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‘No conflicts’ in independent business model, says Turner and Townsend CEO

Turner and Townsend is not “particularly impacted by mega deals” such as Aecom’s acquisition of URS for £2.3bn earlier this month, according to its chief executive.

An independent business model is a competitive advantage for T&T because it is “not conflicted”, Vincent Clancy said.

Mr Clancy was speaking to Construction News as the firm posted a 12 per cent increase in group turnover to £357.4m in the year ended 30 April 2014, compared with £318m in 2013.

Aecom’s acquisition of URS created a new £11bn turnover global force in engineering design. It followed up the deal with another move this week, acquiring the£707m-turnover US contractor Hunt Construction.

“We’re not really competing at scale – we’re trying to compete on positioning our services more,” Mr Clancy said.

“We don’t see the need to change [our] independent model. In fact, we think it gives us a competitive advantage.”

“We’re not conflicted by the fact that one day we’re turning up as a contractor and then the next day we’re turning up as a project manager”

Vincent Clancy, Turner and Townsend

Turner and Townsend’s group pre-tax profits rose by 12 per cent to £33.3m, from £29.7m last year.

“We don’t do engineering, we don’t do construction – we’re clear about that and clients like that,” he said.

“We’re not conflicted by the fact that one day we’re turning up as a contractor and then the next day we’re turning up as a project manager.

“For clients it’s very simple why they’d employ us and there’s no conflict with other things we might do as well.”

Mr Clancy admitted that competition both in the UK and overseas could increase as large European and US-based consultants continue to increase their size, while strong players from the Asia and Middle East markets move onto the global stage as well.

Turner and Townsend 2014 results

  • UK turnover was up 11 per cent to £148.2m in 2014 (2013: £132.9m)
  • UK operating profit grew 11 per cent to £16.5m in 2014 (2013: £14.8m)
  • Global turnover grew 12 per cent to £357.4m in 2014 (2013: £318.5m)
  • Global pre-tax profit increased 12 per cent to £33.3m in 2014 (2013: £29.7m)
  • Global staff numbers rose 13 per cent to 3,660 across 87 offices at the year end (2013: 3,239)


“Our business strategy is around delivering great outcomes for our clients, so it’s about being more intelligent, agile and having the capability where the clients want it,” he said.

“But competition changes all the time and we’ll have to change all the time to deal with that.”

In 2014, the UK remained the largest market for Turner and Townsend. Turnover increased 11 per cent to £148.2m in 2014, compared with £132.9m in 2013.

“In the short term we are going to have a series of issues that will push in the wrong direction for efficiency and cost saving”

Vincent Clancy, Turner and Townsend

UK operating profit also grew 11 per cent in the period to £16.5m, from £14.8m last year.

Recent UK contract awards have included its appointment by Heathrow Airport as the sole provider of cost management, commercial and project controls services over the next five-year investment period, and landing a place on National Grid’s three-year professional management services framework in May.

Mr Clancy said its North America and Asia markets have the potential to grow to the same size as the UK in the future.

The firm saw turnover growth of 46 per cent in the Middle East to £17.9m, 33 per cent in Asia to £25.7m and 30 per cent in North America to £56m in 2014.

Turner and Townsend Hudson Yards New York Time Warner

In the US, Turner and Townsend was awarded a full programme management commission by Time Warner in May to develop its new 1.3m sq ft headquarters at Hudson Yards in New York (pictured).

It will continue to look for bolt-on acquisitions in the UK and globally over the next 12 months to expand its geographical reach and improve its capabilities.

Mr Clancy said Turner and Townsend was “much more positive about the UK than we were this time last year”, with the London recovery beginning to ripple out to the regions.

The firm saw growth in the property and commercial sectors, with an increase in central government infrastructure spending also beginning to create more work, which is expected to continue.

Turner and Townsend in numbers

51%

Increase in turnover in three years since 2011

54%

of group turnover comes from outside the UK

46%

Turnover growth in the Middle East to £17.9m in 2014

21%

Global turnover growth in the infrastructure sector

70%

of global infrastructure revenue came from the UK market in 2014


But he warned the market remained “pretty tight”, which would challenge clients’ demands for cheaper projects.

“Inflation is a big issue. Getting contractors to bid at the moment is a big issue. Subcontractor strength and capacity is a big issue.

“In the short term we are going to have a series of issues that will push in the wrong direction for efficiency and cost saving.”

He added that clients procuring construction projects would face a difficult 12 to 18 months until more capacity is built up in the industry.

“If you’re a client, you’ve got to make your projects attractive to the market.

“We’ve got to go back to a lot of the basics around how you engage with the marketplace and how you work with contractors to deal with some of these issues – just passing the risk to the contractor won’t necessarily get you the right result.”

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