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There seems to be discussions about the Carillion liquidation spread over numerous topics in the Birmingham forums.

So I have created this topic to try to put all the discussion in one place.

This topic is mainly for how the Carillion situation affects Birmingham but could also cover UK wide issues.
 

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Discussion Starter · #2 ·
Sandblast added this to the Paradise topic yesterday

A chap on the Manchester Moda Tower forum has been answering some questions by their forumers. It doesn't sound good. See below, his answers are in bold type.


As I suspected. This is a real shame before I do not forsee anything happening on this site quickly. There are a lot of questions and a lot of unanswered questions. I don't profess to be an expert but I do work in the field so hopefully you'll find some of these answers enlightening.


https://www.designingbuildings.co.uk/wiki/Home is a great website for construction information.

Quote:
Originally Posted by AJD1984 View Post
If Heyrod are the structure subcontractor can they not continue with it and take over as main contractor too or does it not work like that? I suspect deals/negotiations are taking place behind the scenes.


The main contractor (Carillion) takes liability for the construction of the building. They co-ordinate the build and sub-contract separate works out to sub-contractors. These sub-contractors are tied to the main contract between the client and contractor by collateral warranties. In a sense, a sub-contractor like Heyrod are simply tied to the contract (not bound) and have no influence over the administration of the construction contract, neither do they have the financial clout to step in and continue the build. Even if this they could, they would need to spend months analysing the costs and calculating the price so they can make a profit. Generally, profit margin in the construction is 2-4% so it is important tenders are priced accurately. The meagre profit margin also illustrates the risk/reward of the construction sector and it little surprise why Carillion failed as they took on too many risky projects.

Quote:
Originally Posted by battenfobs View Post
Surely a company of Heyrods size and others must of known about carillons debts months if not years ago and put something in place or have some sort of guarantee if carillon collapsed ?


The contract to build Angel Gardens was signed in January 2017 before when it became public that Carillion were in serious financial problems in July when their share price fell off a cliff. However Heyrod (and other sub-contractors) would have suspected Carillion were in difficulties - most obvious sign would have been invoices being paid later as financial distress became worse and Carillion looked to retain cash in the bank for as long as is possible to increase chances of survival.

Quote:
Originally Posted by mileymc1 View Post
Fingers crossed things get put into place and sorted sooner than later.

Need to get this show back on the road! Thinking positive, it must be a priority as so much expense has already been occurred with piling groundworks and already being well under construction.



Logically, you would think this would be good. Sadly, the fact some of the works have been done is a problem - not an advantage!

The contractor can be sued for up to 12 years after the building is complete - known as the limitation period. In effect, it's an extended warranty for the building owner if there are major defects as a result of a contractor not building the agreed design correctly. It's sadly possible, Carillion may have taken shortcuts to skimp on money and make savings due to the financial difficulties they were in. As a result there maybe latent defects (patent defects can be seen - latent defects cannot) that can arise after the building has been in operation for a number of years.

For instance, any new contractor doesn't know if the rebar in the concrete has altered to save costs. If it is of poorer standard, settlement and cracks can occur in the concrete. The foundations of the building will need underpinning to prevent future subsidence which costs a fortune. This is quite a common claim that occurs in court. So you're trusting what has been built previously which you don't know if it has been correct or not. As such there is increased risk of litigation but the same reward. Consequently, many contractors would steer clear of this as a potential project at this moment in time.

Two things contractors fear that can wipe out profit margin: delays (which killed Carillion on many big projects) and litigation (which is often out of the blue). Many wise contractors would stay away from this job until:
1. They are desperate for work - which they are not at this moment in time contrary to what is said in the news about falling construction output.
2. The client is willing to pay an above market rate to the contractor to offset the increased unknown risk a contractor would take.

I do fear we will be seeing a concrete core sticking out of the ground for later rather than sooner unless one or both of the things above happen.
 

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Morning all

So, yesterday was quite a day. Awful news all round really.

Moda were in discussion with Carillion last year and they were nailed on for this. Detailed design had begun (I think). I'm guessing Moda started looking elsewhere before Christmas once the warning signs started. My top tip is McAlpines to take this on. Mace were also initially in the frame. BAM don't have the resource, they've got their hands full. Speaking of which..

Argent were on the phone to BAM yesterday to see if they can pick up the completion of 1CS and they are looking at it. Which makes total sense of course considering they are due to commence on 2CS. Interesting point is that Carillion have constructed the basement structure, and had provided a warranty for it, so there is a nice big liability gap now. Good luck BAM.

