BAM Launches Cost-reduction Programme after £59.6m Project Losses
BAM is launching a new annual £80m cost-cutting drive across its business following a series of unexpected losses on projects totalling £59.6 million.
The savings are expected to be delivered by the end of 2015 and will derive in part from a streamlining of the structure of the operating companies, with a focus on market segments and value creation.
BAM said this measure would enhance the ability of its businesses to capture synergies and efficiencies, and capitalise on their strengths.
The substantial losses stem from two projects: firstly the deterioration of a large civil engineering project in Germany, one of a handful of loss-making projects reported last year. The problems are due to adverse weather conditions; BAM has implemented technical solutions to keep the project on schedule but they are proving more costly than expected.
The second problem project is a mid-sized UK civil engineering project which was bid for in 2012, due to a combination of adverse ground conditions and bad weather.
BAM said it would maintain its current structure based on two operational sectors – Construction and M&E services and Civil Engineering.
Nico de Vries, Chairman of the Executive Board said: “I am extremely disappointed to have to announce these negative developments. Our underlying strategy is the right one, but our delivery has not been good enough. It is fully clear to the Executive Board that BAM must act urgently and decisively to get all parts of the Group to contribute positively to our results. That is why we are taking the actions being announced today.”