Pair set to receive 拢32m each in dispute with Transport Scotland

Balfour Beatty and Galliford Try have said they are close to striking a settlement in a long-running dispute over what the pair claim they are owed on their scheme to build a dual carriageway in Scotland.

The 58km-long Aberdeen Western Peripheral Route (pictured) was mired in a series of problems caused by issues such as bad weather and the cost of carrying out utility diversions. It was finally fully opened in February 鈥 more than a year late.

Aberdeen

In August, Balfour Beatty chief executive Leo Quinn told 黑洞社区 the joint venture, called Aberdeen Roads Limited, was due 鈥渉undreds of millions鈥 from client Transport Scotland and added: 鈥淭he job was sold for 拢530m but has cost over 拢1bn to deliver.鈥 He said Aberdeen Roads, which had included bust contractor Carillion, had been forced to shoulder around 拢500m in extra costs.

But in an update earlier today (Monday), Balfour Beatty said it was 鈥渋n advanced discussions with the client鈥 regarding a 拢32m settlement it would receive.

It added: 鈥淭he settlement [would have] no material change to the group鈥檚 balance sheet position. Any settlement would remain subject to usual consents and approvals of all interested stakeholders.鈥

Galliford Try said it was also expecting a cash payment of 拢32m, adding that it would incur a write-off of 拢52m on the job.

In a statement, the firm, which is set to become a construction-only business once the sale of its housing and partnerships businesses to Bovis Homes formally completes next month, added: 鈥淭he settlement brings to a conclusion a complex and challenging project, averting a lengthy and costly litigation process. The settlement also removes a significant distraction and uncertainty, allowing the construction business to focus on its core business.鈥

Balfour Beatty signed the deal in December 2014 鈥 just a few weeks before then new chief executive Leo Quinn arrived at the firm.

Both Quinn and Bill Hocking, Galliford Try鈥檚 construction boss who will be the firm鈥檚 new chief executive when the Bovis deal is wrapped up, have previously said they would not have signed up to the job.

The scheme has caused huge financial damage to the firms involved with Carillion going bust last year, in part blaming problems on the road for its demise, while the costs of completing it and another problem job, the Queensferry Crossing, saw Galliford Try launch a rights issue last March to raise close to 拢160m.

In its statement today, Galliford said the Aberdeen road and another historical contract, thought to be the Queensferry Crossing, meant the firm will report an exceptional write-off of around 拢61m in its 2019 results.