crisis builder Carillion

[eric pebble]

Looks to me like these guys were run by a load of people who think pwoperdee is a license to print money....

https://www.standard.co.uk/business/jp-morgan-warns-of-more-pain-ahead-for-crisis-builder-carillion-a3587406.html

 

& more here:

https://www.standard.co.uk/business/russell-lynch-zafar-zapped-but-others-must-share-blame-at-carillion-a3631956.html

 

Edited September 11, 2017 by eric pebble

[Majorpain]

Massive pension deficit, Massive debts, not paying suppliers for 120 days and a culture of lowest bidder gets the work regardless of quality has come back to bite them royally.

£5bn order book?  Fab, but can they actually make any profit from it...

[TheCountOfNowhere]

20 minutes ago, eric pebble said:

Looks to me like these guys were run by a load of people who think pwoperdee is a license to print money....

https://www.standard.co.uk/business/jp-morgan-warns-of-more-pain-ahead-for-crisis-builder-carillion-a3587406.html

 

& more here:

https://www.standard.co.uk/business/russell-lynch-zafar-zapped-but-others-must-share-blame-at-carillion-a3631956.html

 

They were right, just ask the BoE     

[Guest]

What does this mean for the battersea devlopment? Was carillion a big enough player for it to grind to a hault?

[eric pebble]

Carrillion are - or were - big.  Looks like a lot of greed and incompetence has put them on the edge.

Same old, same old message:  Greed and incompetence has led to economic collapse - or near collapse.

[Option5]

On 11/09/2017 at 1:10 PM, Grab_Some_Popcorn said:

What does this mean for the battersea devlopment? Was carillion a big enough player for it to grind to a hault?

I suspect it already has, they just don't know it yet...............

[crashmonitor]

On Monday, September 11, 2017 at 1:05 PM, Majorpain said:

Massive pension deficit, Massive debts, not paying suppliers for 120 days and a culture of lowest bidder gets the work regardless of quality has come back to bite them royally.

£5bn order book?  Fab, but can they actually make any profit from it...

The depressing thing is that these contracts are still ball crunchingly expensive in spite of sinking the shareholders. Somebody must be making money and one assumes it is management and professionals within the construction industry. We think the economics of house prices are mad but when minor refurbs on public buildings are running into the millions of pounds then somebody is making a huge monetary gain.

[macca13]

47 minutes ago, crashmonitor said:

The depressing thing is that these contracts are still ball crunchingly expensive in spite of sinking the shareholders. Somebody must be making money and one assumes it is management and professionals within the construction industry. We think the economics of house prices are mad but when minor refurbs on public buildings are running into the millions of pounds then somebody is making a huge monetary gain.

Same in all areas of business, seems to be consultants and sub contractors reaping the rewards, NHS is being raped by agencies.. 2 billion of our 12 billion foreign aid goes to consultants not those in need..

wonder what qualification you need to be a consultant, best friends, mate of a mate, family member? 

[frankief]

http://www.constructionenquirer.com/2017/09/13/carillion-bosses-had-bonuses-protected/

 

[crashmonitor]

Galliford Try the construction giant has announced it will give up on large infrastructure construction projects. It currently has a margin on every job of -6%. Seems to back up the point that Corps and their shareholders are getting shafted by freelance Consultants and subcontractors on every job. 

Who would want to touch one after Grenfell anyway. No doubt the contractor who did that lost millions on the job even charging 100k per flat for dodgy insulation. Such are the mad economics of public sector infrastructure.

I note Kier hasn't made a profit for years, but the Market is optimistic it might one day judging by the share price. I guess it might be the only tender left soon which might help. ( Kier price to earnings minus 61...ie. it makes huge losses)

 

Edited September 14, 2017 by crashmonitor

[The Preacherman]

Good riddance to Carrillion a nasty toxic business.

Construction is riddled with corruption and skimming. That is one of the reasons why the margins are so poor but the price is often high. 

[frankief]

1 hour ago, crashmonitor said:

 Seems to back up the point that Corps and their shareholders are getting shafted by freelance Consultants and subcontractors on every job. 

 

Don't know how much you know about the construction industry, but consultants (do you mean architect/ structural engineer/ PQS etc?) on a traditional contract are engaged and paid for by the client. Payment of their fees would have nothing to do with the building contractor and it would not impact his margin.

