Losses on job now approaching 拢150m

Aberdeen

Galliford Try has said the cost to complete the road it is building around Aberdeen has gone up by a further 拢20m taking losses on the job to more than 拢140m.

In a trading update, the firm said completion of the final section was now due in December after remedial work on the Don bridge, near the city鈥檚 airport, was hit by weather problems and complexities over carrying out repairs.

Work on the bridge 鈥� which involves realigning stretching ducts 鈥� was due to finish this month.

But in its update Galliford Try said: 鈥淎s a result of higher than anticipated direct costs, and the further delay to completion, our estimate of the final costs to complete the contract has increased by approximately 拢20m.鈥�

In September it announced a 拢25m hit for the second half of its financial year and the boss of its construction arm Bill Hocking said the 鈥渧ast majority of the road is complete鈥� with 80% of it opening by the end of that month.

He added: 鈥淭he bridge will be finished in late autumn. After that there is no practical impediment to opening the road.鈥�

The firm has now lost 拢143m on the scheme which was originally let as a 拢533m lump sum, fixed-price deal to a team that also included Balfour Beatty and Carillion, whose implosion has cost Galliford Try 拢25m of the 拢143m figure.

Cenkos analyst Kevin Cammack said: 鈥淸The road] is proving to be an almighty construction migraine that simply won鈥檛 go away. Hopefully the latest expensive dose of tablets will get the job done.鈥�

But the firm said it was in 鈥渃onstructive discussions鈥� with client Transport Scotland about recovering money on the scheme which it said in this afternoon鈥檚 update was 鈥渟ignificant鈥�.

Hocking has previously said the firm will not bid for any more lump sum, fixed-priced deals and that contracts it has taken on in the last couple of years have been hitting margins of 2%.

In its update, Galliford Try said the underlying construction was trading in line with expectations while its Linden Homes business was making 鈥済ood progress鈥� against strategic targets.

 

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