Balfour Beatty

Balfour Beatty awarded £47m Fort Augustus to Fort William overhead line and cabling works

Balfour Beatty has been awarded two contracts worth around £47 million for the Fort Augustus to Fort William 132kV Transmission Reinforcement project.

Both contracts have been awarded by Scottish Hydro Electric Transmission plc, part of Scottish and Southern Electricity Networks (SSEN), through the existing F2 Overhead Line General Works Framework and the 132kV Underground Cable Works Framework.

The first contract worth around £44m is for the overhead line works and will involve the design, supply and installation of a new conductor system as well as structural upgrade works. The second contract worth circa £3m is for the underground cabling works and will include the design, supply and installation of cable systems required to reconfigure the network as part of the overhead line reinforcement programme.

As a strategic partner Balfour Beatty has been supporting SSEN through the development stages of the project since March 2017. Balfour Beatty will be deploying the innovative composite core Monte Carlo conductor system, providing SSEN with twice the power capacity of the current steel core conductor. The works will be carried using methods that allow the service between Fort Augustus and Fort William to be maintained throughout the project, minimising any impact to SSEN customers.

Andy Smith, operations director for Balfour Beatty’s Power Transmission and Distribution business in Scotland, said: “These two contracts build on Balfour Beatty’s long-standing relationship with SSEN and demonstrate our ability to deploy innovative solutions and deliver challenging projects to exacting safety standards. We are delighted to have been selected to support SSEN in the reinforcement of this critical transmission infrastructure.”

The contract is due to start this spring with completion due in 2020. At its peak, the project will employ a workforce of around 110 people including a number of graduates, trainees and locally employed staff and contractors.

AWPR project opening delayed until Autumn

The expected opening of the Aberdeen Western Peripheral Route (AWPR) project has been deferred until Autumn 2018 – six months later than planned, economy secretary Keith Brown has confirmed.

The consortium tasked with delivering the £745 million project Aberdeen Roads Limited (ARL) said the impact of Storm Frank during winter 2015/16, recent extreme weather during early March and the collapse of Carillion have all had an impact on the opening date.

The Aberdeen bypass had previously been expected to open during Spring 2018 and last week an announcement by Balfour Beatty, one of the consortium partners, suggested that it expected the completion date to be Summer 2018.

Transport Scotland said it conducted “urgent discussions” with ARL to determine whether both partners shared this view.

“The outcome from the discussions with ARL is that we now expect to be able to open the project in Autumn 2018,” the transport body said.

Economy secretary Keith Brown said the £745m project cost “remains unchanged” as a result of the delay.

He added: “While this revision to the opening date is very disappointing to the people of the North East, we have to accept the expert advice of our contractors on the ground who are delivering this significant project.

“Clearly there has been a huge amount of work that has gone in to getting the project to where we are now. I would like to pay tribute to the effort of the people who are working hard to get this project over the finishing line.

“I understand how highly anticipated this project is for those living and working in the region and the patience local communities have shown during the construction process, I would like to thank them for their continued patience as we enter the final stages of the project. Transport Scotland will continue to work closely with ARL to open sections of the road at the earliest opportunity.

“The total scheme cost estimate is £745m and this remains unchanged as part of this announcement. Under the terms of the contract, ARL does not receive payment for the work until a section of road is open to traffic.

“During construction over 1,000 jobs have been created as a result of this project and it will generate over £6 billion for the local economy with an anticipated 14,000 new jobs to follow over the first 30 years after the scheme opens.

“Once open, the AWPR will cut congestion in and around Aberdeen city, with a positive impact on reducing emissions and improving active travel, it will also improve connectivity in the region, providing better journey time reliability, particularly for those travelling from the north of the city to the south side.”

The project, equivalent in length to building a new road between Edinburgh and Glasgow, is a key part of the Scottish Government’s £1 billion investment in transport in the region, which includes the AWPR, Aberdeen to Inverness rail improvements and the Haudagain roundabout improvement work.

Balfour Beatty celebrates return to profit for UK construction arm

Steel beams secured into position at the Perth Transport Futures project

Balfour Beatty’s ‘Build to Last’ transformation programme has finally generated an operating profit for the firm’s UK construction business, though issues still remain within some of its problem contracts.

The firm’s 2017 financial results have revealed the construction division has followed up its 2016 operating loss of £65 million to report an operating profit of £16m in 2017.

However the figures do not include non-underlying items including a £44m provision on the Aberdeen Western Peripheral Route (AWPR) where Balfour Beatty had to step in following the collapse of Carillion. The contract is now expected to be complete in the summer of 2018.

Other items include £12m of restructuring costs and an £18m gain on the disposal of Heery International.

Balfour Beatty erecting the steel structure to form the Dundee railway station

The company said: “Each requires a high level of leadership involvement to ensure the best achievable outcome and a positive effect on customer relations. In most cases, the positions taken are proving adequate, reflecting, as expected, a mix of projects successfully closed out ahead of expectation, as well as others where the outcome, although disappointing, is being managed to its best conclusion.

