Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Dawn rises to the challenge of PFI

Over the past 35 years Dawn Construction managing director Alan Macdonald has radically reshaped the business he founded in 1971. He talks private clients and PFI with Steve Menary

NEARLY 35 years after setting up his own business, Alan Macdonald remains in the saddle with his hands firmly on the reins.

Mr Macdonald is the only one of the th ree founders of Dawn Construction still on the track.

The racing analogy is fitting as Dawn's managing director is also the chairman of Ayr racecourse. This role is one reason Mr Macdonald has shunned the limelight.

The low profile has tended to leave Dawn unheralded, but the business is booming. In the year to January 2006, the group's contracting, housing and development activities produced a £13.6 million pre-tax profit on £114 million turnover.

At the start of 2000 Mr Macdonald decided to reshape the business. A small works operation was shut in 2003 and an office in Edinburgh went the following year as Dawn eschewed a return to direct employment.

Mr Macdonald explains: 'We employ to site agent level and it's gone that way since we started to do large jobs.

'Edinburgh is a tough market to get into and whatever we can get over there we can control from Glasgow. We've done that for jobs in Dundee perfectly well.' Mr Macdonald might not like Dawn to be judged against local rival Barr but the differing strategies and fortune do bear consideration as similar sized businesses controlled by their founders.

Barr veered off into sidelines such as owning Ayr United football club and an ice rink only to run up heavy losses that saw a change of management.

Dawn also sank into debt after taking a 50 per cent stake in Ayr racecourse but this, Mr Macdonald insists, is a development opportunity.

Scotland's only grade one course was owned by its members, who could not finance the necessary refurbishment. It was bought by a joint venture between Dawn and Thornton Healthcare, run by course vice-chairman Richard Johnston.

Dawn will build 400 homes, a cinema and other commercial units on spare land in return for upgrading the facilities.

A public enquiry delayed the £35 million redevelopment but Dawn still had to splash out £7.5 million on works at the course.

Dawn has also met the public enquiry costs ? around £300,000 ? although the group is chasing Edinburgh house builder MacTaggart & Mickel for costs of nearly £60,000.

M&M is not popular in Dawn's Glasgow headquarters after objecting to the course redevelopment on the grounds that it could have led to the local council denying permission for its own sizeable housing scheme in another part of Ayr.

Mr Macdonald, teeth slightly clenched, says: 'We offered to sell them half our land for housing but they said 'No'. They were not very helpful to the extent that we've gone after them for costs. They certainly won't be getting any land now.' A keen rugby fan, Mr Macdonald does not pretend to have been more than casually interested in racing before the deal but he has since caught the bug.

Unlike Barr, the group has stayed in Scotland apart from the odd development opportunity in Newcastle-upon-Tyne.

This approach will continue, with no plans for offices outside the existing operations in Prestwick and Glasgow.

'Early on, we once took a job at Benbecula in the Western Isles, ' recalls Mr Macdonald with a wistful smile.

'I managed to persuade the navy at Rossyth to take our plant and equipment up there for free as an exercise. Then when we got there we found the locals could buy cement cheaper than us due to grants from the Highlands enterprise board.' Dawn has mostly avoided direct employment, with only about 90 staff at a contracting arm that should turn over about £90 million this year with jobs averaging about £8 million.

That Benbecula job was a school, and Dawn has returned to the education arena in recent years having initially focused on private clients.

Mr Macdonald explains: 'The first job that took us into a new league was a supermarket in Ayrshire about 15 years ago.

'We'd always been chapping at Safeways' door but they always said 'bring us a site and we'll see' so we did.' Dawn assembled land in a package that involved 34 different deals and as a result clinched a £2 million contract to build a Safeways store on the site.

'On the back of that one job we did another 32 for Safeways after that, ' says Mr Macdonald.

The acquisition of Safeways by Morrisons in 2003 has since curtailed some of Dawn's supermarket ambitions.

Mr Macdonald says: 'At the time we had a site we'd just sold to Morrisons but they wouldn't accept our construction costs to build the supermarket. We haven't built a supermarket for three or four years now.' The pendulum has since swung back towards state jobs with Dawn building up stakes in five private finance initiative concessions in education and health.

The attraction is the control PFI deals offer, but Mr Macdonald is not careering headlong into the Government sector unlike many in the recent state-funded construction boom.

'The Government does pay, ' says Mr Macdonald. 'But ou r preference is to work for private clients. In the past on Government jobs we were not in charge of the supply chain, but that has changed.' Seeking to remain in control has also taken Dawn into housing with around 200 units a year built and sold. The plan is to raise this level to around 500 by the end of the decade.

Mr Macdonald is not a betting man but don't bet against him ? after 35 laps he shows no signs of coming unseated.