The 53-year-old chief executive, who earned £807,000 in salary and bonuses last year, will be replaced by Haydn Mursell, currently group finance director.

Mursell (below) joined Kier four years ago from Balfour Beatty, where he was deputy finance director.

He played an instrumental role alongside Sheffield in orchestrating the £221m financial package which enabled Kier to successfully acquire May Gurney last July.

Sheffield said: “Since I joined Kier in 1983, the group has grown enormously, both in scale and the services it offers.

“I’m very proud of what we have accomplished, but feel it is now the right time to transition the leadership of the group.

“I know that Haydn will do an excellent job leading Kier in the next phase of its development and I wish him every success in his new role.”

Sheffield is one of the few remaining civil engineers running a major contractor. He joined Kier as a graduate engineer in 1983.

As a project manager through the 1990s, he ran major infrastructure projects in London, Saudi Arabia and Hong Kong before joining the board of the group’s construction division in 1998.

Sheffield is understood to be looking at other opportunities in industry rather than early retirement.

Phil White, chairman, said: “I would like to express our thanks to Paul for his long-serving commitment to Kier, most recently guiding the acquisition and integration of May Gurney.”

He added: “Haydn has done an excellent job as finance director since joining the group in 2010 and has demonstrated that he is the right person to take over from Paul. The Board is looking forward to working with Haydn.”