Costain facing £45m hit after Welsh road job ruling

Grant Prior 1 year ago
Share

Costain is facing a £45m hit to its upcoming results after an arbitration ruling over the disputed A465 Heads of the Valley road contract went against the company.

Costain contract involves seven bridges and 12.5km of retaining walls
Costain contract involves seven bridges and 12.5km of retaining walls

The scheme for the Welsh Government has been the subject of a long-running arbitration case and is expected to come in more than £100m over budget and two years late.

Costain moved its latest results announcement to September 14 while it waited for the latest decision which centred on the designs of a retaining wall on the job.

A company announcement stated: “The arbitrator’s decision found that responsibility for the design information rests with Costain and, consequently, the additional costs associated with the building of the retaining wall is not a compensation event under the Contract.

“Costain is disappointed by the arbitration award which reverses the ruling of previous adjudication awards.

Although the arbitration award relates to the liability for the additional costs associated with the building of a specific retaining wall under the Contract, it has implications for the responsibility for design information under the whole contract and therefore Costain’s ability to recover these costs.

Costain is in ongoing discussions with the Welsh Government to reach agreement on a final financial settlement and to seek recovery of costs under the Contract.

“However, on the basis of the uncertainty of recovery of such costs following yesterday’s arbitration award, and subject to reaching a final settlement, the Group’s half year results for the period to 30 June 2020 will include a charge to the income statement of c.£45 million to adjust the revenue recognised based on the level of cash received to date under the Contract.

“Costain will continue to fulfil the Company’s obligations under the Contract, with completion scheduled in 2021.”

The results are also facing a £49.3m charge over disputed payments on a gas station job.

Costain’s share price fell by more than 20% during early trading on Thursday morning.

Latest news

Race starts for £200m M5 Junction 10 Improvements

Cheltenham junction upgrade will see new roundabout built above the motorway
2 hours ago

New boss at Balfour Beatty Kilpatrick

Will Smith joins from consultant Cummins
2 hours ago

Contractors battle Storm Arwen to replace rail bridge

BAM Nuttall, Atkins Mouchel Joint Venture successfully completes marathon 78-hour installation
2 hours ago

Bids called for £835m South London council estate upgrade

London Borough of Southwark is on the hunt for four firms to deliver housing estate upgrades
1 hour ago

Willmott Dixon to build £21m net zero Preston school

Tarleton Academy will be net zero in operation
1 hour ago

Veteran pair leave Currie & Brown

End of an era as David Broomer and Euan McEwan retire
2 hours ago

Balfour Beatty launches neurodiverse site cabins

Cabins adapted for visually impaired and light-sensitive builders will become standard on Balfour sites
1 day ago

26 firms win £7bn schools framework – full list

B&K, Willmott Dixon, BAM, Kier and Wates chalk up both northern and southern major project lots
2 days ago

French specialist Matière to install HS2 cut and cover tunnels

Stanton Precast wins pre-cast segment deal for 'green tunnels'
2 days ago

Scottish house builder buys rival for £56m

Springfield buys Tulloch Homes to expand presence in the Highlands
1 day ago

Wates wins contract for underground houses

Construction to start next year on earth sheltered homes in Battle, East Sussex
2 days ago

VAT dodging electrician banned for five years

Company director barred after Insolvency Service probe
2 days ago

£11m in extra brownfield grants awarded – list

Twenty-three sites receive brownfield funding in second tranche of grants
2 days ago

GMI lands £30m helicopter logistic hub

Building work starts on Yeovil hub for manufacturer Leonardo
2 days ago

HS2 Euston team to get architect-designed site huts

Up to 2,500 workers and 150 students could be using the welfare facility on a daily basis
2 days ago

Firms readied for £1.3bn highways surfacing framework

Second supplier day to be held on 2 December ahead of March tender invite
2 days ago

Countryside Properties sets aside £41m for recladding

Progress made towards becoming 100% focused lower risk Partnerships business
2 days ago

BAM pairing takes £26m Sunderland train station

Demolition work will start next year on first phase southern entrance area
2 days ago

Osborne wins £21m London City grade II interior refurb

Work to start in the New Year on 84 Moorgate upgrade
3 days ago

Bouygues bags latest phase of Portobello Square regen

Construction to start next summer on North Kensington site
3 days ago

VolkerFitzpatrick wins £26m storage sheds deal

Firm has delivered several projects at the Daventry International Rail Terminal over 11 years
3 days ago

Massive Stewart Milne development goes into administration

Countesswells new town now in hands of administrators
6 days ago

Race starts for £2.5bn Ministry of Justice framework

Frameworks cover projects up to £30m and are divided into regional lots
3 days ago

London Uni submits North Acton high-rise tower cluster plan

Plans in for eight buildings ranging between 6-32 storeys in North Acton
3 days ago

Galliard forms new partnership to build 850 homes

Work to start on £300m Brimingham and Ipswich developments by next spring
3 days ago

Engineers battle to repair power network after Storm Arwen

Large sections of overhead power lines need to be rebuilt after "worst damage for 20 years"
3 days ago

Leeds £270m Lisbon Square towers approved

Work to start in the Spring on residential and office scheme
3 days ago

Green light for £65m canalside scheme in Wolverhamption

Construction to start next summer on transformation of brownfield site
3 days ago

Ex-Laing O’Rourke boss to head rejigged BAM UK business

BAM names new chief for combined UK and Ireland businesses in growth push
6 days ago

Robertson submits £150m Cardiff Arena plan

Arena work to start next Autumn with wider Atlantic Wharf regen scheme to follow
6 days ago

Contractor services