Opinion: Toxic times for major contractors

Grant Prior 10 years ago
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BAM and Balfour Beatty are the latest big names to suffer holes in their balance sheets caused by toxic contracts.

But many major contractors are facing bigger problems than just the legacy of bidding for work at perilously low rates.

Recessions force people into desperate measures and bidding low to win work and keep resources ticking over is a natural reaction to a downturn.

The real worry is how long it is taking to discover just how wrong contracts are going.

It smacks of organisations bloated with too many managers and not enough proper construction people.

Clients are also questioning the worth of Tier One contractors.

Transport for London is cutting them out altogether on its £330m station modernisation programme and working with subcontractors direct.

Specialists and smaller contractors are sensing a change and see an opportunity to work closer to clients.

That is worrying news for major players who have gone too far down the management route.

Big names win big contracts because of their size.

But they have to bring something more to the party than just management skills.

If the real construction innovation and experience is among the specialists and package contractors then more clients will find a way of dealing with them directly.

After all, it’s hardly the best advert for managing a major project if you didn’t know what was happening at your own company.

 

 

 

 

 

 

 

 

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