Any contractor that will get appointed to the stalled Midland Metropolitan hospital project in Sandwell will have to adhere to the requirements that have been set out by construction union Unite. Originally planned to become operational this month, the hospital project has been stalled since the main contractor Carillion collapsed
With the demise of Carillion, Government departments’ scrutiny over the progress of their major projects is increasing. One method being used to manage infrastructure projects is Earned Value Management. As well as being able to monitor costs and schedules, it also has a value add element that allows organisations to
An annual average of £16,000 is being lost by each subcontractor as a result of bad debts and collectively they are forced to write off £2.8 billion each year. Research by Bibby Financial Services (BFS) found that three fifths of subcontractors have written off sums over the past year. Moreover,
Catering trade association ceda have offered their support to foodservice sector companies affected by the liquidation of construction giant Carillion, announced on Monday. The news sent shockwaves through the construction industry, its supply chain and the nation. Build UK, the leading representative organisation for the UK construction industry, has thrown
Now that the Carillion’s collapse is becoming old news, ArchOver CEO Angus Dent outlines the lessons to be learnt and the steps that smaller businesses should take to make sure future failures will not touch them. At the time of its demise, Carillion had £1.5 billion worth of outstanding payments,
The managing director of construction consultancy at MPG, Michael Gallucci, offers his advice on how firms affected by the collapse of Carillion should respond. Around 30,000 businesses are owed collectively £1 billion following the catastrophe, with chains of first tier suppliers and subcontractors left in a state of uncertainty. The
The CBI is a Construction Council that is made up of 35 Chief Executives from across the sector. The Council has asked a group labelled as future leaders within the construction industry to create some recommendations that will help with collaboration and digitisation of the sector. The future leaders group
Wolverhampton-based construction and support services group, Carillion has secured a £490m contract to develop a prestigious new development in the Middle East. The company’s Al Futtaim Joint Venture has been awarded the huge contract, which will see it develop the Flagship Theme Districts and Public Realm works for Expo 2020
Carillion, a subsidiary of Wolverhampton-based support and construction services group, has been chosen as the preferred bidder for a power transmission contract worth £120 million. Manitoba Hydro has chosen Rokstad, a division of Carillion Canada, as the preferred provider for the next phase of its Bipole III high voltage transmission
Carillion’s joint venture with US engineering giant KBR has secured a £1.1 billion construction and facilities management contract to re-base troops coming back from Germany by 2019. The Aspire Defence Capital Works joint venture will design and build 130 buildings, along with extensions and alterations to the current buildings and
BDC 319 : Aug 2024
Any contractor that will get appointed to the stalled Midland Metropolitan hospital project in Sandwell will have to adhere to the requirements that have been set out by construction union Unite. Originally planned to become operational this month, the hospital project has been stalled since the main contractor Carillion collapsed in January 2018 and it is not expected to be completed until at least 2022. In order to ensure workers are treated fairly and not exploited whenever the project resumes, the union wrote to Toby Lewis, chief executive of the Sandwell and West Birmingham Hospitals NHS Trust to seek that any contractor appointed to the project adheres to the following requirements: Adhere to national industrial agreements that govern pay and conditions Use local labour and suppliers Workers are directly employed (not employed under a form of bogus self-employment) Exploitative forms of employment such as umbrella companies are outlawed Trade unions are recognised and are given proper access to the workforce. “Local residents desperately need a new hospital which must become operational as early as possible but this must not be at the expense of the construction workers who will undertake this vitally needed work,” said Unite regional officer Su Lowe. “Exploitation can only be prevented and fair treatment guaranteed by recognising industrial agreements, guaranteeing direct employment and allowing unions proper access to the workforce. Unless workers are treated fairly and decently there is likely to be further problems with the construction of this site, which will create even more delays, causing even greater misery for patients and staff,” So Lowe added. The local NHS Trust is working to appoint a contractor for the project.
