PFIs boost Kajima presence in UK

Kajima is set to strengthen its presence in the UK construction market on the back of a boost to its PFI workload - its six bids up and running would add £175m to workload if successful.

One of the world's largest construction groups, Kajima has announced a major shake-up as part of a medium-term business plan.

The upheaval involves substantial job losses but Kajima Europe finance director Geoff Walters stressed that far from contracting in the UK, Kajima is looking to expand.

Kajima has a UK annual turnover of £100m. "It's a nice level to be at," said Walters. "We want to increase it, but in a controlled fashion, so we are definitely not looking to buy and neither are we thinking of pulling out. Kajima is here long-term."

The average PFI bid cost for reaching preferred bidder status runs to £500,000. "It's for the big boys, so you have to have deep pockets," said Walters. "After that, you should get your money back, though there is still a risk of a proposed project being pulled."

Kajima has targeted schemes in the £20m to £50m range. Smaller ones are not seen as being cost-effective while larger ones are "not us", said Walters.

Walters added that Kajima is winning work because of its belief in providing good design. "The feedback reaching us is that we are seen as strong in this department," he said. "There is a cost for this, but it's worthwhile. We have in-house architects and we use external architects whose work comes to our guys, who then carry out an audit on design and quality.

"We like having local or near-local architects on board as they understand the local culture."

Jarvis is a strong player in the PFI education sector, but with a reputation for building boxes. Recently, Kajima says it has emerged successful from all shortlists where it has been up against Jarvis.

"We are strong on life-cycle costing, largely as a result of the research backing we get from our parent group in Tokyo," said Walters.

"All the PFI projects we've done so far have been slightly different.

"Now we're able to offer a good record and street cred and that's important as in PFI it is difficult to get on the treadmill, whereas once you have been accepted, that all changes."

Kajima's long-term plan is not to build a strong PFI equity portfolio. "If we can, we'd like to bundle them up and sell them after building and operating them for about three years," said Walters. "That's the intention. We're a trading company and do not look to be long-term investors."