One hundred days into the job, Mace’s chief executive aims for £400m turnover by 2010 and targets USA
Steve Pycroft has been at the helm of construction consultant Mace for 100 days. He has inherited a company in a strong financial position: results published this week reveal that in 2004, the last year of former chief executive Bob White’s tenure, pre-tax profit rose 28% to £5.2m and turnover rose 36% to £183m.
This is the latest step in a fairly lengthy success story. Over the past five years, pre-tax profit has increased more than 400%, and about 73% of Mace’s workload is repeat business.
All of which puts a little bit of pressure on Pycroft. White is a well-known face in the industry, whereas Pycroft is a more behind-the-scenes character. But he has spent three years in the anteroom to greatness as chief operating officer.
The company is working on some of the UK’s biggest projects, including Heathrow’s Terminal 5, London’s 2012 Olympic bid, and Royal Bank of Scotland’s headquarters at Gogar in Edinburgh. And it has just thrown its hat into the ring to programme manage the Olympic construction programme if London is named as host city in July.
Pycroft’s challenge is to stamp his mark on the business. But when he talks about the handover from White he is keen to emphasise continuity. “It’s been a seamless transition, although I’ve had to accept that I’ve now got less of a day-to-day role in construction.”
His task so far has been to engage in more strategic thinking. This has resulted in a plan to grow Mace’s existing businesses, to expand geographically and to groom the next generation of managers.
On the face of it, the structure of the company looks complex, because it has diversified into so many different sectors. The company’s main activities are project management, construction management, quantity surveying, construction and fit-out, and facilities management.
Diversification has, according to Pycroft, saved Mace from falling victim to a market in which aggregate demand is holding up while particular sectors are prone to disastrous contraction.
Staff numbers increased 40% in 2004, and the firm now employs 1600. It is aiming to hit the £200m turnover mark in 2005, with 70% of this target already secured, and also achieve a £6m pre-tax profit. By 2010, it is looking for a £400m turnover with 85% repeat business.
Pycroft makes clear the firm now has the skills and market positions it needs, and that the plan is therefore to cast Mace’s net further.
It’s not about looking for diversification, but markets outside the UK
“It is not about looking for further diversification, it’s about looking to markets outside the UK.
“Every year we look at a different country and the potential for Mace there. Last year we looked at China, secured a £1bn project and opened an office on the back of it.”
Mace has joined with a Hong Kong contractor called Hsin Chong in a joint venture to build Macao’s first Las Vegas-licensed casino.
This year Mace is turning its attention to the USA for the first time. “It is our next research target,” he says. “After the holiday season we will send a small group of people to consider where best to locate Mace.”
Pycroft also has India in his sights, and is aiming to strengthen Mace’s position in the Chinese market.
Back in the UK, there are some big challenges ahead. The fit-out sector has been subdued in the past three months, although Pycroft says it is now picking up. But he adds that the biggest challenge is attracting quality people into the industry.
As for PFI work, despite being involved in the government’s city academies programme, and having a stake in education consultant Place Group, Pycroft is generally happy to steer clear. “It has such a high entry price, and it’s a lottery,” he says.
To safeguard the future, succession planning is under way. “We have a second tier of directors in place, and below them we have the Futures Group, which is about 25 junior staff with the highest potential. “
The Mace board owns 100% of the firm, and at the end of next year, White will make his financial exit, remaining non-executive chairman.
Mace at a glance
- 2004 pre-tax profit £5.2m (up 28% compared with 2003)
- 2004 turnover £183m (up 36%)
- 1600 staff
- UK offices: London, Birmingham, Manchester, Liverpool and Edinburgh
- Overseas presence: Europe, the Middle East, the Far East and Africa
- Main activities: project management, construction management, cost management, contracting, facilities management
- Key projects: Heathrow Terminal 5, London's 2012 Olympic bid, Jumeirah Beach residential development, Dubai