500m.

Compensating for blips

Bond says that, like so many companies today, Rydon is seeking safety through diversity. 鈥淲e work across a wide range [of sectors], and that means that if there is any kind of blip we can compensate because we鈥檙e not exposed to one particular work stream.鈥�

At the same time, the firm is being forced to innovate like mad. The prime example of this is how Bond has been using Ryhurst, the health division of the business, to move away from traditional PFI. 鈥淧FI fell out of favour quite a few years ago but it was obvious to us a long time before that,鈥� he says. 鈥淪o in 2008 we started to search for a new way of working with our health partners to see if we could come up with a better model.鈥�

The result has been a system called Service Targeted Estate Partnership (STEP) which is similar to PFI but doesn鈥檛 tie partners into a PFI arrangement: 鈥淲e bring our expertise in to manage estates for clients and to rationalise their estates without fixed supply chains,鈥� explains Bond. 鈥淚t also reduces costs and is more flexible than traditional PFI.鈥�

You can react more quickly if you are a speedboat but if you hit a rock, you know you鈥檝e hit it

Bond insists that, even with health reforms up in the air for the foreseeable future and a consequent lack of clarity surrounding healthcare facilities delivery, STEP is being used as a successful model - one that has caught the attention of minister for the cabinet office, Francis Maude. 鈥淲e are getting chased by health authorities after delivering the first STEP scheme in Lancashire [鈥�] We have been talking a lot to government and this is a model they feel very comfortable with.鈥�

Bond is far less upbeat about prospects on the education front. Rydon is on the Partnerships鈥� for Schools academies framework, but with the 拢55bn 好色先生TV Schools for the Future programme cancelled last year this is unlikely to yield as much work as the firms on it had hoped - even though being on the list at least gives them a chance at what work is available. 鈥淚t鈥檚 been a very difficult period. Unfortunately things keep changing with this government.鈥�
Bond鈥檚 strategy here is to go small. 鈥淲e will probably be doing more refurbishment and some smaller schools,鈥� he says. 鈥淲e won鈥檛 be doing the big landmark buildings because, as a country, we can鈥檛 afford it. I think this change will take out some big players.鈥� Again, it鈥檚 the firm鈥檚 agility that Bond hopes will see it through - whereas bigger companies may flounder and sink.

Other highlights

Bond lists regeneration and urban renewal, sustainable housing and maintenance as the three other divisions taking up a lot of his time at the moment. The first is a direct response to the market where the larger capital building projects have all but disappeared: 鈥淲e used to do schools [and] large community hospitals worth up to 拢60m. Now you might refurbish a hospital instead of building a new one - it鈥檚 a drip, drip approach because the capital investment just isn鈥檛 there anymore.鈥�

As for housing, Bond says it鈥檚 a question of taking stock and keeping an eye on the market: 鈥淲e鈥檝e got about 3,500 housing units under our control and amid all of the planning controversy we pushed a lot of applications and were very successful. We鈥檝e won a lot of appeals and we decided to secure those consents but not build them out at the moment because, frankly, the mortgage market is looking pretty grim. So we鈥檝e had to say: 鈥檛hat won鈥檛 necessarily be a good use of our money.鈥欌��

He is quick to point out that, actually, this puts Rydon in a strong position: 鈥淎s a business we鈥檝e got no debt,鈥� he says. 鈥淪o consider a business like mine with control of 3,500 units without any debt - that鈥檚 quite a story.鈥�

And then there is the maintenance division. This is arguably the golden goose of Rydon鈥檚 portfolio with a 拢500m order book just a year after Bond bought the division into the fold, following the acquisition of Equipe for 拢153m: 鈥淲e have a very reactive maintenance business,鈥� he says. 鈥淭he order book is 拢500m at the moment though that is stretching over several years and some of our projects are lengthy and span five, 10, maybe even 20 years at a time. But that鈥檚 all secure.鈥�

Avoid the chaos

Part of the reason for Rydon鈥檚 success is Bond鈥檚 own military sense of discipline: 鈥淵ou have to stick to some disciplines otherwise it all gets too chaotic,鈥� he laughs. 鈥淢y kids say I am totally boring because I know exactly what I am going to do every day. But this is the way I work and it means I am confident about the business.鈥� But against this single-minded determination is a flexibility of outlook, a readiness to respond challenges: 鈥淵ou just have to adapt, which is something we have been doing for 20 years. We are constantly adapting our model, focusing on what we鈥檙e good at. And it works because clients want to talk to us. They see us as a safe pair of hands and they鈥檙e right.鈥