Skanska: 3.4% margin by playing to its strengths

Skanska's solid performance in the first three months of 2005 has resulted in an operating margin of 3.4%. Chief executive David Fison said: "You have to be around the 3% level to feed money back in and drive the improvements you look to make in the following year.
"It's been going well this year as we're getting staff more closely aligned with the concept of what jobs we're good at and what markets we don't want to be in.
I expect a small growth in turnover, although the order book will have doubled by the end of the year."
Financial results for the three months to 31 March 2005 show turnover running to £160m with operating profit at £5.5m.
"Skanska has more focus on complex jobs, ones where we need to integrate various elements and ones where we need to understand the customer's needs," Fison said.
"People do sometimes say 'why not bid for this job?' when we have stood back, but we're not operating in the low margin area now, nor for clients who don't understand what they want.
"Once, a contractor would have exploited such a situation, but today you just see it as a being a waste of time," Fison said.
During the quarter, senior internal appointments were made. David Myers became managing director of Skanska's mechanical, electrical and hard FM operating unit, taking over the reins from Peter Coote, who continues on the main board.
Skanska's bid costs for PFI and design and build projects might make its eyes water, but Fison commented: "There is no upper limit on how much we will spend as our parent has a strong balance sheet and we are looking for every good opportunity.
"But we do limit ourselves according to our resources - there are some we would like to bid, but we hold back if we can't assemble a quality team."