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Carillion crisis ‘could affect hundreds of architects’

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Hundreds of architects could suffer from Carillion’s collapse, a construction industry leader has warned.

Civil Engineering Contractors Association (CECA) chief executive Alasdair Reisner said there was a ‘real risk’ that the demise of the £4 billion turnover company could lead to other failures in the supply chain.

Carillion crashed into liquidation on Monday morning with as much as £1.5 billion of debt.

‘Based on experience of previous large corporate failures in the construction sector, sadly it seems likely that tens or even hundreds of architects may be impacted by the decision to put Carillion into liquidation,’ said Reisner. ‘It is difficult to have any certainty until there is a better understanding from the liquidator about which companies were creditors of the business.’

CECA and fellow trade body Build UK yesterday joined forces to demand urgent action to tackle the crisis. They said more than 30,000 firms could be owed money for work previously carried out for Carillion, and urged the government to share details of known creditors.

Reisner said: ‘Urgent steps must be taken to support Carillion’s workers and suppliers.

‘We believe that government and industry must work together to mitigate the effects of the company’s liquidation and ensure the thousands of capable staff are able to remain in our industry.

‘Government and industry must closely co-operate to protect the wider UK construction industry and its supply chain, which is a key driver of economic growth.’

The two organisations proposed a free jobs exchange to advertise employees made redundant from Carillion. They also called for government support for at-risk suppliers that provide essential or niche services, whose collapse could have impacts for the wider industry.

A list should be published of projects needing a replacement contractor, they added, so new firms can take these on.

RIBA executive director Adrian Dobson earlier this week said there would be a ‘vast impact’ on the ‘many’ subcontractors working with Carillion, including architects.

The architects body today said it ’welcomed’ the action plan from CECA and Build UK.

’At this stage, the government needs to ensure that measures are in place to mitigate the impact on tier 2 and tier 3 suppliers,’ said a RIBA spokesperson. ’Liquidators must also give clarity on PFI contracts.

’Continuity of the current contracts, rather than re-allocation of workforces, will be key to avoid redundancies, cash flow crises or insolvency further down the supply chain.’

The spokesperson added: ’Understanding how many RIBA chartered practices are in the Carillion supply chain is key, therefore we urge members who are likely to be impacted by the collapse to get in touch for advice and support.’

Former RIBA president Jack Pringle told AJ earlier this week that 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.’

 

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Readers' comments (2)

  • MacKenzie Architects

    I suspect just about every one of the major contractors is arithmetically insolvent, relying on a rolling stream of publicly-funded projects to help projected earnings, and optimistic final account projections.
    When you ask the sub-contractors who do most of the work for them, they scarcely ever have a good word to say about them, and almost never get fair retention monies back.
    It weakens SMEs, who have to try and recover lost money on their smaller contracts.

    But, big government -national and local- is insisting on these stupid framework agreements and working only with big contractors. Bad value for money and bad design usually thrown in.

    I wouldn't be surprised if another big Co fails this year.
    I suspect the only contractors making money just now are the housebuilders (& HS2 boondoggle).

    I hope the RIBA is making a noise about this; this is a longterm problem.

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  • Geoff Williams

    Architects add to the demise by putting cost before quality. Apparently, little is done in the way of auditing to drive forward the quality issue and to ensure that projects are completed on time every time. Joint ventures seem to be the format for protection but do they work to the satisfaction of the client? Don't Architects set the standard?

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