Author Bio ▼

Jamie Hailstone is a freelance journalist and author, who has also contributed to numerous national business titles including Utility Week, the Municipal Journal, Environment Journal and consumer titles such as Classic Rock.
February 22, 2018

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Construction

Safety issues at Carillion’s Liverpool PFI contract published

Safety problems at one of Carillion’s PFI hospital contracts were known about nine months before an £845 million write down, according to new information published by MPs today.

A letter jointly published by the work and pensions and business, energy and industrial strategy committees from the contractor building the Royal Liverpool Hospital, the Hospital Company, indicates cracked beams were first discovered in November 2016, when work in that part of the hospital was halted.

Last month, the Carillion’s former chief executive, Richard Howson appeared in front of both parliamentary committees and was asked about the £845 million contract write down, which brought the crisis at the construction giant into public view.

Cost changes

In response to a question about “the lack of challenge and preparation for a potentially disastrous scenario”, Mr Howson fell back on the discovery of cracked beams in the construction of the Royal Liverpool Hospital, which “added over £20 million to our cost of completion”.

“I am illustrating how the cost projection changed in Q2 of that year,” he told MPs.

But the letter from the contractor states: “Because of the nature of the defects, it was necessary to set up an exclusion zone above and below the area of the defective beams until temporary beams could be installed,” the letter states.

“This exclusion zone below the beams was not removed until 24 January 2017 and the exclusion zone above the beams was in place until 24 March 2017.

“While these exclusion zones were in place, no work could be completed within those areas.”

Carillion collapsed in January with debts of more than £1.5 billion.

Famous beams

Speaking before today’s inquiry session on Carillion, the chairman of the work and pensions committee, Frank Field, said: “These famous beams are becoming an ever more perfect parable for the whole company: the cracks were visible long before the directors or auditors admit, and while they were dutifully added to the litany of factors and organisations to blame for Carillion’s spectacular demise  – anyone and anything but the people running it – they were only ever holding up one part of one of Carillion’s thousands of projects.”

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