Galliford Try has ruled itself out of working on two of Highways England’s complex infrastructure projects: the Stonehenge Tunnel and Lower Thames Crossing.
Speaking as the firm announced its full year results, with pre-tax profits soaring to £143.7M for the year to June 30, from £58.7M the year before, its construction and investments chief executive Bill Hocking said the firm no longer goes for fixed price jobs. Both projects are likely to be private finance initiatives and Hocking said the risk transfer, “onerous” terms and conditions and variable track record meant the projects do not fit its business model.
“We will not be going for jobs like Stonehenge or the Lower Thames Crossing in any guise, not as part of a joint venture or by ourselves. We will stick to the frameworks, what we know we are good at, what we know we can perform well at and where we can make a profit. I’ve said we will not do any fixed price, massive lump sum jobs anymore and that’s exactly what PFI is.”
Instead it is focusing on frameworks, including Highways England’s smart motorway frameworks and said it had a “sweet spot” of £10M to £80M on projects.
The accounts revealed Galliford Try’s figures for its construction arm has been impacted by a £45M writedown after the compulsory liquidation of Carillion on 15 January this year. Galliford was working with Carillion and third joint venture partner Balfour Beatty on the Aberdeen Western Peripheral Route (AWPR). The two remaining firms were obliged to complete the project, costing both millions of pounds. Today’s announcement takes Galliford’s bill for extra costs on the scheme to £123M.
The 58km AWPR has an official price tag of £745M and was originally due to open in spring but has been delayed until autumn this year.
The construction arm’s reported an operating loss of £29.1M, an improvement on 2017’s figure of an £88.8M operating loss.
Highways England has been trying to de-risk the Stonehenge tunnel project to attract more contractors.