Balfour Beatty’s new top-flight CFO to get $600k a year

Balfour Beatty, the UK’s largest construction firm, has appointed a chief financial officer from the tourism sector to handle what many see as one of the toughest jobs in British construction. Philip Harrison joins the contractor from travel agency Hogg Robinson, and will be a key member of the management team being assembled by Leo Quinn, the chief executive hired last year to rethink and re-energise the company.

Harrison, who has previously held group finance director positions at VT Group and Hewlett-Packard, will take over from Duncan Magrath once a start date is determined. He will receive a basic salary of US$603,480.

The next key position to be filled will be that of chairman. Balfour said that the recruitment process for this was progressing well and an announcement would be made "in due course".

Harrison: A track record in embedding strong financial controls– Balfour Beatty

Quinn was evidently attracted by Robinson’s record of keeping a grip on complex finances. He said: "We are delighted to have found and attracted a candidate of Philip’s experience and calibre and he will be joining a leadership team committed to restoring Balfour Beatty to strength.

"His strong understanding of businesses that bid and deliver major contracts globally and his track record in embedding strong financial controls across complex companies are essential in our drive to improve cash generation and reduce overheads."

The company, which had been one of the most successful of Britain’s international construction firms over the past 10 years, began encountering difficulties with problem contracts in its domestic market and this led to the first of five profit warnings in 2012. 

Since then, it has struggled to stabilise its position and fix on a permanent management team. This in turn led to a steadily falling share price, which made it a target for other firms. Carillion, the second largest contractor in the UK, launched what turned into a semi-hostile $3bn takeover bid in September last year. This was followed in December by a $1.5bn offer by the John Laing infrastructure fund for Balfour’s equity holdings in public-private partnership projects.

The choice of Quinn, a turnaround specialist who was working in the aerospace industry, and the decision to rebuff Carillion and John Laing, signals a determination to relaunch Balfour Beatty. 

This project has got off to a flying start this year as the group was named the sole contractor for a new national infrastructure framework for public works. According to Scape Group, the body that is organising the framework, this could lead to $2.3bn of work over the next four years.

The framework is intended to streamline procurement for a wide range of projects commissioned by councils and other public sector bodies, including road, rail and flood defence projects.

Mark Robinson, the chief executive of Scape, said: "This is a ready-made solution for all public sector bodies to deliver civil and infrastructure projects quickly. The normal tendering process can take six to nine months but because we have everything in place, we could get a phone call and have a team assembled in days, ready to begin rolling out a programme."

Quinn said of this success: "Balfour Beatty has significant depth of expertise across the UK in delivering civil engineering projects successfully and through this appointment we will be able to improve delivery for our customers and expand our portfolio of local infrastructure schemes."

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