Profile: Ian Tyler, Balfour Beatty chief executive

When you took over as chief executive at Balfour, did you find any surprises?

No. I took over a good ship. Mike Welton who was here before me had done a fantastic job.

Also, given that I had been Balfour’s finance director for six years, with another three years as chief operating officer, it was unlikely that I was going to be surprised or look to change direction.

So here you are steering the ship, where are you taking it?

Balfour has a large number of opportunities. We chose the ones that fit in with our strategy. There are four parts to our development:

• UK regional civils capability;
• Investments outside of UK PFI;
• Business management activities;
• Stronger presence outside the UK, specifically in the USA.

Thus far we’ve done exactly what we said we’d do and there is plenty more mileage in it yet.

Well lets start with UK regionals: Mansell and Birse were only the start then?

Yes. There are Cowlin and Dean & Dyball to add to that list and what you can see is that Balfour has bought high quality in each case.

In the main, our strongest market has been in the north: our best-performing operations have been in Scotland and the north east of England with Balfour Beatty Construction and Balfour Beatty Civil Engineering.

Mansell, Birse, Cowlin and Dean & Dyball have added strength in the London, north west England, the Midlands, Bristol and Cardiff, and along the south coast.

That seems to round everything off in UK civils. Would you like more?

Well we are least strong in the south east.

Let’s turn to Balfour’s investments apart from those in UK PFI. You have been a stakeholder in Barking power station for 15 years and you recently bought into Exeter airport. Do they have anything in common?

Yes they do, they both take Balfour’s financial and development skills that have come out of our PFI work – and don’t forget we have 250 professional people in this department – into adjoining areas.

Exeter was good. There will be more of that size and type.

But you didn’t bid for Chiltern Railways?

No, because you would have to be a rail operator and we aren’t.

If BAA was split, would you like some… Gatwick airport for example?

No. Too big. Our rule is that we take a major part of the investment. We are not running round the market with a large chequebook because there are a lot of investors out there with much larger chequebooks.

You’re not moving Balfour towards being another Ferrovial then?

No. Ferrovial has a different business model.

Your biggest move, in terms of non-PFI investments, wasn’t in the UK at all but was in America - the £180m acquisition last February of GMH Military Housing, a military PPP accommodation business. Tell us about that.

In terms of size, GMH and the acquisition of Centex Construction in America, which also cost £180m, are the two biggest deals that we’ve ever done.

With GMH, we are buying a business that is largely the value of the concession’s assets that will be held for a total of 50 years and we are only two years into that.

The military sector is the only part of the US where there is a mature public-private partnership market. What we now have starts to create critical mass.

Part three of your plan, the development of business management activities must be the least flagged-up of Balfour’s planned fourfold expansion. Why is that? Is it not happening?

It is happening but it is slower because it is more organic growth.

We are creating a business division that differentiates us from others. The business now has more than 500 people and is delivering 5% of group profit. Five years from now it could be accounting for 20% of group profit.

If I can give you an example of it at work, the best case to cite would be the management of the Kings Cross underground development where we were programme manager.

We’re not seeking to be more like WS Atkins or to become a designer, rather it is a desire to be successful at the white collar management of our business. It will become more important. It is already the way we present Balfour Beatty to the market in alliances with clients such as the National Grid.

We want to have the ability to manage the delivery of the infrastructure we’re involved with and to provide the thinking up front that leads to that delivery.

Are looking to duplicate your UK activities in the US market?

Yes - we are trying to create an entity that is broadly a similar weight, depth and interaction with the UK. But no - we will not simply replicate what we do in that market.

We look to be a player in the delivery of buildings, of transport infrastructure and of utility frameworks, but not necessarily in the same US markets as in the UK.

When Centex, the US housebuilder, decided that its £2bn-a-year turnover construction business was non-core we got the opportunity we needed. We won’t make many acquisitions as good as that. It has absolutely first-class managers and the business is very stable.

Globally, where do you see Balfour’s future several years further down the line?

Balfour has a turnover of £7bn today and £2bn of that comes from America and I can see a future scenario where operations in America and the UK are the same size.

Group turnover in some future time might well be split between three portions: 40% UK, 40% America and 20% rest of the world.

Does 20% in the rest of the world point to a major drive somewhere else then?

No. In reality we are close to that figure already, thanks to our operations in Dubai, Hong Kong and our European rail division.

Where else might we see Balfour plant its flag?

I don’t really know. We’re not intending to do anything soon. If someone was to open up a desk-top analysis on Balfour, you’d expect to see us being drawn towards a market like Germany… and from there to the countries further east.

India and China are very difficult. Another no-go zone would be France and Spain because of what is the essentially monolithic local dominance of their markets.

3 things you didn’t know about Ian Tyler

• He holds a private pilot’s licence;
• He runs marathons;
• He is President of CRASH, the UK national construction and property charity for the homeless.

Ian Tyler CV

• Age: 47
• 1988-1991 Group treasurer and financial controller at Storehouse
• 1991-1993 Group financial controller, Hanson
• 1993-1996 Finance director, ARC
• 1996-2002 Finance director, Balfour Beatty
• 2002-2005 chief operating officer, Balfour Beatty
• 2005-present chief executive, Balfour Beatty