Re Contract

Balfour Beatty PLC
18 December 2006



18 December 2006


                 BALFOUR BEATTY APPOINTED PREFERRED BIDDER FOR
                 =============================================
             £157 MILLION KNOWSLEY BUILDING SCHOOLS FOR THE FUTURE
             =====================================================
                                  PPP PROJECT
                                  ===========


Balfour Beatty, the international engineering, construction and services group,
announces today that its specialist education PPP concession company, Transform
Schools, has been appointed preferred bidder by Knowsley Metropolitan Borough
Council on Merseyside for the £157 million PPP concession to construct seven new
learning centres under the Building Schools for the Future (BSF) programme.

The concession which is for 25 years is anticipated to reach financial close in
the spring of 2007. It will provide seven state-of-the-art learning centres
which will replace all of the Borough's existing secondary schools over a 3-year
period.

Transform Schools will work with Knowsley Council not only in the building and
management of the new premises, but also in the further development of a clear
educational vision through researching and evaluating progressive learning
environments and teaching models in the UK and internationally. The partnership
may also involve the development of a not-for-profit company to manage the
extended use of the facilities and an employment and training hub to maximise
local employment, training and development opportunities.

Commenting today, Balfour Beatty Chief Executive, Ian Tyler, said:

'We are delighted to have been chosen by Knowsley Council to be their partner in
this exciting project which will transform education provision in the area. We
bring the experience gained not only from our work on five major schools PFI
schemes but
also lessons learned from project-based learning schemes in the UK, US,
Australia and Asia.'

Councillor Ron Round, Leader of Knowsley Council said:

'This is a very exciting stage in the Building Schools for the Future programme.
We are a step closer to making our dreams to transform education in the borough
a reality.

No other local authority in the BSF programme has such ambitious plans as
Knowsley to replace all of its existing buildings. This shows our vision and
commitment to improving the opportunities for all our residents. We now look
forward to working with Transform and unveiling our exciting plans early in the
new year.'

Construction and building services work under the contract will be carried out
by Balfour Beatty Construction and Balfour Kilpatrick. The maintenance of the
schools will be undertaken by Haden Building Management, also a subsidiary of
Balfour Beatty.

Balfour Beatty will invest £19 million of equity in the project which will bring
its overall equity commitment to the education sector up to almost £50 million.

It is Balfour Beatty's sixth major schools PFI project and its first as a
concession company under the BSF scheme. Its projects at Stoke and Rotherham are
in their sixth and fourth year of operation, respectively. Projects in North
Lanarkshire and Bassetlaw began in the summer of 2005 and its Birmingham PP2
concession became operational in April of this year.

The company is also one of the two framework contractors who are providing
construction services to the £160 million BSF scheme for Manchester City
Council.

In his recent pre-budget statement, Chancellor Gordon Brown reconfirmed his
commitment to rebuilding or renewing every one of England's 3,500 state
secondary schools over a 15-year period at a total cost of over £45 billion.

                                      ENDS


Enquiries to:-

Tim Sharp
Tel: [phone]
www.balfourbeatty.com




Notes to Editors:

1)      Balfour Beatty's other schools PFI projects are:

        -   for Stoke City Council (13 new schools and numerous new
            extensions in a 25-year concession worth £153 million)

        -   for the Metropolitan Borough of Rotherham (10 new schools and five 
            refurbished schools plus energy management, repairs and maintenance,
            caretaking, cleaning and catering in a 30-year concession worth 
            £100 million in construction and £40 million in long-term services)

        -   for North Lanarkshire Council (24 new schools in a 30-year 
            concession worth £140 million in construction and up to £100 million
            in long term services - preferred bidder)

        -   for Nottinghamshire County Council (Bassetlaw Grouped Schools - five
            new secondary schools, a new special school and two new centres for 
            post-16 education in a 25-year concession worth £123 million in 
            construction and in excess of £100 million in long-term services - 
            preferred bidder)

        -   for Birmingham City Council (12 new and refurbished schools, 
            including two secondary schools, nine primary schools and one early 
            years centre £56 million of construction work, £40 million in 
            long-term services)

2)    Transform Schools won both Best Operational Education Project and the 
      overall top prize of Best Operational Partnership (All Sectors) at the 
      2004 Public Private Finance Awards for its 25-year Stoke Schools 
      concession. In May 2006 its Rotherham project won Best Operational 
      Educational Project under the same award scheme.

3)    Balfour Beatty is undertaking all design and construction work for schools
      in East Lothian in a contract worth some £40 million under the PPP 
      concession for that council.

4)    Balfour Beatty is providing all design and build services for Babcock and
      Brown in its schools PFI projects. Work secured under this arrangement to 
      date exceeds £80 million, including the construction of five new schools 
      in Calderdale, West Yorkshire.

5)    Balfour Beatty is a world-class engineering, construction and services 
      group, well-positioned in infrastructure markets which offer significant 
      growth potential. Its partnerships with public and private customers 
      generate secure, long-term income. Its financial position, with 
      significant net cash and with strong operating cash flows, offers 
      continuing flexibility to add additional capacity and expertise to the 
      business mix and to make appropriate investments in PPP/PFI and other 
      long-term growth opportunities.



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