Chief executive says figure is achievable from 2020

The chief executive of Balfour Beatty has said his firm should be making margins of 5% within three years.

Leo Quinn (pictured), who joined the business at the start of 2015, said the country鈥檚 biggest contractor should be hitting that number by 2020.

He said: 鈥淢argins are more important to me than growth鈥 think the industry should not be working for less than a 5% operating margin.鈥�

Quinn鈥檚 comments came .

In its results, the firm said it wanted to hit 鈥渋ndustry-standard margins鈥� by the end of next year - which it said meant 2-3% in UK construction - but Quinn said the contractor should set its sights higher for the future.

His comments come as other chief executives also set targets for their own firms in this results season with Morgan Sindall boss John Morgan saying he wants his construction business to hit 2% from a current 0.7% while Galliford Try鈥檚 chief Peter Truscott is asking the firm鈥檚 construction arm to be hitting margins of 2% by 2021. These currently stand at just 0.4%.

Earlier this year, ISG chief executive Paul Cossell said contractors should be aiming for 5% and admitted that an internal audit at the business had found inefficiencies which would have equated to a 3% improvement in margins.

Quinn, who said he plans to be at the firm for another five years, reckoned that Balfour Beatty would be in a position to start making decent margins soon. 鈥淲e have to burn off the low-margin contracts first,鈥� he added.

The firm has drawn a line under most of the near 90 problem contracts Quinn inherited when he joined with just nine left to be sorted out. The majority are in the UK and Quinn said: 鈥淭he root cause was a lack of control and poor assessment of risk.鈥�

He said that the firm now 鈥渆mploys a level of prudence that should have been adopted years ago鈥�.

Commenting on the return to profit, Quinn said: 鈥淚t鈥檚 very comforting to see the largest player in the construction market back in the black.鈥�

Quinn also gave more details on why it pulled out of a deal to build a twin-tower scheme at Nine Elms in south London with the developer 鈥� Chinese firm Dalian Wanda 鈥� later signing a deal with Multiplex.

He said: 鈥淥n Nine Elms we got to the point where we couldn鈥檛 deliver the building in the timescale they wanted and the cost was higher than they wanted to pay. There wasn鈥檛 a meeting of minds.鈥�

Quinn said Balfour Beatty was still interested in high-rise but would only bid for them selectively.

Outside of Hong Kong, where it has revenues of $1bn, Quinn said 98% of the firm鈥檚 work is in the UK and US with more than half of its 拢8.7bn revenue coming from the US.

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