Member Info for jst008

But that's the art of construction, managing the risk. Risk is not free, Customers want the contractor to take these risks on within a lump sum but often shirk at the value added.
On any project you should know at least 75% of the trades you will be using before you start, even already signed them up under the same terms. The risk is passed down the chain. They would have priced under the same T&C's. If you get this right at the very start you have a chance, it's where contractors give in too easily because the Customer can't afford it is where it all falls apart.

turnover for vanity profit for sanity.
one would hope that the orders coming through these days have been properly adjudicated internally in line with any new measure AD has imposed. Risk properly allocated.

plus an £87m surgical centre in Taunton.

Not sure what the question is. The Construction side of Kier is their main core business & the London region being probably the main region (although other regions would argue otherwise). This is where (where the London office is) WC French started many years ago. Residential is not cash generative as you say. Think about it, you don't pay for the house until you exchange/complete contracts. Up until then everything is paid out by the developer including infrastructure, roads etc. Construction is cash generative. In their hay day Kier Const got the cash in for Housing to build their houses & make the decent returns. Partly also because they did not have to borrow the capital outlay. But now Kier Const has no spare cash to offer KL.

Hi Steve, I can only understand you do not know how construction companies finances work. The issues Kier have left now / over the last 12+ months started life 3 or so years ago as tender opportunities. The projects where they are loosing money on may still even be on site. Even when projects finish the accounts both up & down stream can take months or years to agree, & won't impact on the bottom line until then. The big infrastructure projects you refer to are probably not even on site yet. They may well generate a positive cash position from the get go but no true margin will be taken or declared until much later.
1-2% margin on huge turnovers is what the industry is about. 3-4% on the debt is manageable otherwise they would not be here today. Plus the debt is far less than the turnover, so the higher % you are worried about is not a true comparison.

at 10.55am. Who from? I assume not a private individual.
Confidence growing

Hi Steve I do not agree with your comparison with BB. They are not half the size, more like double. Their turnover is £8.4bn. More than 75% of which is in the UK. BB compete with Kier mainly on a regional level after they bought Mansel back in 2003, other than this BB are a major civils company who I would say take on higher risk projects such as new roads/motorways & large infrastructure schemes. Kier on the other hand have generally always been know as not taking on high risk projects. You will never see Kier build a new stadium or huge central London development. Their construction division is made up of several regional divisions with a major contracts division that covers the whole nation. My experience is 5+ years old now but Kier were always risk adverse in selecting the contracts they undertook. Their Infrastructure & Services division has grown in size recently & probably come up against BB in their tenders but on the medium sized projects.

I don't see it either, no evidence just your speculation. Terra Firma has housing businesses not construction.
Who outside of construction would buy a construction business, just look at Kier's former owner, Hanson. He got out as he could not understand the risk & reward process.
Another contractor may have a punt, but surely they would have already done this when the price was on a down spiral not now heading back up. Also who?

This is old news in the industry. Not so much regarding the cladding material which is correctly under the spotlight since Grenfell but more to do with quality of workmanship with regard to fire breaks at correct intervals. Some clients are very proactive, some don't have a clue. I know of many projects where the main contractor is going back to check poor workmanship & the client is taking the opportunity to replace the cladding too, and paying for it.

Fake news, this was 2018 /19 & then only the Pension Administration Business that was picked up with the purchase of Mouchel. Kier had a lucrative defined benefit scheme which finally closed in 2015 to existing members. For the last 3 years it has been in surplus. Improving too year on year. Not a liability anymore, getting better as people naturally 'drop off'.
The rumour mill is probably getting confused with the Guy Hands story.

All government projects will use BIM, they are the ones who will be pushing it. Private speculative developers are the ones who don't want the added cost. Also the larger frameworks such as Scape insist on BIM level 2 as a minimum & Scape 5 due next year will probably require more. The smaller contractors (not the big guys Kier, Wates, WD, Morgan Sindall , BB etc) do not take H&S anywhere near as seriously as the big guys, they may talk the talk but if you ever visited one of their sites there would be a chasm in the requirements & activities on the ground.
H&S and BIM are no where near 20% of the build cost, where do you get this figure from? For my projects these are incorporated into the overall overhead.
Even if KL landbank was against borrowing it is still land in their control, theirs to develop & make a return on. Your house is still worth the market value even with a mortgage. Albeit you have to pay the loan off but it would not reduce the value of the asset. Depending where this land is would be of more importance. The nett cost of construction is not too different around the country, obviously labour is more in the south. But the average 3 bed semi in Cambridge say is £5-600k whereas in Wales or the North of England it will be much less, anything as low as £250k in places. The location of the landbank is in my opinion a more significant factor in valuing KL.

