Major Midlands projects impacted by Carillion’s collapse
The sudden liquidation of Carillion has thrown into doubt the future of many construction contracts and facilities management agreements both in the West Midlands and beyond.
On behalf of the Government, Carillion was managing projects including part of the construction of the HS2 network, around 50,000 homes for the Ministry of Defence, nearly 900 schools nationwide, a £200m commitment to manage some prisons, plus numerous road and rail maintenance projects.
The government has pledged to provide financial support to ensure Carillion workers are still paid and has promised that the public sector contracts will be maintained.
Private sector firms may also step in to try and fill the void left by Carillion’s sudden disappearance from the marketplace.
In the West Midlands, Carillion was responsible for delivering two of the region’s most high profile schemes – the redevelopment of Birmingham Paradise and the construction of the £430m Midland Metropolitan Hospital, which straddles Birmingham and Sandwell.
Rob Groves, regional director of Argent which is the development manager for the Paradise development, said he was confident that One Chamberlain Square – ironically the new home in the city for PwC, the firm handling the Carillion liquidation – would not be adversely affected by the company’s collapse.
He said Argent’s strong relationships with the supply chain and other contractors would prove resilient.
He said site works were now 80% complete and BAM Construction would be on site in February to start construction of the development’s next building, Two Chamberlain Square.
He added that Argent’s relationship with Carillion extended back more than 25 years, before the firm’s demerger from Tarmac, and he wished all the workers affected by the collapse the best of luck.
So far as the new super-hospital is concerned, Toby Lewis, chief executive of the Sandwell and West Birmingham Hospitals NHS Trust, moved to reassure fears for a project that was already over-running because of engineering delays.
In a statement, he said: “We regret this morning’s announcement concerning Carillion, who are the constructor for our long awaited new hospital, which is almost complete.
“We are working closely with HM Treasury and The Hospital Company as alternative arrangements are put in place to ensure that the construction of the Midland Metropolitan Hospital is completed.
“People working for Carillion are part of our local community and we will want to do anything that we can do to support their needs and futures at this difficult time.”
Elsewhere, the knock-on effects from Carillion’s collapse were being felt across the construction sector.
Balfour Beatty, the international infrastructure group that was once courted by Carillion, said the firm’s collapse could end up costing around £45m.
Balfour Beatty was a joint venture partner with Carillion on three projects: the Aberdeen Western Peripheral Route, the A14 in Cambridgeshire and the M60 Junction 8 to M62 Junction 20 scheme.
Balfour Beatty said it would continue to work with its customers and would meet its contractual commitments.
“The cash impact to Balfour Beatty is likely to be an outflow in the range of £35m to £45m in 2018,” it said in a statement.
“The profit impact of Carillion’s compulsory liquidation would be recorded as an exceptional non-underlying charge in the income statement.”
Galliford Try was also working with the company on the Aberdeen project. It said it was facing a hit of somewhere between £60m to £80m as a result of the collapse.
Kier Group, which was a joint venture partner with Carillion on HS2, said it was implementing contingency plans both for the high speed rail project and the Highways England smart motorways programme.