With the demise of Carillion, Government departments’ scrutiny over the progress of their major projects is increasing. One method being used to manage infrastructure projects is Earned Value Management. As well as being able to monitor costs and schedules, it also has a value add element that allows organisations to track and measure the progress more effectively. Earned Value is not a new idea, it has been in use since the industrial revolution. However, it came to prominence first in the US when the government introduced earned value management as a requirement for their contracts, and has in the UK where Government Departments are keen to establish the value add of their major contracts. The concentration being applied to major suppliers in the wake of Carillion’s demise, means that effective tracking of progress throughout the project is increasing in importance. Earned value management offers opportunities beyond the simple adherence to contract requirements. It allows an organisation to have transparency around projects, programmes and portfolios of stand-alone and integrated works, and provides a clearer indication of progress on large-scale projects than other traditional monitoring techniques. In essence it allows organisations to keep projects on schedule and within budget. However it is far more than simply applying the three set formula of schedules, costs and completion to a project. There are often different variables to be considered with each project, as well as ensuring data is consistent and true. At the forthcoming APPS18 Oracle event, Nathan Morgan from Prōject (EU) Ltd will be showcasing how both Government Departments and major suppliers can benefit from adopting Earned Value Management. The presentation is being made on Wednesday 5th December 2018 at 3.20pm in the main hall.
An annual average of £16,000 is being lost by each subcontractor as a result of bad debts and collectively they are forced to write off £2.8 billion each year. Research by Bibby Financial Services (BFS) found that three fifths of subcontractors have written off sums over the past year. Moreover, findings from the Subcontracting Growth 2018 survey found that the average firm waves goodbye to £16,149 worth of bad debt each year. Undertaken following the collapse of Carillion, the study found that almost a fifth of subcontractors (17%) said the most common reason for not receiving the full amount billed was due to a customer going out of business. A change in the scope of work part way through a project (8%), queries over the quality of work (6%) and disputes over contracts (6%) were also among the top reasons firms would lose money. “Bad debt is a serious issue for many construction businesses and, across the entire sector, more than £2.8bn is written-off each year, representing a significant economic leakage,” said Kash Ahmad, specialist finance director at BFS. “Bad debt occurs due to insolvency in the supply chain, protracted default or dispute and the issue is particularly challenging for smaller firms that have already footed the bill for raw material and labour costs. This places a massive strain on these businesses, sometimes even causing viable firms to fold. For many, bad debt is the hidden cost of doing business,” he continued. Helen Wheeler, managing director for Construction Finance at BFS also added: “Making full and correct payment in accordance with contracts is a fundamental pillar of the Government’s Construction Supply Chain Payment Charter, but it is clear that this simply isn’t happening. Unless something more tangible is done, the growth of tens of thousands of small construction firms will continue to be stifled.”
Catering trade association ceda have offered their support to foodservice sector companies affected by the liquidation of construction giant Carillion, announced on Monday. The news sent shockwaves through the construction industry, its supply chain and the nation. Build UK, the leading representative organisation for the UK construction industry, has thrown its weight behind the Carillion supply chain and is representing their needs in on-going talks directly with Government, attending a meeting with the Secretary of State for Business, Energy and Industrial Strategy on Monday. As a founding member of Build UK, and the only Association member specific to the foodservice industry, ceda are able to feed into these discussions and represent those companies in the foodservice sector affected by Carillion’s collapse. In pledging his organisation’s assistance, ceda Director General Adam Mason said, “As the fallout from the Carillion collapse dominates the political agenda, our unique position within the Build UK membership, places us at the forefront for any foodservice business now facing uncertain times. We are a direct route to help and support and this week to date we have been in regular communication with Members, but we call on any business in the sector, ceda Members or not, who are, or feel they may be, affected by the Carillion crisis, to get in touch. “The immediate concerns and actions are with those businesses in our sector directly affected by the Carillion liquidation, but beyond that we will continue to work with Build UK to highlight that the construction business model needs to change as current conditions, payment terms and operating margins are not sustainable.”
