Murphy’s boss has set the company a target of winning one in every three projects it bids for as part of a drive to treble turnover by 2025.
Chief executive Steve Hollingshead said at a group level he had seen “major improvements” in its bid success rate since he joined, but that he wanted to push this further until the company was winning one in every three.
“Our target is to get a one in three bid-to-win ratio,” he said. “We are coming from a space where we were around one in seven; we are certainly on the route [to one in three] and definitely better than one in seven.”
He added: “A lot of money in contracting is spent on tendering, and if you are not converting those into wins then [that is money lost].”
The comments from Mr Hollingshead comes as Murphy posted pre-tax profit of £23.3m for the year ending 31 December 2016, up nearly 69 per cent on £13.8m the previous year.
The company’s cash balance grew to £96.9m at the end of last year from £85m 12 months earlier, while its order book stood at £1.17bn – up 21 per cent on the previous year’s £962m.
Following the first full year under Mr Hollingshead’s leadership, the chief executive said the improved figures came as a result of better governance throughout the business, which ensured there were no significant loss-making projects.
“The significant point about 2016 is that we didn’t have any big loss-making contracts affecting our results,” he said.
Murphy posted a loss of £9.1m for 2014, the first in the company’s history, with much of this down to problems delivering Beckton Energy’s fat-fired power plant in east London.
The Beckton plant had now been fully handed over to the client, and Mr Hollingshead said the company had learned lessons from the project.
“Projects like Beckton have a long tail,” Mr Hollingshead said.
“A lot of learning has been done from our experience at Beckton; one of the new things we have brought in is a proper lessons learned process after our projects, looking at the challenges, what we have done well and what we could do better.”
Despite the growth in profit, the company saw turnover dip to £613m in the year ending 31 December 2016, down from £629m in 2015.
In 2015, Murphy published its 10-year plan targeting turnover of £2bn and margins of 10 per cent.
Mr Hollingshead said the reason behind the drop in group turnover was largely due to the conclusion of the company’s Crossrail work and a decline in its Australian arm.
Nevertheless, he noted that UK revenue was up and expressed confidence that the £2bn target could be achieved.
Murphy has been on a recruitment drive since Mr Hollingshead started at the business, with 19 new recruits being added to its management team.
These have included former Serco finance boss David Burke as its chief financial officer, former Laing O’Rourke director Russell Kellett as group operations director and Capita’s Alistair Smyth and Chris Green as engineering director and commercial director.
Mr Hollingshead said he now had his team very much in place and did not expect recruitment on the same level as the previous 18 months.
It was Murphy’s long-term strategy, he claimed, that helped recruit top talent from the industry. “These people have joined because they are all enthusiastic about the plan we have got for the business.
“If you look around at the construction industry there aren’t many businesses [that have as] clear a plan as we do – that’s what characterises our business.
“That’s not me being big-headed, but I think that resonates with the people we recruit.”