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Carillion returns to road building as ECIs pay off
13:11 19 Mar 2003
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Road clients' growing interest in Early Contractor Involvement
(ECI) forms of contracts have delighted Carillion, the construction
and services group.
"It makes great sense," said finance director Chris Girling, as the group unveiled its financial results for 2002, "as effectively you are paid for your bid costs."
Girling pointed to good future prospects in highways as margins from road maintenance are holding firm while new road build projects are "back with a vengeance".
The ECI approach has revived Carillion's interest in road building. "Because of the risks we were being asked to carry on new projects, we withdrew to the point where we are only building one new road at the moment, but ECI changes all that," said Girling.
Carillion's turnover in the 12 months to 31 December rose to £2bn (£1.9bn). The pre-tax profit improvement to £42m (£35m) would have been higher without an exceptional charge of £5m from the disposal of Maxxiom, the hoists, accommodation and general plant hire subsidiary.
Crown House, Carillion's M&E subsidiary, has at last been knocked into shape. After further losses last year, running to £2m, it will finally break even in 2003. "It's a big asset," said director of construction services Roger Robinson. "It was downsized and now has an annual turnover of £100m and just 40 customers."
Carillion's PFI bid costs run at between £10m and £15m a year. "They are still too high," said Robinson.
"There is no excuse for the lack of standardisation. Design costs are huge - so why should you have to design four just to build one as this waste is only recycled into future bids? This is the reason why some hospitals are now receiving only one bidder.
"The innovation should be put into the concept stage and that would call for a leap of faith. The competition phase should be based on conceptual issues such as 'what's your team?' and 'what's your track record?' It needn't be detailed at all."
Chief executive John McDonough spelt out Carillion's PFI record. "The projects have all been delivered on time and all to the cost target."
"It makes great sense," said finance director Chris Girling, as the group unveiled its financial results for 2002, "as effectively you are paid for your bid costs."
Girling pointed to good future prospects in highways as margins from road maintenance are holding firm while new road build projects are "back with a vengeance".
The ECI approach has revived Carillion's interest in road building. "Because of the risks we were being asked to carry on new projects, we withdrew to the point where we are only building one new road at the moment, but ECI changes all that," said Girling.
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Carillion's turnover in the 12 months to 31 December rose to £2bn (£1.9bn). The pre-tax profit improvement to £42m (£35m) would have been higher without an exceptional charge of £5m from the disposal of Maxxiom, the hoists, accommodation and general plant hire subsidiary.
Crown House, Carillion's M&E subsidiary, has at last been knocked into shape. After further losses last year, running to £2m, it will finally break even in 2003. "It's a big asset," said director of construction services Roger Robinson. "It was downsized and now has an annual turnover of £100m and just 40 customers."
Carillion's PFI bid costs run at between £10m and £15m a year. "They are still too high," said Robinson.
"There is no excuse for the lack of standardisation. Design costs are huge - so why should you have to design four just to build one as this waste is only recycled into future bids? This is the reason why some hospitals are now receiving only one bidder.
"The innovation should be put into the concept stage and that would call for a leap of faith. The competition phase should be based on conceptual issues such as 'what's your team?' and 'what's your track record?' It needn't be detailed at all."
Chief executive John McDonough spelt out Carillion's PFI record. "The projects have all been delivered on time and all to the cost target."
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