Preferred Bidder

Kier Group PLC
16 October 2002

                     KIER NAMED PREFERRED BIDDER FOR £640M

                OUTSOURCING CONTRACT FOR SHEFFIELD CITY COUNCIL

Kier Group plc has been named preferred bidder for the outsourcing of Sheffield
City Council's building maintenance and repairs service. The contract, which
will run for a period of ten years, is worth approximately £640m, with £61m
expected in the first year.

Kier will establish a new joint venture company in conjunction with the
Council's Construction and Building section and approximately 1,300 Council
employees will transfer to the new company under TUPE (Transfer of Undertakings
and Protection of Employment). The joint venture will take over the maintenance
and repairs of around 60,000 council houses and other council buildings such as
libraries, schools and social services establishments. The contract is planned
to begin in February 2003. In its new capacity, the company will be able to bid
for private sector work, not previously available to the Council.

Colin Busby, Kier Group Chairman, commented: "We are delighted with this news.
As Kier's largest outsourcing contract, it marks a very special milestone for
us. I am very proud of the major improvements to outsourcing that Kier has
delivered for the London Borough of Islington that won us the title of 'Contract
Services Team of the Year'. I am confident that we can do the same at Sheffield
and by remaining focused on continuous improvement, Kier is set to deliver
further benefits for Sheffield City Council, its tenants and other stakeholders.
As Kier's third contract under the Government's 'best value' programme it
supports the growth of our support services activities highlighted in our recent
preliminary results announcement."

                                    - ENDS -

Enquiries:

Colin Busby, Chairman

Deena Mattar, Finance Director

Kier Group plc                                        Tel: [phone]

Caroline Sturdy, Associate Director

Bell Pottinger Financial                              Tel: [phone]



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