Liebherr cranes at work on the Queensferry Crossing, Scotland
UK construction and infrastructure business Galliford Try is reviewing its construction business with a view to downsizing.
“The review will reduce the size of the construction business, focusing on its key strengths in markets and sectors with sustainable prospects for profitability and growth, where we have a track record of success,” the company said in a written statement.
“The board anticipates that this review will result in reduced profitability in the current year reflecting a reassessment of positions in legacy and some current contracts and the effect of some recent adverse settlements, as well as the costs of the restructure. The single largest element relates to the Queensferry Crossing joint venture, which has recently increased its estimated final costs on the project,” the statement noted.
Graham Prothero, recently picked up the reins as chief executive at Galliford Try
Galliford Try was part the consortium including ACS (Hotchief, Dragados) and American Bridge to build the road bridge over the River Forth that was originally set at £795 million (€920 million) in 2011. The 2.7km bridge was officially opened by the UK’s Queen Elizabeth in September 2017 (see World Highways, key project report, November 2015).
The three-tower cable stayed bridge was built alongside the existing Forth Road Bridge and carries the M90 motorway across the Firth of Forth between Edinburgh, at South Queensferry, and Fife, at North Queensferry. The final cost came in at £1.35 billion (€1.56 billion).
Galliford also said that it is assessing its work and costs on the completed Aberdeen Western Peripheral Route. “The board expects that the outcome of this assessment will reduce the group's full year post‐exceptional profit before tax by £30-40 million (€35-46 million) below the current consensus analysts' forecast.”
The contract for Transport Scotland’s Aberdeen Western Peripheral Route - unofficially called the Aberdeen bypass – was awarded in June 2014 to Connect Roads, a joint venture between Balfour Beatty Investments, Carillion Private Finance (Transport) and Galliford Try Investments. The final section of the bridge was opened in February.
The estimated cost in 2009 was up to £395 million (€457 million) but rose to around £745 million (€862 million) by 2016. The collapse of Carillion and some issues with concrete helped push the final price tag to over £1 billion (€1.15 billion), according to media reports.
Galliford’s announcement to cut back its construction division comes after the company appointed Graham Prothero as chief executive last month. Prothero, who joined the company as finance director in 2013, takes over from Peter Truscott who said he is leaving to pursue other opportunities. Prothero’s career includes finance director at Development Securities and as a partner at Ernst & Young consultants. A corporate statement at the time of his appointment said he will “maintain Galliford Try’s progress towards the group’s 2021 strategy”.