Dudley Hospital PFI gives Sir Robert a £24m headache

Sir Robert McAlpine has taken a £24m hit on its Dudley Hospital PFI contract.

The writing was on the wall as the same problematic contract had already caused Sir Robert £3m of additional losses in the previous year.

The privately-owned group issued its latest financial annual accounts this week. Covering the 12-month period to 31 October 2003, the figures showed turnover up at £760m from £650m the previous year. The pre-tax loss in 2002 of £1.4m looked like small change when compared with the latest loss of £11.6m.

If it had not been for the exceptional item, Sir Robert would have achieved an operating profit of £11m.

The directors’ report, issued with the financial results, said: "Other contracts have been satisfactory and the forward order book is very healthy, having recently secured two major new contracts."

A company policy of keeping the group’s internal workings secret meant that no one in the company was willing to explain the problems at Dudley Hospital.

The project was in the news 18 months ago when Sir Robert parted company with Emcor Drake & Scull, which had a £30m M&E subcontract. Haden stepped into the breach.

Despite running into the red, Sir Robert continues to hold its position as one of the construction industry’s better payers, paying its subcontractors and suppliers within an average of 31 days, down on the previous year’s figure of 34 days.