Samuel James Bland's questions to Balfour Beatty plc/ADR (BAFBF) leadership • Q2 2017
Question
Samuel James Bland from JPMorgan Chase & Co. asked if the shift away from fixed-price contracts was a market-wide movement or a company-specific decision, and requested details on the HS2 target cost contract terms and associated risk management.
Answer
Group Chief Executive Leo M. Quinn explained that the shift was driven more by Balfour Beatty's increased selectivity in bidding rather than a general market trend. He described the HS2 target cost structure as a better way to work, allowing for collaborative estimation and risk pricing with the client. He noted the 60-40 pain/gain share is a typical incentive structure for such contracts.