Jarvis takes £12m hit from higher bid costs

Increased bid costs will put a £12m dent in Jarvis' profit, the beleaguered group warned the City this morning.

Four recent PFI wins took longer than expected to get to the preferred bidder stage, incurring additional bid costs. A further six PFI projects where Jarvis is shortlisted were expected to reach preferred bidder stage by now, but they have not done so. "These projects will now also incur additional bid costs beyond those previously anticipated," the statement said.

Although Jarvis will take a £12m hit in the current year to March, the group expects a "significant recovery" in the 2004/05 financial year.

The board has instigated a programme to reduce bid costs by £6m and the group will take a more selective approach to bidding. The separate projects, construction and facilities management operations will be integrated into one business.

There is some good news: Jarvis said it is making excellent progress on discussions with Network Rail to exit rail maintenance.