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M&E design failures hit Laing construction profits

FAILURE TO meet tight mechanical and electrical specifications on the £82M National Physical Laboratory (NPL) redevelopment project boosted losses reported by John Laing's construction division last week.

As a result, the contractor said it would no longer agree prices for design and build projects until designs are 'substantially detailed'.

Laing Construction is the design and build contractor for 29 new laboratories at the NPL's Teddington site. But heating and ventilation systems failed to perform to the demanding specification when tests were carried out, said Laing Construction chairman James Armstrong.

'These are very highly specified in terms of temperature control and air movement, ' said Armstrong. 'We began to test them (the heating and ventilation systems) and found that the designs did not work.'

Last week Laing Construction reported an operating loss of £88.9M for 2000. This was an increase on the £67.3M operating loss in 1999. Construction turnover was down from £1.19bn to £854M.

NPL cost increases accounted for most of the losses with the rest coming from £15.1M of reorganisation costs.

Losses in construction dragged down John Laing's group profits for 2000. Pre-tax profits fell from £52.7M to just £5.7M last year on turnover down from £1.5bn to £1.3bn.

Laing has tightened its bidding procedures in a final attempt to get the contracting division in shape before it is sold to concrete sub-contractor O'Rourke (NCE 5 April). Negotiations on this sale were expected to end this month, with John Laing shareholders expected to vote on the deal in early June.

O'Rourke should take control later that month.

Under the terms of the deal O'Rourke will take on the yellow and black Laing logo, adding the word 'construction' to it.

www. laing. co. uk

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