Carillion: Kier Group boss foresees new bid process

Image source, HS2

The government will have to issue new tenders for Carillion's halted building projects if it wants to get value for money, the boss of one of the UK's biggest construction firms says.

Haydn Mursell, chief executive of Kier Group, said other firms would be "daft" to pick up Carillion's projects under their current contract terms.

Public contracts are likely to be delayed as surveyors assess progress.

Kier was Carillion's joint-venture partner on the HS2 rail project.

Carillion went into liquidation on 15 January. It had been working on dozens of large infrastructure projects including hospitals, the redevelopment of Battersea Power station, and the Anfield Stadium expansion.

It also operated services contracts in schools, hospitals and prisons, which have been the initial priority for the government.

Carillion's work on HS2 and smart motorways traffic management projects will be taken over by joint-venture partners Kier and Eiffage, but it is still unclear what will happen to other public and private sector contracts.

'Complicated' process

"The government has to choose between two competing forces," Mr Mursell told BBC Radio 4's Today programme.

"Does it want them completed to a certain time frame, in which case they need to engage with the contracting fraternity quite quickly.

"Or is it about value for money, in which case, maybe a re-procurement might occur."

He said it was unlikely that firms would step in to take on Carillion projects on current terms.

"Carillion's contracts were loss-making, so it would be daft to step in and take them," he said.

Alastair Stewart, construction and property analyst at Stockdale Securities, said the process was "very complicated" and a lack of estimators and quantity surveyors would make it difficult to establish the true position of jobs that were half-complete.

He said while the government was likely to forge ahead with public sector contracts, it was possible that Carillion's private sector contracts would be mothballed "for months or indefinitely".

Mr Mursell said Kier had taken on Carillion workers in the HS2 and Smart Motorways joint ventures and that by the end of this week, it would "be as if they were always amongst ours and Eiffage's ownership".