Contractor says it will 鈥榮ubstantially complete鈥� delayed hospital this March

Laing O鈥橰ourke has confirmed losses on its troubled PFI hospital job in Canada currently run to 拢93m.

The writedown on the Centre Hospitalier de l鈥橴niversit茅 de Montr茅al (CHUM), which the firm is delivering in joint venture with Spanish contractor OHL, is disclosed in the heavyweight contractor鈥檚 annual report, which is now available on the company鈥檚 website.

Laing O鈥橰ourke says the delayed hospital will hit 鈥渟ubstantial completion鈥� by this March. The first phase had been due to be handed over to the client last April.

Commenting on the CHUM project, the report states: 鈥淭he write-down in this contract was due to additional costs due to programme slippage including damages payable after the original substantial completion date was not achieved.

鈥淭he client and the joint venture project team have now agreed to target substantial completion in the last quarter of the year ending 31 March 2017.

鈥淲hilst the scale and complexity of this contract means the position is not without risk, management believe project progress together with recent alignment of programme with the client significantly de-risks the company from further material slippage.鈥�

The annual report also confirms the group suffered an overall 拢246m pre-tax loss in the year to March 2016.

The publication comes after Laing O鈥橰ourke plc - its trading division covering operations in Europe, Canada and Abu Dhabi, but not Australia - disclosed earlier this month it made a 拢267m pre-tax loss for the period, blaming the Canadian PFI hospital, problems with its offsite manufacturing business, compensating blacklisted workers and restructuring costs.

In a letter to clients and staff before Christmas, the company鈥檚 founder Ray O鈥橰ourke sought to explain the deep losses, saying: 鈥淲e all know that when recession starts, our industry 鈥� enters a race to the bottom - regrettably Laing O鈥橰ourke joined in.鈥�

He also set out plans for the firm to become a 拢4bn-turnover business within four years and restated the firm鈥檚 commitment to investing in off-site manufacturing. He added: 鈥淚 want to assure all our stakeholders that our company is adequately financed, has returned to profit in FY17 and is 鈥� well-positioned to move forward from these less than satisfactory results.鈥�

Topics