微密圈

Credit: David Levene

鈥淵ou can either oversell yourself and under-achieve, or undersell yourself and over-achieve. We are inherently cautious, and I make no apologies for that.鈥� So says Ian Tyler, chief executive of the UK鈥檚 biggest contractor, Balfour Beatty, and the man with the biggest job in the industry.

He has made it to the top of his game at the relatively young age of 45, and since taking the helm two years ago he has cultivated a culture at Balfour Beatty of understated, quiet business. And that reflects the man himself, with his dry sense of humour, quiet confidence and intensely sharp mind. 鈥淵ou will not meet a more impressive person in the industry鈥� is how one chief executive of a rival company describes Tyler.

During a rare interview, 微密圈 gets an insight into a man who is running a cash-rich company with further acquisitions plans. He is happy with the low-key nature of the business but concedes that because of high-profile work such as London Underground upgrades, as part of consortium Metronet, and potential wins in the nuclear sector and the Olympics, that could be about to change.

The financial performance of the business under Tyler certainly speaks for itself. Last year pre-tax profit rose 25% to 拢134m on a 拢4.9bn turnover and the company has 拢300m of committed PFI equity investments, which Tyler intends to expand internationally. Unlike some contractors, especially those that have acquired, Balfour Beatty is not highly geared. In fact, it has 拢300m cash in the bank.

And Tyler has been spending it. Although it lost out to Carillion in the race for Mowlem in February, the firm has been chipping away at smaller, regional acquisitions. The most recent is Birse, the contractor and engineering company for which it has made a 拢32m offer. Tyler insists it is 鈥渁 very good business鈥�, despite its building division making losses. 鈥淏irse has gone through agonies to sort out its problem areas, which arose from diversifying into building. It has closed those businesses now.鈥�

What Balfour Beatty will gain from Birse is a civil engineering presence in Yorkshire and the Midlands. What it will not provide is the boost across the board that Mowlem would have done. Tyler would have liked to get his hands on Allenby and Connaught, the 拢12bn Ministry of Defence contract, as that would have marked its first entry into defence PFI.

Credit: David Levene

As it turned out, Balfour Beatty never made an offer for Mowlem. 鈥淏efore we completed due diligence it was clear that we were not going to be prepared to pay the price we would have had to pay,鈥� says Tyler. Balfour Beatty has had joint ventures with Carillion in the past and analysts say that the two have a friendly relationship. Still, according to sources, laughter erupted at Balfour鈥檚 office when Carillion announced that it was forced to write down 拢90m on problem Mowlem contracts that it had not foreseen.

Chatting to 微密圈 in his office in Victoria, London, Tyler is animated but relaxed. He is clearly a man in control. If he does let off steam it鈥檚 in the gym: 鈥淚 try very hard to keep fit. I go to the gym for a couple of hours three times a week.鈥� His general management style is less strict: 鈥淢y own passionate belief is that we achieve our objectives through proper and courageous decentralisation. We have to be prepared to allow people to take decisions. I hold our management team directly accountable for all aspects of our business.鈥�

Tyler has been described as a man who likes the cut and thrust of an argument.

Tyler smiles on hearing that description of himself. 鈥淭here is no master鈥搒ervant relationship here,鈥� he says. 鈥淒ecisions are made after debate and analysis. We tend not to act purely on instinct. Generally we have consensus decisions. That鈥檚 not to say there isn鈥檛 an element of dictatorial leadership sometimes.鈥�

Tyler is not one to be seen at the various industry events, networking his way through the summer party season. As one senior industry source puts it: 鈥淗e knows the people he needs to know.鈥�

As befits its size and influence, Balfour is involved in a number of key projects. It is on the shortlist of four for the delivery partner for the 2012 Olympics in London. Tyler, like everyone else on the shortlist, is chomping at the bit to land the role. 鈥淚t is a big role, and a very high-profile role. We have put together a bloody good team. It would be a transforming event for Balfour Beatty if we won it,鈥� he enthuses.

My own passionate belief is that we achieve our objectives through proper decentralisation

G3, the consortium it is leading with Amec, cannot be best pleased with recent comments from Peter Hendy, commissioner at Transport for London, who made it clear that he would not be happy if Balfour Beatty won the role because of its track record with Metronet, the London Underground PPP. Tyler feels that it would be 鈥渋nappropriate to comment鈥� on these remarks.

It has not been plain sailing for the company over the past few years. Although it has just about put the Hatfield rail disaster behind it (its fine for health and safety breaches was reduced from 拢10m to 拢7.5m earlier this month), Metronet鈥檚 station delivery programme is still behind schedule, as is its maintenance timetable. Tyler acknowledges this but does not rush to the defensive: 鈥淚t is an operating business founded on the principal of uncertainty, but overall I absolutely believe that we will be in the range of our financial expectations 鈥� although we won鈥檛 get anything out of it for at least 10 years.鈥�

Nor does he dismiss the problems it has experienced within its civil engineering and rail business in the USA. 鈥淲e have had some real problems out there and they are not behind us. We have got through phase one of the recovery to make it stable,鈥� he says.

Tyler is not a whinger. Some in the City, including Bridgewell Securities analyst Howard Seymour, do not believe that Balfour Beatty receives the recognition it deserves: 鈥淭he perennial issue for Balfour Beatty is that it does not get the rating it deserves, but it does not sing from the rooftop unlike others. The company鈥檚 ability to grow is second to none,鈥� he says.

Tyler might be agitated about this but he is not losing sleep: 鈥淚 don鈥檛 have an absolute view of the value of the business. However, we have looked at businesses with a much higher rating and failed to understand why that is 鈥� but I don鈥檛 sit and worry about it.鈥�

As the conversation turns to the topic of his imminent holiday on the Scilly Isles, a place he first fell in love with as a child, Tyler is equally at ease as he is talking about the industry. For all that he spearheads a low-key, understated culture at Balfour Beatty, in person he has plenty to say for himself.

We have had some real problems [in the USA] and they are not behind us. We have got through phase one of the recovery to make it stable