Now that the Carillion’s collapse is becoming old news, ArchOver CEO Angus Dent outlines the lessons to be learnt and the steps that smaller businesses should take to make sure future failures will not touch them. At the time of its demise, Carillion had £1.5 billion worth of outstanding payments, a £2.6 billion pension debt, and it issued three profit warnings in just five months, so in reality its failure should have come as no surprise taking the state the company was in. What happened to it is an important reminder that no matter how big a company is, it can still fail. The industry did not know how bad Carillion’s position was and now the consequences of it are 43,000 jobs left in uncertainty and money owed to more than 30,000 small business. Although credit insurers have confirmed that they will pay out a £30 million compensation, that only accounts for a small portion of the total debt owed. Unpaid invoices generally account for 25% of bankruptcies, with the figures for the construction industry being even higher. This sector experiences the highest levels of insolvency per year, so SMEs need to be more aware of the risks they are exposed to. If you are the owner of an SME, then do your research before working with a big company. Don’t just rely on its reputation for reassurance. You could look at whether they have a good record for paying their debts. Or how about asking your peers if they had issues with invoicing them? Additionally, consider what would happen if a customer was to default and ensure that you have protection, such as credit insurance, in place. The Carillion collapse proves that credit insurance does pay off when a big contractor goes bust, but not enough companies took it out. Trusting a company’s longevity or size is understandable, but it can also be a risky mistake. Investments and contractors can go bad, so you need to make sure you are protected. SMEs should not accept contracts where there’s a risk that they won’t be paid or where there aren’t measures in place to protect them against losses.
The managing director of construction consultancy at MPG, Michael Gallucci, offers his advice on how firms affected by the collapse of Carillion should respond. Around 30,000 businesses are owed collectively £1 billion following the catastrophe, with chains of first tier suppliers and subcontractors left in a state of uncertainty. The questions is now what should these businesses do about the money they are owed for the work they had completed? Michael says that the first step is recognising how exposed your company is. If your business’ survival depends on this payment then it should become your number one priority. However, if your situation is not that critical, you are better off focusing on other customers and opportunities than wasting time on this issue. Banks have created a new fund to help those affected by the collapse and the government has a task force that will address this issue. This is worth looking into, but it is not a certainty and there are other things you can do to protect your business. After you understand your situation, look at where you have outstanding contracts and see if these are affected directly or indirectly with Carillion. Check them and make sure you are entitled to suspend or terminate the contract with the customer and then look at the options you have with the subcontractors. The contract may or may not tell you specifically what should happen if one of the parties in the supply chain becomes insolvent. If it does, make sure you keep track of the progress, if it doesn’t then you should start retrieving the owed money through legal means or by withholding future work on the project until you get paid. “I am a strong advocate of effective programmes and record keeping to protect yourself in the event of disputes or situations that lead to potential non-payment such as your customer going into liquidation. If you don’t already have full written records of the work you have carried out on any projects affected by the liquidation of Carillion, prepare them now,” advises Michael.
The CBI is a Construction Council that is made up of 35 Chief Executives from across the sector. The Council has asked a group labelled as future leaders within the construction industry to create some recommendations that will help with collaboration and digitisation of the sector. The future leaders group that has been asked to compile these recommendations come from a range of different companies including BAM Nuttall, Carillion, Henry Boot, Kier Group, J Murphy & Sons, Mott Macdonald, NG Bailey, Pinsent Masons, Wates, Ryder Architecture and Saint Gobain. The group of future leaders will report to the CBI Construction Council in November with their recommendations that will hopefully see the industry adapt in preparation for the future. The Future leaders group is comprised of 18 individuals that have been marked as rising stars. The members of this council are all under the age of 35 and come companies at different parts of the supply chain as well as from a variety of different size businesses. The range of different sectors involved in making the recommendations should mean that the ideas put forward to the CBI will benefit companies across the supply chain. It is thought that bringing potential future leaders of the construction industry together will help to develop ideas from a fresher perspective. This will help the industry push forward the industry and lead to the development of solutions that are efficient in to the future. Thinking of new ideas will also help the construction sector manage with the aims set out by the Government to update infrastructure, as well as housing, roads, rail and nuclear. The Future Leaders Group ideas will complement the work that is done by the CBI Construction Council. This Construction Council works to promote the construction sector and help the Government in order to allow the industry to thrive and progress.
