Kajima to stay in PFI despite £80m losses

Kajima has insisted it is committed to PFI despite revealing that it will take an £80m hit on its existing PFI schools contracts when the group’s results are announced in May.

The Japanese construction giant pointed to the recent award of the £19m Brentwood Community Hospital PPP. It is also bidding for about £163m-worth of PFI schools in Oldham, Slough and Gateshead.

However, it pulled out of the £40m Salford PFI school scheme citing “affordability issues” (CJ 26 January).

Kajima said its losses stemmed in part from problems with the £21m Haverstock school PFI project in Camden, north London, where it was fined an undisclosed sum last October for delays.

Haverstock’s pupils spent almost four weeks being taught in sports halls and community centres because Kajima missed two deadlines to complete the work.

Kajima blamed unusually heavy rainfall in August along with exceptional difficulties in its supply chain for the delay.

Head of Kajima’s PFI division Julian Rudd-Jones said last September: “I am very sorry for the delay. This is a complex project with a challenging construction timetable.

“Until recently we had all hoped that the acceleration measures we had instigated would enable us to complete on time despite earlier delays. In the event, a number of factors, including continuous heavy rain during August, have made this impossible.”

At the same time, a second phase of the project, involving the demolition of the remaining Victorian buildings on Haverstock Hill, was said to be “well advanced and on time”.

Problems also surfaced on another Kajima PFI school project in Ealing last November, when the education joint committee were told by David Gallie, director of services to schools, that there had been slippage on Kajima’s building programme.

The £60m Ealing project involves the redevelopment of two high schools, at Acton and Greenford, and one primary school. Kajima won the construction work with Mitie taking on the facilities management.

“There would be financial penalties for the contractor,” members were told. The removal of asbestos is thought to have been one of Kajima’s problems.

Elsewhere, Kajima is reported to have finished on time and on budget on the Wooldale Centre for Learning, a PFI project in Northampton.

Kajima’s on-going PFI schools portfolio includes a £35m education village in Darlington for 1,900 pupils. It is on target to  open in September.