“A very limited number of contracts have disappointed outside of this expectation. The largest of these is Aberdeen Western Peripheral Route which has experienced ongoing schedule and cost issues. These contracts have impacted the underlying results of Construction Services.”

Overall group underlying pre-tax profit rose from £62m to £165m for the year ended 31st December 2017. Underlying revenue is also up, from £8,215m to £8,234m.

The firm revealed that all earnings-based businesses “materially improved profit from operations” and said that it remains on track for “industry-standard margins” in the second half of 2018.

Leo Quinn

Leo Quinn, group chief executive, said: “These results clearly demonstrate that our Build to Last programme is transforming Balfour Beatty. The group has been repositioned to drive sustainable growth in profits, underpinned by a strong balance sheet. It has the right culture and capabilities to capitalise on the rising tide of infrastructure spend in our chosen markets.

“As a result of Build to Last, and the governance and controls now in place, we remain on track to achieve industry-standard margins in the second half of 2018. In the medium term, we are building a group capable of delivering market-leading performance.”

With around 2,000 employees in Scotland, Balfour Beatty is extremely active north of the Border with numerous schemes being delivered across the region.

Current portfolio projects include the Perth Transport Futures Project, which will support growth in Scotland’s third fastest developing region, the redevelopment of Dundee Rail Station and associated facilities and Dorenell Wind Farm in Moray, which on completion will connect the farm to Scottish Southern Electricity Networks (SSEN) Blackhillock Substation.

Haudagain shortlist down to final two

Transport Scotland has announced that two bidders will be competing to deliver the A90/A96 Haudagain Improvement project in Aberdeen.

The two shortlisted bidders are Balfour Beatty Civil Engineering Ltd and Farrans Construction.

This next stage of procurement will see the two bidders enter into a period of competitive dialogue.

The contract for delivering these key improvements is estimated to be worth £18 million approximately and involves the construction of around 500m of new dual carriageway connecting the A90 North Anderson Drive and the A96 Auchmill Road.

Upon completion, the improvements will reduce congestion, improve journey time reliability and bring about road safety improvements. The project will also enable new pedestrian and cycling routes through the local area.

Minister for transport and islands, Humza Yousaf, said: “Today’s announcement is a further sign of this Scottish Government’s commitment to improving the roads in the north east of Scotland

“Not only have we reached this key milestone in the procurement today, but we are also progressing opportunities to undertake some work in adavance of the main construction. This would enable the main construction contractor to hit the ground running later in the year.

“We remain committed to tackling the bottleneck at Haudagain. Alongside benefits from the AWPR, the A90/A96 Haudagain Improvement Project will boost the local economy and bring much needed journey time benefits for road users and communities in the north east.”

Completion of the Aberdeen Western Peripheral Route/Balmedie to Tipperty will take traffic away from the streets of Aberdeen and improve air-quality to some 75,000 houses.

That, coupled with the removal of the bottleneck roundabout at Haudagain, will deliver improved journey times for strategic and local traffic bringing much needed relief to road users and communities in the north-east.

Balfour Beatty to cut 25 jobs in Aberdeenshire

Balfour Beatty is to end operations at its Kintore substation design office by the end of the month with 25 employees set to lose their jobs.

The company said a challenging last two years was to blame for what was a “difficult decision”.

Engineers at the Aberdeenshire office worked on designing electricity substations for power firms such as SSE and Scottish Power.

However, a Balfour Beatty spokesman said financial constraints had imposed the move upon the firm and that “every effort” would be made to offer the workers other roles within the wider business where possible.

He added: “The last two years have been challenging for our power transmission and distribution business in Scotland, with little sign of change in the near future.

“In light of this, we have made the difficult decision to cease operations at our substation design office in Kintore by the end of March.

“Regrettably, 25 roles will be made redundant but we are making every effort to find alternative roles within the wider Balfour Beatty business for the affected employees.”

First Minister Nicola Sturgeon has said that her government will hold talks with Balfour Beatty over the redundancies.

North East MSP Lewis Macdonald raised concerns at First Minister’s Question in Holyrood this week.

The Labour politician said: “The first minister knows that Balfour Beatty holds many public sector contracts in Scotland — not the least of which is a contract on the Aberdeen Western Peripheral Route.

“Does she share my concern about the company’s plans, which were announced this morning, to close its electricity substation design office at Kintore in Aberdeenshire, at the cost of the jobs there, and to bid for all future work on Scotland’s electricity network from outwith Scotland?

“If the first minister shares those concerns, will she raise them with Balfour Beatty and tell the company to drop its closure plans and, instead of making workers redundant, to sit down with staff in Kintore and plan a sustainable future for its Scottish business?”

In response, Ms Sturgeon said: “Such decisions and announcements are always of concern and this one is no different.

“In direct response to Lewis Macdonald’s question, I say yes, we will engage with Balfour Beatty on the matter.

