Laing O’Rourke’s Annual Review 2013 highlights the group’s search for “high-quality profitable work rather than volume”, its positive cash balance and its growing faith in the Design for Manufacture and Assembly (DfMA) model of project delivery.
The group’s turnover in 2013/14 was fractionally higher compared to the previous year, at £4.41bn versus £4.39bn. Profits were also consistent, at £41.9m compared to £41.1m in 2012/13.
But the order book for 2014, at £7.4bn, shows a decline from the £8.2bn booked in both 2013 and 2012. According to the privately-held business, this reflects “the Group’s focus on high-quality, profitable work rather than volume, in targeted key sectors such as oil and gas exploration and processing and mining in Australia, and infrastructure in the UK.”
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While some of its competitors are struggling with weaker cash positions in the age of 30-day payment terms and Project Bank Accounts, Laing O’Rourke can lay claim to a large cash pile – an indicator of its ability to invest in new projects.
Although slightly down on last year – with net funds at £408.6m, compared to £439.4m in 2012/13 – it attributes this to currency issues with the weaker Australian dollar, and says it has benefited from “a continued focus on strong cash management and a prudent investment strategy”.
Laing O’Rourke has demonstrated its advanced construction techniques at (clockwise from top left) at the Leadenhall building, Crossrail’s Custom House, Hong Kong’s Mass Transit Railway and Manchester Central Library
The review document says: “The Group’s strong cash performance has been achieved while maintaining alignment to the UK Government’s Prompt Payment Code and our creditor days outstanding reduced in the year. In April 2014 the Group committed to the Construction Supply Chain Payment Charter.”
According to a statement from chairman Ray O’Rourke: “Our business model is resilient, and is underpinned by a management and performance framework that ensures we remain selective in securing those projects which embrace our unique business offering (UBO) of engineering excellence, Design for Manufacture and Assembly (DfMA) and direct delivery through digital technologies.”
Meanwhile, the statement from group chief executive Anna Steward says that the company’s policy of “transferring as many activities away from construction sites into controlled factory environments, will ensure we are less impacted by the skills shortage in traditional trades and will not be driven to engage a lower skilled and inherently less safe workforce”.
Examples cited include the Leadenhall Building, were Laing O’Rourke installed a proprietary structural flooring solution, with floors constructed from solid precast concrete components manufactured at the company’s Explore Industrial Park. It says that the process is typically twice as fast as working with wet concrete and the floorplates can be assembled within a matter of hours.
The latest project to use proprietary DfMA systems was announced this week: a £100m contract for developer Voreda and Imperial College London’s Imperial West Research and Translation Hub project in White City.
The report also mentions Laing O’Rourke’s Accident Frequency Rate, or accidents per 100,000 hours worked. In 2013/14 Laing O’Rourke reduced its AFR to 0.18, compared to 0.21 in 2012/13. Meanwhile, the Olympic Park achieved an industry-beating record AFR of 0.11 at peak construction; according to construction union UCATT, Crossrail’s AFR in 2013 was 0.48.
In her statement, Anna Stewart added: “We continue to be restless in our pursuit of excellence. No one party has all the answers and we thrive best when given the opportunity to collaborate in wider teams and share ideas and develop solutions together.”
