Collapse of UK’s second largest construction company
The recent news that Carillion, the UK’s second largest construction company, will enter into compulsory liquidation has sent shockwaves throughout the sector and put thousands of jobs at risk across the UK. Describing itself as an ‘integrated support services business’, it employed 43,000 staff globally, about half of those in in the UK, and it held about 450 governmental contracts spanning the UK education, justice, defence and transport ministries. Major construction contracts included the planned HS2 high speed railway line, the Royal Opera House, the Library of Birmingham, the Tate Modern, and the hoop-shaped building of GCHQ. It managed the Smart Motorways traffic control system and supplied school dinners as well as maintaining about half of the UK's prisons and Young Offender Institutions. Its responsibilities included cleaning, landscaping and catering. Carillion was the second-biggest supplier of maintenance services to Network Rail. It also operated in Canada, the Middle East and the Caribbean and was a big supplier of construction services to the Canadian government. In 2016, Carillion had sales of £5.2bn and until July boasted a market capitalisation of almost £1bn. But it ran into trouble after losing money on big contracts and running up huge debts and it finally buckled in January 2018 under the weight of a massive £1.5bn debt. Despite discussions between Carillion, its lenders and the government, no deal could be reached to save the company. While the true cause of Carillion’s collapse is unknown, it ran into problems with cost overruns on three troubled and delayed UK public sector construction projects: the £350m Midland Metropolitan Hospital in Sandwell, the £335m Royal Liverpool Hospital on Merseysiide, and the £745m Aberdeen bypass - delayed because of slow progress in completing initial earthworks. Delayed payments from Middle East contracts and the expensive withdrawal from other projects in the Middle East are commonly cited as significant contributing factors. Government acts to make building rules easier to access and understand The Government is making it easier for people to understand and apply best practice when designing and constructing buildings. “By launching a new building system search engine and sponsoring five commonly used building standards and a handbook, we hope to see improved compliance with the Building Code, and even more importantly, safer homes and buildings”, says Minister for Building and Construction Jenny Salesa. “The online search engine, Building CodeHub helps people locate the latest building rules and guidance information for designing and constructing buildings,” says Ms Salesa. “It’s the definitive source of up-to-date rules and guidance from a range of sources.” “New Zealand’s building regulator the Ministry of Business, Innovation and Employment (MBIE), has sponsored some of the most commonly-used standards, making them freely available to all users,” says Ms Salesa. “We anticipate that providing free access to these standards, will make it easier for consumers to understand the building code
requirements and apply best practice methods when undertaking home building projects.”
The sponsored standards and handbook, which can be accessed from the Standards New Zealand website, are: • Design for access and mobility: Buildings and associated facilities (NZS 4121:2001) - provides solutions for making buildings and facilities accessible to and usable by people with disabilities. • Housing, alterations and small buildings contract (NZS 3902:2004) - a plain English standard building contract. • Thermal insulation - housing and small buildings (NZS 4218:2009) - helps establish the levels of thermal insulation for houses and small buildings. • Interconnected smoke alarms for houses (NZS 4514:2009) - provides information about the placement and audibility of smoke alarms. • Safety barriers and fences around swimming pools, spas and hot tubs (NZS 8500:2006) - describes barriers for residential pools including ways to assess their strength. • Handbook on Timber-framed buildings (selected extracts from NZS 3604:2011) - figures and tables to help design and construct timber-framed buildings up to three storeys high. “MBIE will continue to make the building system more accessible with further enhancements to Building CodeHub and considering ways to improve access to more design and construction building standards,” says Ms Salesa.