The collapse of Carillion cannot be under estimated. It's not them we are worried about but their supply chain. All main contractors are relying on the same supply chains. If any of them go down with Carillion, which is likely from the horror stories we are hearing, this could have an effect on other projects in the city.

It should never have been allowed to get this far.
 

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Morning all

So, yesterday was quite a day. Awful news all round really.

Moda were in discussion with Carillion last year and they were nailed on for this. Detailed design had begun (I think). I'm guessing Moda started looking elsewhere before Christmas once the warning signs started. My top tip is McAlpines to take this on. Mace were also initially in the frame. BAM don't have the resource, they've got their hands full. Speaking of which..

Argent were on the phone to BAM yesterday to see if they can pick up the completion of 1CS and they are looking at it. Which makes total sense of course considering they are due to commence on 2CS. Interesting point is that Carillion have constructed the basement structure, and had provided a warranty for it, so there is a nice big liability gap now. Good luck BAM.

The collapse of Carillion cannot be under estimated. It's not them we are worried about but their supply chain. All main contractors are relying on the same supply chains. If any of them go down with Carillion, which is likely from the horror stories we are hearing, this could have an effect on other projects in the city.

It should never have been allowed to get this far.
I suggested that Carillion did the basement structure in another thread and was told I was wrong and it was BAM. Could be worse than we expected if my original statement was correct.
 

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Surely, in terms of the basement structure of CS2, there will be ways of testing the work already carried out is up to a satisfactory standard.

Although I understand there will be no one to turn to for liability at a later date.
 

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Delusion at boardroom level was quipped by the Guardian! The executives are nicely tucked up in their exec. houses, yachts etc. I do think that this could be a turning point and changes made but then it does involve Governments... I know about Gov. contracts elsewhere and it's not pretty.
 

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It should never have been allowed to get this far.
^^
The weekend "high level" talks must surely have indicated what a potential disaster this could develop into, for so many firms, but more so thousands of workers and their families.
This as the potential to create chaos within the construction industry and many ongoing projects, the news that work as stopped completely at Paradise and the Midland Met hospital is not good at all.
This really should have been caught earlier, its almost like the government wanted it to fail as if to teach them a lesson!
It may be costly but there as to be some government intervention here, for the sake of thousands of families and smaller subcontractors and suppliers at least, then processes put in place to ensure no one else is ever allowed to get into this position.
 

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^^

This really should have been caught earlier, its almost like the government wanted it to fail as if to teach them a lesson
Not so much, after reading various reports on this it appears the government was aware of possible troubles but structured contract tenders to lead towards Carillion or Carillion involved working partnerships with other contractors in the hope the promise of more and more work in the pipeline would keep the banks happy to keep lending


Quite bizarre they wanted the banks to keep funding them after the last crash was blamed on over lending by the banks as such..


Government should have stepped in took a stake in the company provided the funding for its private sector business done and not take on new contracts, possibly sell up to other constructors bringing its public sector contracts under control, any profit from these would have been back in the governments hands

Long term they could have outsourced to other companies but short term they should’ve took control..
 

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^^



Not so much, after reading various reports on this it appears the government was aware of possible troubles but structured contract tenders to lead towards Carillion or Carillion involved working partnerships with other contractors in the hope the promise of more and more work in the pipeline would keep the banks happy to keep lending


Quite bizarre they wanted the banks to keep funding them after the last crash was blamed on over lending by the banks as such..


Government should have stepped in took a stake in the company provided the funding for its private sector business done and not take on new contracts, possibly sell up to other constructors bringing its public sector contracts under control, any profit from these would have been back in the governments hands

Long term they could have outsourced to other companies but short term they should’ve took control..
Are you suggesting that government officials subverted tender processes to favour a bidder? If so it makes a mockery of the whole outsourcing industry, as you are in effect taking about cronyism and corruption. I'm assuming your also aware of the links between the Carillion board and Tory Party. The whole thing just stinks enough already....
 

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There's a very long history of Carillion donating to the Liberal Democrats and the Tory party, and more recently (when the coalition ended) just the Tory party for 'staff costs' and 'resources' and such.

Though they did donate to Blair's Labour too, though I suppose the common denominator here is the parties which support PFIs and what not.

Combined with the other suspicions people have posted, there's probably going to be an investigation.

They're already fast tracking investigations into the bosses, who have some very suspicious activity.
 
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