DCT thrives on strong delivery

What's the ownership set-up at DCT?

I am one of five director shareholders in DCT. This followed a management buy-out about three years ago when the sole proprietor enabled the people that had been there a long time to acquire the shareholding.

How has DCT's performance been since then?

At the time of the acquisition we had a turnover of around £12m. That accelerated over a two-year period to £16m, and subsequently grew to £27m at the end of 2005. We bought some divisions of Dew in June 2006 and we anticipate that turnover by the end of 2007 will be around £40m: £15m from Dew and £25m from DCT.

What's your geographic area of work and maximum contract value?

We have offices in Oldham, Coventry and Coatbridge in Lanarkshire. We work from the south Midlands up into Scotland, although some of our specialists may go further. Our normal contract value is between £3m and £4m. The circumstances would have to be right to take on something bigger.

We try to match up the client demand to what we are prepared to give. If a client wants to operate using particularly aggressive conditions of contract, we'll either say yes or no, and if yes, we'll say that is what we are prepared to give you for those terms. We don't argue about the conditions of contract - if you don't like it, don't do it.

What sectors does DCT specialise in?

DCT has historically majored on the water sector. We are a framework contractor for Severn Trent Water and a tier-one contractor working for two main contractors on their framework contract for United Utilities.

What made you want to buy Dew?

A massive proportion of our turnover was water-related, so we were very exposed to the water sector and the water companies' five-year spending cycle. So, one of the attractions of Dew was that although we are in the same geographic area, we very rarely competed against each other for tenders.

Dew had eight trading divisions, we bought the framework and regional divisions.

We took on 40 staff from Dew and managed to get three framework contracts for the Highways Agency novated and one with Coventry City Council. That put us in a market that we weren't in at all and diluted our exposure to the water sector.

Have you attempted to integrate the cultures of DCT and Dew?

Basically, we have kept them apart. DCT is a very closely knit company, a lot of people have been there a long time and they are very protective of their own name and brand.

We decided that if we were going to get involved with Dew, it should be as a separate, self-sustaining entity. The Dew brand is strong and better known than DCT, so we felt there was value in keeping that and the Dew people feel the same way.

There are one or two areas where we have clients in common and that is causing a bit of confusion for them as to who they should be directing work opportunities to, so that needs sorting. But it's not a lot.

Did Dew bring anything to DCT?

Dew has brought a larger company approach to things like Investors in People, formal training programmes and human resources. When you grow to our current size you do have to look at developing people in more formal ways with all the documentation that goes with it. The beauty of it for us was that we don't have to invent the systems and processes we can just adopt Dew's.

Rapid growth can lead companies to overstretch themselves - what systems do you have in place to combat this?

I monitor cashflow weekly. I start with a prediction of what we expect to be paid that week and check it on Tuesday of the following week, so if something's gone astray I'll know about it and then you take a view of what you do about it.

Some of the framework payments can be more than £1m a month. If you get two or three of those lagging, you are going to have issues. And on the Highways Agency ones you only get paid after you've paid your suppliers, so you are cashflow negative. It's quite an aggressive environment, much more so than regular contracting.

What differentiates DCT from other firms?

I think our strength is that we are very delivery-oriented. We do technically difficult, demanding, risky jobs. We believe our interests are best served by dealing with all the issues and just getting the job done. We hope the client recognises that and we can then talk afterwards about the rightful recompense. We don't like letting people down - that's how we sell ourselves, we are very proud of what we do and I think clients like Severn Trent recognise that.

How are margins?

Specialist subcontractors can work on 25%-plus margins, while there are national contractors at the other end of the scale who are happy with a quarter of a per cent increase in profit over a massive turnover. We are somewhere in the middle. If we take all the risk attached to a project, we expect to return a better margin. It gives us control over what we do.

What's your ambition for the company?

The minimum requirement is to sustain the overhead of course, but after that look for quality work. Growth is a nice thing to have, but you've got to keep an eye on profitability. I don't want to say I'm looking for a £20m increase in turnover in the next few years. I'd rather concentrate on getting better quality work that suits us, that generates reasonable levels of margin, and that doesn't put our resources under pressure.

That said, the challenge for both DCT and Dew is to get more work outside their existing frameworks. But we'll never undersell our value offering - if you do you are asking for trouble.

CV

Peter Greenhalgh

Age: 51

Previous roles

Studied at Newcastle upon Tyne University, graduated in 1976 with BSc (Hons) in Civil Engineering.

Employed as site engineer at Daly & Naughton until 1979.

Joined DCT as a site manager in 1979.

Became estimator in 1981, progressing to senior estimator.

Appointed estimating director at DCT in 1989.

January 1995 appointed managing director of DCT.

Acquisition of Dew 2006 - managing director Dew and DCT.

CV

4 things you didn't know about Peter Greenhalgh

He is private sector representative on the Oldham Skills and Workforce working body.

He built his own house in 1988 without using any company materials!

He took-up skiing at the age of 50.

He is interested in windsurfing and golf.