UK Construction and Law
Costain reports a record forward work position of £7.0bn carrying no single-stage lump sum contracts
By Staff Writer | 13 August 2026
Interim figures published on 13 August show revenue up 3.4 per cent to £543.1m, and a combined order book and preferred bidder book which the contractor says now contains no single-stage lump sum work at all.
Costain Group plc published its interim results for the six months ended 30 June 2026 on 13 August. Revenue rose 3.4 per cent to £543.1m, against £525.4m in the same period of 2025. Adjusted operating profit rose 3.0 per cent to £17.3m, from £16.8m, and the adjusted operating margin was held at 3.2 per cent. Reported profit before tax was £19.2m, against £18.2m, with no adjusting items in the period.
The interim dividend was doubled to 2.0p from 1.0p, on a new target dividend cover of 2.5 times adjusted earnings, reduced from 3 times. The net cash balance was £164.4m, against £144.9m at the half year in 2025 and £189.3m at the 2025 year end.
The figure that matters to anyone advising on risk allocation is not the margin. It is the statement that the forward work position at the end of the half year included no single-stage lump sum contracts.
What the book is now made of
Forward work stood at £7.0bn, unchanged from the 2025 year end and up from £5.6bn a year earlier. It divides into an order book of £3.5bn and a preferred bidder book of £3.5bn. The company puts the visibility this gives at 91 per cent of consensus forecast revenue for both 2026 and 2027.
The composition has moved a long way in three years. Private and regulated customers now account for 48 per cent of forward work, against 30 per cent at the end of 2023. Devolved government customers account for 23 per cent, up from 6 per cent. Central government, which supplied 64 per cent at the end of 2023, now supplies 29 per cent.
On contract model, the announcement is explicit. The forward work position was described as predominantly long-term programmes of work with target cost contracts, where the scope of work, design and budget are developed and agreed with the client before the work is priced.
Costain is now at a key inflection point where the strength of our growing, resilient end markets, strategic positioning with our customers and high-quality forward work position is set to deliver growth in H2 26 and a step change in our financial performance in FY 27 and beyond.
Alex Vaughan, Chief Executive Officer, Costain Group plc
Why the contract model is the story
A single-stage lump sum bid prices a design the contractor did not develop, on information the contractor did not gather, against a programme the contractor did not set. Every gap between what was assumed and what is found becomes a variation, a delay event or an argument, and the contractor carries the consequence until it can prove otherwise.
A two-stage target cost arrangement moves that work forward in time. Scope, design and budget are settled with the client before the number is fixed, and the pain and gain mechanism shares the outcome rather than placing it wholly on one side. The disputes that follow tend to be about the operation of the mechanism, the treatment of disallowed cost and the adjustment of the target, rather than about whether an obligation existed at all.
That shift changes the work of a claims practitioner rather than reducing it. Records of open-book cost, the definition of disallowed cost and the evidence supporting each target adjustment become the battleground, and they are built during the job, not after it.
Where the revenue is going
Natural Resources revenue grew 13.3 per cent, with increases in water, energy, and defence and nuclear energy. The company attributes much of that to the water industry moving from the design phase into the construction phase of the AMP8 regulatory cycle, which carries a planned doubling of investment against AMP7.
Transportation revenue fell 3.2 per cent. Work at Heathrow grew, rail revenue was stable with the HS2 Euston tunnels progressing, and road revenue fell because the prior period included the completion of several historic regional delivery partnership framework projects. Road revenue is expected to return to growth as the M60 and M5 schemes move from design into construction.
Nobody wins an argument by pointing at a healthy order book. They win it with the records that show what the target was, what changed it, and who agreed.