Contractor fails to win any projects in 18 months, raising concerns about UK firms鈥� prospects

Balfour Beatty has failed to win a single PPP project in Germany since it opened an office there 18 months ago, raising fears among domestic firms that Europe may not be as eager as they had hoped to take advantage of their expertise.

Balfour is one of a host of UK companies that are aiming to exploit their experience of PPP projects to break into less developed European markets. The move has been lent impetus by uncertainty in the UK鈥檚 PFI market.

However, Balfour鈥檚 dedicated PPP operation, which is based in Munich, is understood to be bidding for only one scheme at the moment 鈥� a hospital in Bremen worth about 拢100m, which Balfour is aiming to invest in.

A Balfour spokesperson played down the severity of the situation. He said: 鈥淲e have not won anything yet but it takes years to get to the preferred bidder stage.鈥� A German industry source said: 鈥淭hey are desperate to win PPP work in Germany so this isn鈥檛 good.鈥�

Balfour鈥檚 Munich office, run by Heike Albrecht, employs three staff. Albrecht, a German national, is understood to have a background in banking.

Wolfgang Schlicht, project finance leader for consultant EC Harris in Germany, said UK firms seeking to break into Germany needed to buy local companies. He said: 鈥淭o win work you must know the German market well. Foreign companies that have done well, like Vinci, got in early and bought a local player.鈥�

Balfour鈥檚 rail operation in Munich followed this route, with the acquisition of local firm Adtranz in 2000. The division now has a turnover of 拢300m. It specialises in high-speed electrification and power supply projects, and is working on the Gotthard Tunnel under the Alps in Switzerland.

Postscript

The Scottish executive has unveiled proposals for a replacement for PFI. The Scottish Futures Trust would be run on non-profit principles and would obtain funding through bonds at cheaper rates than those of PFI procurements.

For more on the PFI search