Mace is bracing itself for a post-Olympic construction slump by curtailing its growth forecast for 2013, its chief executive has told Construction News.
The construction and consultancy firm reported strong annual results to 31 December 2010 last week, with a 17 per cent hike in revenue to £851 million in 2010 and pre-tax profit up 9 per cent to £21m.
The company, which has the Shard and Olympic deals to its name, said it was “on track” to become a £1 billion turnover firm by the end of 2012.
Having secured its place on the CLM consortium for the 2012 Games, Mace then secured the project management role on the post-Games transformation works.
Chief executive and chairman Stephen Pycroft told CN that the year he will stand down as chief executive - 2013 - will also bring harder times.
“You don’t take £7.5bn-worth [of Olympic work] out of the construction industry and it not have an effect.
“We have factored that into the strategy, which is why we’ve curtailed our growth forecast.
“Generally up to last year we had around 20 per cent year on year and we’ve now reduced that on the basis of acknowledging the climate and the fact that the Olympics, the Shard and London Bridge Place will all be coming to an end.”
Mr Pycroft said Mace is aiming to maintain its market share in the London commercial sector - which made up more than 60 per cent of the 2010 revenue - while diversifying into other sectors, such as infrastructure, including energy-from-waste plants, rail and energy.
He said his company would look to put together the right people to sell Mace into those growth industries, as well as using the newly formed global services group to boost its international scope, which increased from 49 countries to 65 in 2010.
Consultancy work is expected to grow at three or four times the rate of construction in the years ahead.
With constraints on bank lending continuing in the UK, commercial activity can expect to see more joint ventures and foreign investment - such as British Land and Oxford Properties’ Cheesegrater, or Land Securities’ Walkie Talkie, backed by sovereign wealth from China and Qatar.
Mr Pycroft said: “I think we are seeing more and more international funding because the pound’s weak and because most properties are discounted at the moment.
“I think many of them see it as a great opportunity to buy blue chip real estate in central London at knock-down prices.”
When it comes to winning work, the chief executive said price was paramount in the current climate, whereas six years ago it was “more about the people, the reputation and track record”.
Mace has invested £1.5m - more than ever before - on bidding in the past year, including 3D modelling, building information modelling and dedicated teams on the bidding process.
Mr Pycroft added: “I think aligning yourself with a single source [subcontractor], whether it be cladding, concrete, steel, is all part of trying to get a bid team together that have got the winning formula.”
He said this can minimise risk and give clients a guarantee in programme, cost and quality”.
At the project level, the firm arranges collaborative ‘head start’ workshops, where subcontractors are invited to discuss and plan key elements of a project.