Iain Napier

"People say I was a brewer before, but I had no idea how to brew beer," says Taylor Woodrow chief executive Iain Napier, defending the right of senior management to know nothing about the industrial process they are controlling. Well, perhaps "controlling" is the wrong word. "Completely rethinking" might be more apt. The toweringly tall Scot has been in the Taywood hot seat since February, having formerly been chief executive of Bass Brewers from 1996 to 2000. Since then, he has merged the company's divisions, laid off nearly 200 staff, moved its base 110 miles and set a target of doubling profitability within four years.

Some analysts have sneered at Napier's appointment, saying that the specialist nature of construction makes it unsuitable for outsiders. This view has appeared to gain some support from the spectacular resignation three months ago of Robin Southwell, former chief executive of Atkins, after the company's share price fell 93%. Southwell was a former BAE manager with a background in marketing.

Napier thinks this is ridiculous, as well as outdated. "Construction is perhaps the last bastion that thinks that way," he says. "The proof of the pudding is in the eating and the success of the business will be a testament to that." He adds that all big public companies have the same basic distribution of skills: the people at the top handle business strategy and resource allocation and leave the experts in middle management and below to do the work on the ground.

Besides Napier, the Taywood triumvirate includes former British Gas chief executive Robert Hawley as chairman and Peter Johnson, a former finance director at Norwich Union Life, as group finance director. Pre-tax profit for the six months to June was up 4% compared with the same six months in 2001, and the acquisition of Bryant Homes last year looks like being a notable success.

The key to Taywood's current strategy is focus. It has effectively merged its four core businesses – Taylor Woodrow Property, Taylor Woodrow Capital Developments, Taylor Woodrow Construction and Bryant Homes. Each used to have its own board, finance departments, human resources sections and administration. Napier saw this as "wasteful" and "duplicative" and announced sweeping changes in the autumn: "Taylor Woodrow had a reputation for being a mini-conglomerate and for being unloved by our investors because, frankly, they didn't understand what we were trying to do."

This strategy has borne two tangible results – neither overwhelmingly popular. By Christmas, 180 employees will have been made redundant and the head office is moving from Staines, outside London to Solihull in Birmingham. The relocation is expected to result in a further 30 to 40 people leaving the company – the former finance director Adrian Auer has already resigned rather than move his family.

Napier puts a positive spin on the redundancies: "We've been crushing together the four finance departments and the four human resources sections. Most of the 180 are middle to senior management. In terms of the people on the sites, we've increased the number by 15%. And in the core process of acquiring land and planning there has been a 25% increase in staff."

Solihull does have its advantages. The office is 10 minutes from Birmingham International Airport, which allows Napier to be at the company's North American operations within eight hours. Another advantage is that staff outside London are less likely to take jobs with competitors. Ultimately, though, the move to Solihull was driven by cheaper accommodation costs.

In terms of the actual work that Taywood undertakes, Napier scowls at the high-risk construction that it undertook overseas just a few years ago. The company now concentrates on the well understood UK and US markets. Within Britain, it is focusing on four main areas: PFI healthcare, facilities management, contracts for blue-chip clients such as Tesco and Shell and brownfield development.

Companies worth less than £400m will have to make tough decisions. It could be that they will be lunch for someone else

This mean and lean approach has meant that the company is leaving what has been one of its most important sectors: PFI roads and transport infrastructure. "We have been selling some of our equity stakes in PFI transport and roads. Our strategic view is that although the government says it is going to spend heavily on transport infrastructure, the one thing they'll never stop spending on, Labour or Conservative, is healthcare."

And so Taywood is planning to bid for up to four large PFI hospital projects over the next three to four years, a move that is not completely consistent with the low-cost, low-risk philosophy. The failure to win one or more of these jobs could lose the company millions of pounds in bid costs – the main reason for Amey's predicament.

Napier's response to this is that high bid costs are not necessarily such a bad thing.

"The good news is that the level of expertise and financial clout you need to bid for these projects is going to limit the number of people who stay in the game. My candid view is that I'd rather government sped up the [bidding] process so we didn't have to incur so many costs and take so bloody long to get an answer, rather than worry about bidding costs specifically."

This is easy for Napier to say: only 15% of the firm's construction profit comes from the PFI. The company does not live or die by contracts it wins and loses in this sector – unlike the Ameys of this world.

The Darwinian notion of the survival of the fittest is a theme close to Napier's heart. Or perhaps that should be survival of the biggest: only the largest companies are ultimately viable, he believes. The fact has been partly masked by continuing house price inflation, recently put at 30% by a Halifax report. This, he says, has been the scourge of good volume housebuilders.

"High house price inflation is bad – the inefficient survive. Over the past five years you'd have to be the dumbest possible businessman not to make money building houses."

As the market cools the big housebuilders will grow bigger, and the complexities of large-scale, brownfield mixed-use development will take the minnows out of the game. Napier argues: "Housebuilding is a sector with too many participants. Over the next three to four years, companies with a market capitalisation of anything below £400m will have to make tough decisions on where they are going. It could be that they will be lunch for someone else."