Subcontractors are not the ones doing the shafting either, they are the bottom of the food chain and are employed by the main contractor, they are the ones working under a subcontract to the builder, who pays them only when he has been paid by the client. Sometimes not promptly either - see Construction Enquirer site for many articles about trade bodies and their thoughts on payment terms and retentions etc.

Edited September 14, 2017 by frankief

[crashmonitor]

9 hours ago, frankief said:

Don't know how much you know about the construction industry, but consultants (do you mean architect/ structural engineer/ PQS etc?) on a traditional contract are engaged and paid for by the client. Payment of their fees would have nothing to do with the building contractor and it would not impact his margin.

Subcontractors are not the ones doing the shafting either, they are the bottom of the food chain and are employed by the main contractor, they are the ones working under a subcontract to the builder, who pays them only when he has been paid by the client. Sometimes not promptly either - see Construction Enquirer site for many articles about trade bodies and their thoughts on payment terms and retentions etc.

Well fair enough, as you have some knowlege of the industry perhaps you can come up with an answer as to why public infrastructure Corps are working on negative margins and collectively losing billions. Ok overly competitive tendering, still a puzzler why the contracts are eye wateringly expensive eg. some refurbs are costing more than the buildings cost to build in the first place. In Galliford Try, Kier and Carillion you have the big three...well Carillion was one of the big three. They are off setting losses  on private homes where margins are as high as 25%.

Just concerning if public infrastructure becomes a no go area for construction firms.

Edited September 15, 2017 by crashmonitor

[Option5]

1 hour ago, crashmonitor said:

Well fair enough, as you have some knowlege of the industry perhaps you can come up with an answer as to why public infrastructure Corps are working on negative margins and collectively losing billions. Ok overly competitive tendering, still a puzzler why the contracts are eye wateringly expensive eg. some refurbs are costing more than the buildings cost to build in the first place. In Galliford Try, Kier and Carillion you have the big three...well Carillion was one of the big three. They are off setting losses  on private homes where margins are as high as 25%.

Just concerning if public infrastructure becomes a no go area for construction firms.

If it's like as the oil industry they give a low price and agree on a completion date. These are of course lies but if they don't the other bidders will  and get the job. They bid at a loss on the assumption that they will cover the missing margin and the overrun with variations. Now money is tight the variations don't get agreed and they're threatened with liquidated damages for the overruns, double whammy. To limit their losses they throw money and bodies at the job to get it finished on time, usually failing miserably.

A lot of these companies are running on cash flow from stage payments to stay afloat so the have to "buy" the next big project to keep the plates spinning. If they get lucky and make a profit on a job they can hope to outlast their competitors.

[Majorpain]

2 hours ago, crashmonitor said:

Well fair enough, as you have some knowlege of the industry perhaps you can come up with an answer as to why public infrastructure Corps are working on negative margins and collectively losing billions. Ok overly competitive tendering, still a puzzler why the contracts are eye wateringly expensive eg. some refurbs are costing more than the buildings cost to build in the first place. In Galliford Try, Kier and Carillion you have the big three...well Carillion was one of the big three. They are off setting losses  on private homes where margins are as high as 25%.

Just concerning if public infrastructure becomes a no go area for construction firms.

Its a demand and supply thing on one hand, there are too many construction companies chasing too little work.  That works a level below however, so the main contractor will typically get to choose between several subcontractors if the client has not specified anyone for that job and will typically these days pick the cheapest.  That does not always work out the best for them...

I have a feeling that the areas causing the problems are site safety and architects.  Zero harm is a noble goal but its side effect is contractors spending a LOT of time and money on H & S (both consultants and site safety), that will always hit the bottom line.  Architectural drawings these days have moved from things you can work off to "design intent only".  Some Architects are better than others in this respect, but if it does go wrong someone will have to pay to fix it (hello main contractor).  The government is trying to fix this by forcing everyone to use Digital BIM that must be accurate for all pubic contracts, its supposed to be live but is still a WIP at the minute.

Its interesting that refurbishments are more expensive than newbuild, it does indicate to me that the construction side is reasonably efficient, the "hangers on" not quite so.  All that measuring and redesigning will add up fast.

[Will!]

On 13/09/2017 at 3:28 PM, macca13 said:

wonder what qualification you need to be a consultant, best friends, mate of a mate, family member? 

Just loads of front.