Relationship partnering pays off

Costain has a taken a very prudent line on calculating the value of its forward orderbook at £800m as the group is near-certain to sign up to a further £300m-worth of contracts.

In three of its key markets - roads, healthcare and water - clients have moved rapidly towards relationship-led partnering. Costain enjoys this form of contracting.

Chief executive Stuart Doughty said: "We've had a framework agreement with Tesco for four years and another with Thames Water for 10, and in each case we have reduced the cost base of new projects year-on-year as we've taken on more and more responsibility for delivery of the total package."

Several of Costain's relationships with clients started with just the delivery of contract, but as a result of on-going evolution, the group has moved further back into the procurement process until it now undertakes the feasibility, process and design stages before the conventional build phase even gets under way.

"We've managed to reduce Tesco's cost base every year," said Doughty, "while retaining a similar profit figure every year. There's more and more pressure on us but it makes us continually look for new ways of delivery."