ANDY Sturgess, managing director at Galliford Try's construction arm, expects more utilities to start letting medium-sized jobs as individual deals outside framework agreements.
Galliford Try turned over £74 million in water work in the year to June 2004 and has twice this amount of work in hand.
Mr Sturgess said: 'The major capital programmes at the utilities in England and Wales are largely spent.
'What Yorkshire Water is saying is that it is reserving the right to go to the market for jobs over £2 million and I think that other utilities will follow a similar pattern.'
Galliford Try, which has a £621 million order book, is on Yorkshire Water's tender list to bid for this sort of work after missing out on its main framework deal.
GT's main water work is with Scottish Water and this and all the rail work in hand has been won on a noncompetitive basis.
Mr Sturgess expects these two sectors, plus schools, medical and social housing work, to help lift contracting margins to 2 per cent by 2006.
He added: 'Looking beyond 2006, there's no reason why we can't push on to 2.5 per cent or more.
'Rail might ramp up significantly as Network Rail's ability to bring work forward has strengthened.
'We've also got around £60 million of orders for social housing work and there's no reason we can't get that up to £100 million but we're not looking for turnover, it's a profits issue.'
GT's housing operation provided most of the profits after selling 761 homes, which was only 20 more than in the previous year but the average selling price leapt £24,000 to £224,000.