Carillion's 'big bang' plan arrested

Carillion's plans for a "big bang" transformation of the group are believed to have been consigned to history.

The £100m plan was to float off Carillion's entire construction wing and then merge the rump of Carillion with another services group.

Chris Girling, finance director, is credited as being the persuasive influence that convinced chief executive John McDonough that the two existing portions of Carillion should be kept intact. It has taken six months to achieve this mood swing at the most senior level.

A construction analyst said this week: "When McDonough arrived he was shocked at the culture of a construction business, of how it manages risk. Remember that Carillion was still doing a lot of hard bid tendering.

"But McDonough now sees that the two parts, construction and services, can be knitted together, and even believes that it is an advantage, when bidding for enormous PFI projects, to have a huge construction capability in-house."

Carillion has steadied City nerves with a trading statement saying that recent months have gone to plan, and year-end profits are in line with expectations. Analysts have pencilled in a pre-tax profit figure of over £55m.

Girling is also seen as having boosted Carillion's financial credibility. "In the Tarmac days, there was nothing in the cupboard for a rainy day," said the analyst. "But Girling has arrived and he's been putting £10m to £15m away for the last three years.

"He's also favours the slowly-slowly approach. The £50m to £100m mega-deal is no longer on the cards. You could see that when Don Kenny was brought in from Johnson Controls in order to build Carillion's services capability from within."