Architects have demanded clarity over a warning that certain Carillion contracts could be ended today (17 January)
Cabinet Office minister David Lidington told Parliament on Monday afternoon that there were only 48 hours of guaranteed government support from the government for Carillion’s non-public work.
The Wolverhampton-based construction, development and service giant crashed into liquidation on Monday morning with as much as £1.5 billion of debt.
Lidington said: ‘For the next 48 hours, even for private sector employees – rather than those providing public services – there is certainty they can continue to turn up for work. After 48 hours either the private sector counterparty must agree to fund future provision including the fees of the official receiver or those private sector contracts of Carillion will be terminated.’
Architects across the UK are counting the cost of working for the £4 billion turnover company.
Concerns were voiced in the House of Commons about when Carillion’s much-delayed £335 million Royal Liverpool University Hospital, designed by NBBJ and HKS, would finally open.
Elsewhere, the huge scheme to regenerate the Vaux Brewery site in Sunderland has ground to a halt in the wake of Carillion’s demise. It is understood that Feilden Clegg Bradley was novated to Carillion Construction to help deliver the first phase.
Workers had still not returned yesterday (16 January) to the site of the already behind-schedule £588 million Midland Metropolitan Hospital, at Smethwick near Birmingham, which is being designed by Edwards Williams Architects and HKS (pictured).
According to the AJ’s sister title Construction News, work on more than £1 billion-worth of Carillion projects has now halted.
Former RIBA president Jack Pringle said the implications of the Carillion collapse could be huge.
‘This is not a car crash; it’s a motorway pile-up,’ he said. ‘Carillion was £1.5 billion in debt; it was out of control.
‘There will be some architects in the midst of projects that will collapse. If they have a balanced portfolio of clients and sectors then it should not be a major problem but if they have become specialised and reliant on Carillion then it could be catastrophic.’
RIBA executive director Adrian Dobson said there would be a ‘vast impact’ on the ‘many’ sub-contractors working with Carillion, including architects.
‘The government has announced it will be covering Carillion’s costs on public sector service contracts to ensure that public services are not interrupted. That still leaves public and private sector construction work left in uncertainty and this needs to be clarified by the government and the liquidator as soon as possible,’ he said.
’The government should [also] clarify the situation for firms involved in PFI work with Carillion.’
An Insolvency Service spokesperson said: ‘Carillion is in liquidation and all contracts will eventually have to cease, be sold to a third party or be retendered.
’Private sector contracts will be terminated if the customer does not agree to pay for them to continue. The liquidator and special managers are determining with Carillion’s private sector clients which services will continue to be provided and how many employees will be needed to carry out this work. No one has been dismissed at this point and staff will continue to be paid for the work they perform.’
HKS Architects principal Francis Gallagher said: ‘We have a global practice and this minimises risks and exposure for us. It is far too early to say what will happen with individual projects, but we will be working closely with stakeholders to ensure the best possible outcomes for the schemes we are involved with.’
NBBJ declined to comment.
John Seager, chief executive of Vaux Brewery developer partnership Siglion, confirmed that, as Carillion Construction had been appointed to undertake construction on the site, liquidators at PwC had instructed that work on site ceased while they consulted with suppliers on the best way forward.
’The site has been locked down by liquidators, which is standard practice in these circumstances,’ he said.
’We are working closely with Carillion and PwC and we hope that this will be resolved quickly and that we can ensure that no momentum is lost and the Vaux site is delivered as expected.’
Carillion is also a partner in Siglion, but Seager said it had ’already made its equity investment in full’ and insisted it would be ’business as usual’ for the developer.
Feilden Clegg Bradley has been contacted for comment.
FCBS’s proposal for the Vaux Brewery site in Sunderland