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Skanska in for new offices as it waits on Google redesign

Skanska will “wait and see” Google’s revised King’s Cross hub plans before deciding whether to bid for any revised scheme but has capacity to bid for new London offices despite a flurry of recent wins, according to its UK chief executive.

Bam Construct was chosen to build the £300m Google HQ job last year, but the plans are being revised after Google told AHMM to come up with a “more ambitious” design in November 2013.

It is understood the new scheme is likely to be significantly bigger and could involve several main contractors.

Asked would the firm re-bid if the opportunity came up, Skanska UK president and chief executive Mike Putnam told Construction News: “We put a big effort in last time, will we repeat it? I don’t know, we will wait and see.”

The contractor has landed several high-profile London office jobs in the last year, including the £500m 52 Lime St (Scalpel) job for W R Berkley, the £102m 1 and 2 New Ludgate schemes for Land Securities and the £29m 100 Cheapside redevelopment, backed by partners including Quadrant.

Mr Putnam said Skanska’s team was “busy planning” on the Scalpel, where he said there would be developments in the coming months.

He said: “There’s a lot to do; a great thing to do is to spend time planning and then projects go well - and we’re busy planning.”

Despite the flurry of high-profile wins, Mr Putnam said Skanska retained the capacity to keep bidding for new schemes as developers bring back office projects that were shelved during the downturn.

“We are a large business so capacity is not an issue for us,” he said. “But the wins are about building long-term relationships with clients like Land Securities.

“Although we have picked up some big wins over the past year, they tend to go in cycles and be quite large jobs.

“They run over many years; just because you get two or three in one go, it doesn’t mean they’re starting or finishing at the same time, so we still have more capacity.”

Industry recovery:

“It is definitely shifting. The recession is behind us, but probably a better description is that it’s in the rear view mirror. These are more optimistic times with growth ahead and people’s order books are starting to look better and have more opportunities around them.

“However you have still got the legacy of the recession to deal with.

“The lead-in times for new work and execution of it means it will be some months before people really feel it, but 2014 has got off to a better start.”

Mr Putnam was speaking after the firm announced UK turnover of £1.22bn in the year to December 2013, with operating profits of £41.9m at a margin of 3.4 per cent.

The firm grew turnover by 4.3 per cent compared with the previous year (£1.17bn), but operating profit was down from £42.6m.

He said: “We are still delivering a mix of projects; some won in better times, others won in harder times. Having consistent results is good, particularly against the backdrop of some of our peer group where some numbers have been going south.”

Skanska began construction on its first commercial development projects in the UK last year: 66 Queen Square in Bristol, The Monument Building in central London, and Bentley Works in South Yorkshire.

Mr Putnam said the commercial development sector would “only ever be a small part of our business” in the UK, despite being a large part of Skanska’s international operations.

“[In the UK] it can be very good; the market is going up and on quite a high level right now. But equally, it can change quite suddenly and dramatically. We are happy to keep a fairly low profile when it comes to development.”

Supply chains:

“We would like to stick with our existing supply chain and work with them but that means keeping an open dialogue between us so we’re aware if they were ever to get into any difficulties.”

Mr Putnam said the notion that firms are hit hardest coming out of prolonged periods of downturn is “real” and “doesn’t just affect the supply chain”.

“It affects everybody because if people over-stretch themselves in periods of prolonged recession then it is often the upswing that catches them out.

“We always try to pick the work we go for carefully. We are quite targeted in our approach to new work and also clients. We try to maintain the same clients, there’s nothing like repeat business where you understand one another and can develop a relationship.

“Because there are opportunities around, people will inevitably be more selective, which is good business.”

Crossrail land and property director Ian Lindsay told Construction News last month it still wanted contractors and developers for over-site schemes at its main stations.

Mr Putnam would not rule out getting involved with one of the schemes, but said it was likely to be on the contracting rather than developer side, in partnership with key clients.

“[We are interested] on a very selective basis,” he said. “They would be quite big schemes so we wouldn’t go for them in our own right, but we might go for them in support of others, like our clients.

“We can bring development skills, but it is not a prime area of focus for us.”

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