Bouygues UK's 5% margin fuels expansion plans

Bouygues UK is looking to double its annual turnover to £200m in the next three years and the plan is to achieve the transformation organically.

Pascal Minault, managing director, made it clear that Bouygues has no desire to grow through acquisition.

Globally, Bouygues has an annual construction turnover of £14bn.

In the UK, the group’s total turnover runs close to £500m as a result of contributions from four operations: Bouygues UK, which is mostly involved in building; Ecovert FM, established on the back of PFI wins in the UK; Colas, the road surfacing specialist contractor; and ETDE, an M&E operation.

"Based on the size of Bouygues UK’s orderbook and the volume of work we have at the pre-bidding stage, we should get to £200m," said Minault. "The organic route is a good way of growing in that it is less risky. The downside is that it takes time.

"But it excites our own peo-ple when they are told they must grow their business."

Minault said that Bouygues UK makes a 5% profit margin.

Asked if this is the result of such a strong focus on PFI work, he replied: "No, not as such."

He goes on to list three main reasons: "First, it’s because we have a strong internal technical procurement team. Second, we’ve been able to build on Bouygues Construction’s global capability. Third, we are efficient when it comes to design and procurement."

Bouygues Construction, the global parent, has invested heavily in an R&D project looking into whole-life costings. Every element, such as radiators and floor coverings, for example, is put under the microscope and different technical options are compared under such headings as price of construction, price of maintenance, expected life, cost of removal and cost of replacement.

The most suitable option is flagged up and becomes the group standard.

"Generally it leads to us using higher specification products that cause less disruption to clients," said Minault, adding that the cost assumptions are shared with everyone, including Bouygues UK.

Many of Bouygues UK’s projects are built in concrete. "It’s because we have an efficient system," said Minault. "It’s our heritage, it’s the transfer of what we do in France. The group has the ability to come up with efficient concrete designs. Also, we have proprietary formwork and we have a workforce and supervisors who have been fully trained."

Bouygues UK arrived in the UK ten years ago. Its first contract was a £10m job for a French client who was developing the former Commonwealth Club in London.

That scheme was built by an existing Bouygues subsidiary, but gave the group a foot in the door which it quickly used to advantage by winning the £100m Kings College scheme. At that point, the parent group created Bouygues UK.