Fitzpatrick versus Murphy: it sounds like it could be the headline bout in a boxing match at Dublin’s National Stadium. On this occasion, however, I’m referring to two of the UK’s largest civil engineering contractors…

Norfolk is literally being crossed at the moment by two major projects that are laying the cabling that brings the electricity generated by offshore windfarms to the sub-stations on land from where it is transmitted into the grid and on to businesses and homes.

The Hornsea 3 project runs north to south, from Weybourne on the north coast to the onshore substation just east of Swardeston south of Norwich.

The Norfolk Offshore Wind Zone (NOWZ) route runs from Happisburgh on the east coast across the county to Necton, near Swaffham, where it connects to the National Grid.

VolkerFitzpatrick, a subsidiary of VolkerWessels UK, is responsible for laying the cables for Hornsea 3, while the task of doing this for NOWZ has been given to J Murphy & Sons.

As I have cycled the highways and byways of Norfolk over the last six months, I have had the dubious pleasure of being able to study the work of both companies up close. On more than one occasion I have been forced to dismount and carry my bike around the barriers where my route has been officially closed.

Before I go on I should say my knowledge of civil engineering projects extends no further than a couple of MBA case studies I paid passing attention to over 25 years ago.

Nevertheless, based purely on my own observations I reached the conclusion that if I owned shares in one or other of the two companies, I would prefer to be invested in Murphy rather than Fitzpatrick…

To me the former’s sites look tidier and more organised. The subsoil is neatly piled up and labelled, road signage is clearer, gateways are better laid out and marked. There is a generally greater sense of order and, a confession, it’s harder for a cyclist to get around Murphy’s road closures!

With this in mind, I did some research into both companies on ChatGPT*. The figures below are for 2023…
• Turnover: VolkerWessels £1.43 billion compared to Murphy’s £1.42 billion, so pretty similar.
• Operating profit: VolkerWessels £36.1 million versus £71.7 million for Murphy
• Operating margin: 2.5% at Volker and 5.0% at Murphy
• Net cash (2022): VolkerWessels £148 million, compared to £276 million for Murphy.

Given the size of the projects both companies are involved in the operating margins look pretty thin to me but may well be industry standard. Notwithstanding this, based solely on these very limited numbers I was gratified that my hunch that Murphy was a “better business” appeared to be right.

It reminded me that for all the hours fund managers and analysts spend poring over their spreadsheets, in certain sectors there is no substitute for a good old-fashioned ‘site visit’, and preferably not one carefully orchestrated by the company’s Investor Relations team.

*A note of caution regarding ChatGPT: it told me the Hornsea 3 and NOWZ projects intersect “in the vicinity of Little Barningham”. They don’t: they actually cross over about ten miles further south just outside the market town of Reepham.