Building MD follows Carillion chief executive out of the door

Aaron Morby 4 months ago
Share

Carillion Building managing director Phil Wakefield has left the business as another senior casualty of the ongoing management shake-up following an £845m provision for contract losses and closing businesses in the Middle East.

Building managing director Phil Wakefield

The building MD follows chief executive Richard Howson, who also stood down but will remain with the business to help a smooth transition to the new management team.

Keith Cochrane, interim group chief executive, also revealed financial heads of three business units, have been changed in the last few weeks as part of ongoing management changes.

Cochrane said Carillion had been hit by major project cost-overruns, mostly on three UK PPP projects and one large contract in the Middle East.

The shock profit warning statement triggered speculation about the problem projects.

One is thought to be the Royal Liverpool Hospital PFI where there have been significant project delays and technical problems.

Carillion is also working on the delayed £550m stretch of route between Balmedie-Tipperty on the vast Aberdeen Western Peripheral Route project in joint venture with Balfour Beatty and Galliford Try.

Two months ago, Galliford Try alerted the city that it had been forced to set aside £98m to cover the costs of completing two major infrastructure jobs – one thought to be the AWPR and the other the Queensferry Crossing in Scotland.

The other big job is believed to be its Midland Metropolitan Hospital PF2 project, although Carillion has declined to comment on speculation for commercial reasons.

Cochrane said: “Trading in UK construction notably on three UK contracts and also on one large project in the Middle East has been particularly difficult.”

“As a result we expect to take a £375m provision for contracts in the UK, the majority of which relates to three PPP construction contracts, and a £470m provision in respect of overseas construction markets, the majority of which relates to exiting three middle east construction markets and construction in Canada.

“Of the total £845m, we estimate that £100m-£150m we be the future net cash cost of completing these contracts by the end of 2018.”

The four most challenging contracts represent around half the total provision.

Cochrane said: “We have made number of immediate decisions in response to the issue identified in the contracts review. We will exit all PPP construction markets, we will exit construction in Egypt, Saudi Arabia and Qatar.

“We are accelerating the disposals of non-core business, starting with of 50% of our business in Oman.

“In in our remaining construction markets we will only bid for construction contracts where we can do so via lower risk procurement routes.”

He added: “Reducing net debt is a top priority. One area of immediate attention for me is cost reduction, by that not asking few people to do more, but looking at how we can simplify the business model and by looking at what we can stop doing.”

Carillion is targeting non-core disposals to raise £125m over the next 12 months. It has also set up a new team to target recovery of significant receivables on contracts.

“Going forward we must also focus harder on contract execution.”

Carillion said it would report on the KMPG strategic and operational review of both the business and capital structure in September.

 

 

 

Latest news

Carillion warns on profits again as it breaches banking covenants

Contractor asks for more time from lenders as debts set to soar up to £925m
24 hours ago

T Clarke powers ahead on London major project wins

M&E specialist boasts strong orders for next two years despite Brexit fears
23 hours ago

Kier wins £35m Clydebank hospital project

Kier to start work early next year on first of two treatment centres for Golden Jubilee hospital
23 hours ago

M&E specialists suffering from blight of retentions

Nearly a third of firms have up to 10% of their turnover locked-up in retentions
23 hours ago

15 councils face action over local housing plans

Government set to intervene to force through local housebuilding plans
2 days ago

Betting Spy: Winning start for the Moyes boys?

West Ham are worth a go at 5/2 to turn up for their new boss
1 day ago

North to get own transport spending powers

Plan to give Transport for the North statutory powers from April a game-changer
2 days ago

White collar skills crisis strangling construction

Nearly two thirds of companies can't find Quantity Surveyors
2 days ago

Winvic bags £40m Nottingham build to rent scheme

Construction to start this month on 350-home scheme
2 days ago

Government rethink over £130m Balfour lorry park

Current plans dropped as Highways England goes back to the drawing board
2 days ago

Green light for £270m Swindon leisure complex

Work to start next year on North Star ski centre, hotel and cinema complex
2 days ago

£60m+ offsite secondary school bundle out to bid

ESFA plans trio of £20m-plus secondary schools projects using modular construction
2 days ago

British Land to start £200m London office revamp

Regent's Place office to be enlarged in major revamp near Euston
2 days ago

Hunt starts for £50m Liverpool cruise terminal builder

Preferred bidders will be revealed in March
2 days ago

Boost your online presence with the new Enquirer Directory

New site for suppliers and buyers will showcase their products, services and latest stories
3 weeks ago

CITB to cut costs by stopping training

Skills body to "exit direct delivery of training through the National Construction College"
2 days ago

£17.5m Fylde coastal defence scheme awarded

VBA joint venture to start work in January on Lytham St Annes scheme
2 days ago

Interserve staff braced for more redundancies

Another wave of job cuts set to follow initial 200 lay-offs
3 days ago

£1.4bn Croydon Westfield shopping centre approved

Demolition contractors will be on the site for a year
3 days ago

Demolition to start for £250m Liverpool triple towers

Builder to be named for first residential tower in early 2018
3 days ago

Great Portland Estates plans work on £233m trio of schemes

Developer says London market still healthy
3 days ago

Three-year demolition job starts on Sellafield chimney

Painstaking work will see demolition team bring down 650 tonne stack by hand: Video
3 days ago

Mace wins £90m Harwell research project duo

Health research and satellite testing facilities to be built over three years
4 days ago

Crown Estate awards Kier £36m Regent Street job

Morley House will be demolished to make way for shops and flats
3 days ago

Over 30 firms land £8bn schools framework – Full list

Kier, Bowmer & Kirkland and Keepmoat take largest haul of lots
4 days ago

London facing post Brexit construction skills crisis

30% of construction workers in capital are from EU countries
4 days ago

Wates names interim financial chief

Veteran Rod Holdsworth takes temporary role while replacement found for Andrew Davies
4 days ago

Fire chiefs slam “lack of competence” in construction

Industry warned it needs to take fire safety more seriously
5 days ago

Intelligent JCBs set to save fuel and cut emissions

New software means machines will automatically switch off when power not required
4 days ago

£110m Glasgow shopping store to homes scheme approved

Mace is project manager for biggest city centre scheme since 1990s
4 days ago

Contractor services