Balfour Beatty looks for £50 million savings with shared service centre

8 March 2012

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8 March 2012 | Adam Leach

Construction company Balfour Beatty is looking to build on savings already being delivered by its shared services centre by targeting a further £50 million a year from 2015, its annual results have revealed.

Despite the challenging environment in the construction sector during 2011, the company reported a strong performance as profits increased by 22 per cent to £246 million. Key to the increased profitability was the delivery of £15 million savings resulting from its recently established shared service centre (SSC).

The SSC, which manages an annual spend of £300 million across eight divisions, is on target to cut spending by a total of £30 million by 2013, and the group is now looking to generate a further £50 million in annualised savings by 2015.

Chief executive Ian Tyler said: “Our ongoing programmes to achieve cost efficiency and to recycle capital in our investments business were successful in 2011, and we plan to accelerate them. We have confidence that these programmes will underpin performance. This should ensure that we make progress in 2012.”

The development of the SSC was a central part of the Balfour Beatty’s Group Aggregated Common Expenditure (GrACE) programme, which was launched to deliver savings through centralising procurement. Through the programme the group implemented a category management strategy across its divisions and significantly trimmed down its supplier bases. Prior to the programme it had 200 vendors for office supplies, whereas afterwards it had just one.

The programme saw the company win the Most improved purchasing operation – step change award at last year’s CIPS Supply Management Awards.

 

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