Wolverhampton-based construction and support services group, Carillion has secured a £490m contract to develop a prestigious new development in the Middle East. The company’s Al Futtaim Joint Venture has been awarded the huge contract, which will see it develop the Flagship Theme Districts and Public Realm works for Expo 2020 Dubai. Expo 2020 Dubai will host around 180 nations and an international audience of millions. Describing the event, Expo 2020 Dubai – which has awarded the contract – said: “Expo will provide visitors with the chance to see spectacular architecture, merge with global cultures, examine thoughtful and thought provoking exhibitions, and taste food from every corner of the globe. “Above all, visitors to the event will witness the very latest in thinking and technology all in one place and at one time. Expo will be an unforgettable, once in a lifetime experience. We are preparing for an event that will enthral and amaze the many millions who visit, providing a sense of wonder at the ability of people, working together, to envisage and achieve a better tomorrow.” Read more at http://www.thebusinessdesk.com/westmidlands/news/746646-carillion-secures-490m-dubai-expo-contract.html
Carillion, a subsidiary of Wolverhampton-based support and construction services group, has been chosen as the preferred bidder for a power transmission contract worth £120 million. Manitoba Hydro has chosen Rokstad, a division of Carillion Canada, as the preferred provider for the next phase of its Bipole III high voltage transmission line scheme. The project will involve clearing rights of way, installing access roads, anchors and foundations, the assembly of towers and the stringing of cables for three packages of the Bipole III project, which will include 1,384 km of transmission lines and two converter stations, beginning at Keewatinohk in Northern Manitoba and will end at Sandy Bay Ojiway First Nation in Southern Manitoba. When the Bipole lll project is fully completed, it will deliver renewable energy to the United States and Southern Manitoba. Carillion said it expected to agree final terms and achieve contract signature shortly to enable work to begin before the end of the year, with completion scheduled for 2018. Carillion chief executive, Richard Howson, said: “We are delighted to have been selected for this important project, which further demonstrates the quality and strength of Rokstad’s offering and the success of our strategy of expanding our infrastructure services activities in Canada into the power transmission and distribution market, with the acquisition of Rokstad in 2014.” The announcement was made at the same time as a full year training update was published by the parent group, in which it said performance was meeting expectations with strong growth expected to be reflected in increased operating profit and total revenue. It showed that revenue growth continued to lead the performance, along with a strong margin in support services. The group has also forecast that net borrowing is expected to reduce from the half-year level. New orders plus probable orders in 2016 are expected to reach £4.5bn, with total orders plus probable orders of approximately £16 billion (December 2015: £17.4 billion) by the end of the year.
Carillion’s joint venture with US engineering giant KBR has secured a £1.1 billion construction and facilities management contract to re-base troops coming back from Germany by 2019. The Aspire Defence Capital Works joint venture will design and build 130 buildings, along with extensions and alterations to the current buildings and associated infrastructure. The construction works throughout Aldershot and the Salisbury Plain Training Area are set to begin straight away. They are worth £680 million, which will be shared equally between the partners. The facilities management and maintenance of the new camps and garrisons will be provided by a separate joint venture between both companies, known as Aspire Defence Services. The Project Allenby/Connaught PFI contract was let to Aspire in 2006. Together this will generate £430 million of support services revenue over the remaining 25 year contract. The additional service provision will begin as soon as construction of the first asset is completed, which is expected to be in May 2017, and will run until 2041. ‘We are delighted’ Carillion chief executive Richard Howson said: “We are delighted that Aspire Defence Limited and its sub-contractors Aspire Defence Capital Works and Aspire Defence Services have been selected by the Ministry of Defence to deliver this major element of the Army Basing Programme. “I believe this reflects in the successful delivery of new living and working accommodation along with associated assets for Project Allenby/Connaught, together with the high-quality, value for money services that will continue to be provided for this project.” Last month, Carillion secured a £350 million contract to continue its support of Nationwide Building Society. With the new deal, the buildings and maintenance firm will maintain its management facilities at Nationwide’s Swindon headquarters, its 15 corporate offices, its data centres and its 700 high street outlets throughout the UK. It is a seven-year contract with the potential to be increased to ten, and renews the existing nine-year partnership between the two companies. Shares in Carillion jumped 1.53pc early on Tuesday morning to 255p. Image: MoD/Crown copyright 2016. Photographer Ian Griffiths
