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Industry insiders said the company wants a public listing to keep up with its main rivals – in particular, Parkman, which floated in July, and Oscar Faber, which has linked up with giant US engineer Aecom, the owner of Maunsell.

The sources said companies such as Mouchel needed the capital that a listing would generate if they were to grow through acquisitions. One option Mouchel is understood to be considering is a reverse takeover of a smaller, listed company such as Waterman Partnership.

A City insider said: "Mouchel is the sort of firm that is moving towards a float and they will want to make a few acquisitions to give them a decent size for when they do. Waterman would be attractive to Mouchel – but I don't think Waterman would be keen on that deal."

Bob Campbell, Waterman's managing director, said speculation that such a move was in the offing was "absolute nonsense" and refused to comment further.

Mouchel is also understood to be trying to grow its rail and outsourcing businesses.

The firm's profit jumped 47%, from £2.4m to £3.5m, in the year to 31 July 2000. In the same period, turnover increased 12% from £55.6m to £62.4m.