Interview: Mike Peasland, Edinburgh-born chief exec of Balfour Beatty

By ERIKKA ASKELAND
Published on 18/06/2012 00:00

THE Assembly Rooms, the 18th century A-listed “grand old lady” of Edinburgh’s George Street, will not open to the public until July – but the bulk of the work to refurbish it is now nearly complete.

Mike Peasland, the Edinburgh-born chief executive of Balfour Beatty Construction Services UK, which undertook the £8 million project, is once again a bit smug about delivering another landmark architectural rejuvenation on time and on budget.

Peasland said: “We recently completed the refurbishment of the National Museum in Chambers Street and the new Assembly Rooms will be completed in good time to resume its rightful place at the heart of Edinburgh’s International Festival.”

The main ballroom has been completely refurbished, with its chandeliers restored to their former splendour and gold-leaf re-applied to the cornice mouldings.

“If it was just a refurbishment, you could use a smaller contractor to do it. But there were major structural repairs. Walls have been knocked through. It is that mix of heavy structural work then high-quality finishes as well – very few have the skill to manage that,” he says.

Peasland will also be returning to his home town this week to talk to the Scottish Government about a subject close to his heart: investment and infrastructure in Scotland.

He said: “We are staging an event to share knowledge with people in the public sector because we believe we can benefit from exchanging views on how construction projects in that sector are managed and awarded in Scotland.

“A key to construction is the procurement process, and the event on Wednesday will look at how that can be improved and allow us to create legacies within construction projects.”

Last year, Peasland made friends with the Scottish Government after he told The Scotsman that Scotland was “stealing a march” on other UK regions as it maintained infrastructure spending through PFI-like programmes managed by the Scottish Futures Trust (SFT). He said he had changed his opinion of Scotland’s infrastructure commissioning body after previously being a critic – and despite Westminster so far having ignored Scottish Government pleas to free up £300m for 36 so-called “shovel ready” infrastructure projects, Peasland still thinks it holds true.

“Times are challenging; there are headwinds in the market, I would say.

“But it is still the case that Scotland is ahead of the rest of the UK in terms of the approach to investment and infrastructure and we have found the Scottish Government very keen to support Scottish companies doing Scottish projects.”

He pointed to projects such as the Borders rail link and the M74–M8 interchange project.

“The large infrastructure projects are getting under way in Scotland. In England and Wales, under the national infrastructure plan, they are still stuck, there is nothing coming through.

“Outside the bubble that is London, the regions are behind in terms of getting investment to come through for infrastructure projects. There are hospitals and schools that aren’t going ahead because there are no decisions yet on how to finance them.”

He says the funding freeze is partly driven by austerity measures, but he argues that private finance was also being hamstrung by government inconsistency. The Westminster government’s U-turn on green feed-in-tariff subsidy, for example, has made private companies more “wary” of putting up cash.

“Now the private sector is much more wary of government policy. It has to be much more consistent,” he says.

“There are also a lot of decisions to be made about electricity market reform, and things like the pricing for renewables, nuclear and oil and gas.

“All that needs to be sorted out. Energy and rail are going to be growth markets for us.”

But the company is still managing to make headway in Scotland, he said. The FTSE-250 group’s Scottish operation has so far held up well, with a total turnover for the first six months of 2012 standing at £248m, compared with £241m in the same period in 2011. “Full year we are 10 per cent forward on last year – there is challenge but the wide spread of what we do means there is growth.”

But he also expects growth over the next two years to be “difficult”, with a modest recovery only due in 2015.

Balfour Beatty is to build the new Portobello High School and has just secured its 22nd project for Edinburgh University. Other major projects include Buchanan Street in Glasgow and an £850,000 contract to refurbish Inverness airport.

The firm is also hopeful of winning work with the University of Edinburgh to develop student residences in a project that could be worth £70m.

Student housing is still a strong bet for construction firms, but it is a competitive market. Balfour Beatty will go head-to-head with a specialist student housing developer. But it is a market that is still strong because of demand for university places.

“There is something like one bed space per six students,” says Peasland. “And there is a need to upgrade the quality of the student residences now that there has been an increase in fees. Universities are doing a lot more marketing of their facilities – and not just academic facilities.”