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M8 project hits Ferrovial's results

Ferrovial

Ferrovial Agroman UK has said it suffered a £29M loss on a major Scottish road improvement project.

The details were published in the firm’s results for the financial year ending December 31 2016, which have just been released.

Higher staff and labour costs which were due to “acceleration measures” implemented to finish the project on time contributed to the loss on the M8 M72 M74 Motorway Improvement Project.

Ferrovial Agroman UK said there were also higher materials costs due to changes in design that required larger quantities than originally estimated.

It said: “The contract has historically proved difficult to forecast due to issues with design, the complexities for working on a brownfield site and the shortage of labour and materials in the local construction market.

“As a result there was significant uncertainty in estimating the costs to come, the future operational performance and the degree to which certain cost overspends can be recovered from third parties.”

The £500M M8 motorway improvement project, a joint venture with Lagan Constriction Group, along the corridor from Edinburgh to Glasgow opened in spring this year after three years of construction.

The three-lane motorway includes adjacent cycle and pedestrian highways. The westbound carriageway from Eurocentral to Baillieston opened to traffic a week before the second, eastbound section.The road improvements aimed to shorten the journey time between Scotland’s two main cities by 18 minutes at peak times.

In the results, Ferrovial described 2016 as “another mixed year” and said the main projects it was working on included Thames Tideway, the Northern Line Extension, Crossrail Farringdon Station, the M8 motorway, a Heathrow framework and HS2 Central Area Enabling works - Heathrow being the only one not part of a joint venture.

It said revenue was £364M, up from £262M in 2015, mainly down to a £44M road projects boost and £38M in tunnelling projects.

However overall the company reported a loss before tax of £12M, down £1M from £13M the year before, and in the most part due to the M8 project.

The order book was down to £639M, compared to £826M in 2015. The report said: “Nonetheless, 2016 has been a successful year for bidding activties, with the highlight being the award of the Central Area of HS2 Enabling Works, as part of the Fusion joint operation with Morgan Sindall and Bam Nuttall.”

The HS2 contract was not included in the order book figure.

New Civil Engineer has contacted Ferrovial Agroman UK for comment.

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