Carillion collapse – counting the cost

More than £1bn-worth of roads projects will be impacted by the financial collapse of Carillion.

The contractor, which has slumped into administration, worked in joint venture on major schemes such as the £745m Aberdeen Western Peripheral Route (AWPR) project with Balfour Beatty and Galliford Try, and a JV with Kier on a £335m project for work to junctions 13-15 on the M6 at Stafford.

Kier does not expect any financial impact, but completing the AWPR is expected to jointly cost Balfour Beatty and Galliford Try between £60m and £80m according to a statement from Galliford Try on the day of the Carillion’s collapse.

Balfour Beatty is also working with Carillion on the A14 in Cambridgeshire, and work from junction 8 of M60 to junction 20 of the M62. Balfour Beatty put the cost of completing these two schemes and the AWPR at between £35m to £45m.

Carillion’s biggest solo project was the £96m Eastern bypass in Lincoln for Lincolnshire County Council.

Around 10% of the work had been completed by mid-January, when council executive director for highways Richard Wills said: ‘Carillion will continue on with some works to the bypass and for the foreseeable future, but this situation is constantly changing and is dependent on a number of other factors.

‘In the meantime, we will continue investigating how to best proceed with the project. The most likely situation is that we will appoint a new contractor to manage and deliver the construction element of the scheme; however, we’ll be looking at all of the potential options over the coming days.’

Only weeks before the group’s collapse, Carillion was selected to build the £115m East Leeds Orbital Route (ELOR).

Leeds City Council decided to award the contract to Carillion rather than fellow bidder Balfour Beatty.

Carillion already had a £7m cycleway package on the ELOR. The council agreed a £7m contract to build three roundabouts and was signed up to an early contractor involvement deal to deliver a 7-5-km stretch of dual carriageway just a week before Carillion’s crash.

Leeds City Council chief executive Tom Riordan said: ‘While Carillion were the preferred bidder for the ELOR, a final contract had not been signed off.’

Carillion was also working on the design for a £35m proposal to dual a 33-km stretch of the A40 from St Clears to Haverfordwest for the Welsh Assembly, but this project had not started on site.

The Welsh Government would not comment on this individual scheme but a spokesperson said: ‘Unlike the UK Government the Welsh Government has only a very small number of contracts with Carillion. We do not expect Carillion’s move into liquidation to have a significant impact on our infrastructure or wider work.’

Elsewhere, Carillion and Tarmac began work in May 2017 on a £6.2m deal for the second and final phase of the Greater Yorkshire Link Road to Doncaster Sheffield Airport for Doncaster Council.

Peter Dale, the council’s director of regeneration and environment, said: ‘The scheme is at an advanced stage of delivery and is due for completion in April 2018.

‘We are currently working with Carillion staff and the receiver PricewaterhouseCooopers who are seeking to move forward and honour existing contracts. We are also working with Tarmac to look at contingency plans if Carillion are unable to continue with the work.

‘As such, we are hopeful that the project can continue with minimal impact.’

Last year, Carillion also landed places on the new YORCivil2 framework covering civil engineering, which will also now be vacated as the industry struggles to overcome the collapse of one of its biggest players.

 

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