Balfour Beatty mapped out its new five year plan to city investors and analysts in a special briefing yesterday.

The plan will see Balfour tilt the £10bn turnover business towards greater  fee income work and big transport, power and utilities contracts.

Ian Tyler, Balfour chief executive, said: “In the next five years, we expect to be able to improve the operating margins of our divisions through better utilisation of resources, particularly in our professional services division, and the efficiency savings we have previously announced.

“We believe that we have scope to improve the operating margin of the group to 3.5-4% over the medium-term through a combination of achieving higher margins in the divisions and the continuing greater role of professional and support services in our business mix.”

He said Balfour was in the early stages of setting up an infrastructure fund management business.

Rob Gregor, formerly Head of European Infrastructure at AMP Capital Investors, will head the new fund management team.

The proposed £1bn fund, which Balfour will also invest in, will be focused on core economic infrastructure and will be chaired by Andy Friend, formerly CEO of Laing.

The contractor said it would sell existing assets in schools and hospitals as the emphasis in the UK switched towards transport, power and utilities.

Balfour expects to raise £300m from this and will use the cash proceeds to develop new projects and to deliver returns to shareholders.