Not been there for a while, good to see. Also topping the rolling 12 month league as well.
https://www.constructionenquirer.com/contract-spy/top-contractors-league/

£100m way too cheap, the land bank alone is worth more.
Supply & demand, houses are currently in demand

I agree with Birdboy, why do you say its cheap. A major civils infrastructure project is completely different to a private development. No comparison.
The scheme announced today in Marylebone Square is over £4,200/m2. That is not cheap. Furthermore you know nothing of what they have been actually contracted to build. Shell & core services only, leaving others to fit out? Anything in between up to the full package. Headlines do not tell the full picture. Any work won currently by Kier should have had sufficient due diligence carried out, so I am hoping that they have got their numbers right. Furthermore it's not just about the price, the contract terms they sign up to as well can break a job.

also when read in conjunction with many other similar companies across all sectors...

There are lots just keeping their heads above water at present, it's a case of who has the strongest legs.

The construction side of Kier will make or lose on a project from the price they agree at from the start, not generally what happens throughout the project. it's the unknown unknowns they miss or known risks being worse than expected. Get the pricing right with the correct risk allowance then all should be rosy. You can't say they have not been making money for X months, it's just that some projects have probably swallowed up modest gains made elsewhere.
This is where certain frameworks are better, no cut throat tendering, usually 2 stage negotiations. You understand the risk, you get the price right. All too often you see Main Contractors start this way only for the Client "not having enough budget". Savings are offered & you can end up giving away too much for when the horror that is around the corner comes into view.

As it has been said already there will be no RNS feeds for contract wins unless of significant importance. The construction division the size of Kier win large volumes of work every month across the whole country, their average contract size is probably around £10-12m. Happy to be corrected on this. Frameworks do not mean low margins. The art of pricing & wining works is a dark art like surveying. The stated margin you go in at is often not the same when you finish you just hope it's not less. Construction is very risky with very complicated & intricate contracts they work under & no two projects will have the same contract.
As for the supply chain moving away from Kier, nothing could be farther from the truth. There are thousands of tier 2 specialists out there chasing every project. The Construction Act & the threat of adjudication ensures most play by the rules, no-one has anything to worry about from Kier apart from the big elephant in the corner - the Interserve way out. Do not under estimate the benefit of frameworks - they're good for Kier & for their Customers.

I refer to a previous question of mine - who/what actually determines the price of shares. I know it depends on what the market is prepared to pay & all that. But is there somewhere a computer screen that randomly changes the prices of all the stocks based on the information it receives form.........

There are a few comments from some that may know a lot about the markets etc but it is obvious they know sfa about the construction industry. Which major player has huge assets, their biggest asset is their people. Offices - leased, Plant - hired, Cars - leased, workforce - sublet. Kier has had for years a loyal workforce, admittedly this is being diluted as the old guard leave/retire, many of whom are still on a DB pension which only closed 5 year ago.
Kier do not loose money because of their model, they loose on certain contracts where they estimated it wrong, took on specific risk which bit them on the ar5e or poor management on the micro level ie on that particular site.
Construction is a cash generative business, they just need to keep hold of it.
If Kier goes under, which I hope they won't, it will be because of the City & not their performance as a business.

Hi Steve72, I do not completely follow your thinking, but obviously it is personal to you & is correct as it is your own opinion. Kier & the other big players are generally the only companies that are set up for these huge framework deals. Just to get an opportunity to tender for a place to be on the tender list to get on the framework initially takes a whole team preparing the "glossy" answers to the many questions, reports on company finances, what you do in the community, carbon usage, local employment stats - I could go on but you get the idea. The pre-qual.

Then once in a framework (if you are successful) , carrying out any project all these KPI's needs registering/uploading every month - another team of admin people. Local spend, waste produced, community involvement, young people engagement, H&S stats, gas/elec/diesel usage etc etc. Get the picture. The smaller companies will carry out the actual work under the management of the main contractor, but that is all they do.

The major players also have much greater H&S requirements & demands than any smaller company, they have to as any fine is based on turnover. So for a company like Kier there is a minimum contract size where the prelims they need to add just do not make them competitive. I would say this is about £5m. The optimum contract size is around £18-25m. If you walked onto any major contractors site they each would have their own minimum standards regarding the office & welfare set up. Walk onto a much smaller contractors site & it would be very different.