“I am sure that the cabinet secretary for the economy, jobs and fair work will be happy to meet or write to Lewis Macdonald after we have had the opportunity to do that.”

Unite regional officer, John Clark, added: “The fact the Kintore employees are the sole target for redundancies is a matter of real concern.”

Balfour Beatty primed for £32m Dundee sports centre deal

Balfour Beatty Civil Engineering looks set to be awarded the contract to deliver Dundee’s £32 million Regional Performance Centre for Sport.

Councillors are being asked to accept a tender from the firm which could allow work to start on the facility in May, with a construction completion date of autumn 2019.

The Regional Performance Centre for Sport will contain an 8 court multi sports hub building with spectator seating, a strength and conditioning suite, state of the art sport science suite.

The campus of sports facilities will have a full size indoor/artificial 3G football pitch and outdoor artificial/3G ‘rugby sized’ pitch suitable for both rugby and football.  Facilities are designed to meet FIFA compliance standards for football.

A new indoor athletics centre with an 80m running straight will provide all-weather training for athletes.  The existing athletics track is to be resurfaced and a covered spectator area added and the recently resurfaced velodrome is to have a new area of hardstanding provided for competition, with upgraded floodlighting.

There will also be a 7-aside community grass football pitch that will have open access for use by the local community.

Dundee City Council leader Councillor John Alexander said: “This ambitious project will provide a superb sports facility that also contains a £5 million energy centre.

“This innovative renewable energy approach will give us a district heating capability that has attracted the first award of ERDF Low Carbon Infrastructure Transition Programme funding of £3m.

“I am also pleased that the Scottish Government have responded positively to our request around non-domestic rates that mean that the exceptional circumstances of this project have been taken into account.”

Councillor Alexander added: “I am sure that this centre will provide huge benefits for the city and its people and reflects our drive to make Dundee a better place for all.

“It will provide top class sporting facilities that will support athletes in their development and help improve the health of our population through participation in sport.”

The centre is also benefiting from a £5m grant from sportscotland.

The council’s policy and resources committee is due to meet on March 12.

Full line up of £250m University of Strathclyde framework contractors unveiled

A proposed £60m teaching and learning hub

Four contractors have been chosen by the University of Strathclyde for its Framework for Major Building Construction to support the delivery of its ongoing Capital Investment Plan for construction work exceeding £4 million.

Kier Construction Scotland will join Balfour Beatty and Interserve in securing places on the framework. Morrison Construction announced its place on the Framework last week.

The University of Strathclyde has invested £350m over the last ten years in improving and developing its estates and facilities to support its goal to be the Leading International Technological University.

This latest Framework has a value of £250m with typical project values likely to be between £4m to £50m with the potential for both new build and refurbishment. This four year Framework also includes the potential usage by Renfrewshire Council and Renfrewshire Leisure Limited.

Kier Construction Scotland is already an equity stakeholder and Tier One contractor in hub South West Scotland and a Tier One contractor on hub North and hub East Central.

Brian McQuade, Kier Construction Scotland’s managing director, said: “We are delighted to be appointed as a contractor to the University of Strathclyde Framework. We believe that Kier has a great deal to offer the partnership and we are looking forward to working closely with the team and supporting local communities by creating employment and educational opportunities.”

Joint venture AWPR partners offer jobs to Carillion workers

Carillion workers employed on the Aberdeen Western Peripheral Route (AWPR) have been offered jobs by its joint venture partners Galliford Try and Balfour Beatty, according to Transport Scotland.

The three companies made up the Aberdeen Roads Limited consortium delivering the £550 million section of the AWPR between Balmedie and Tipperty before Carillion entered compulsory liquidation last week.

A Transport Scotland spokesperson said 76 Carillion staff will be offered employment to the remaining contractors to allow work to continue on the project.

The spokesperson said: “Aberdeen Roads Limited has confirmed there are 76 Carillion staff on the AWPR site and we understand that both Galliford Try and Balfour Beatty will offer jobs to allow progression of work on the project.

“The construction partners have reaffirmed their commitment to completing the works.”

Galliford Try revealed last week that the joint venture partners expect to foot a bill of between £60m-£80m to complete the work following Carillion’s demise.

The contractor said: “The terms of the contract are such that the remaining joint venture members, Balfour Beatty and Galliford Try, are obliged to complete the contract.  Our current estimate of the additional cash contribution outstanding from Carillion to complete the project is £60-80m, of which any shortfall will be funded equally between the joint venture members.

“The companies will discuss the position urgently with the official receiver of Carillion and Transport Scotland, to minimise any impact on the project.”

Balfour Beatty said the collapse of Carillion could lead to additional costs of £35m to £45m for the firm overall but did not disclose how much would of this was attributed to the AWPR project.

Meanwhile, Kier Group, which currently operates joint ventures involving Carillion on HS2 and the Highways England smart motorways programme, has revealed that all Carillion employees on these projects will be transferred to Kier.

Following discussions with the UK government and clients, Kier and Eiffage are now 50/50 partners in delivering two of the seven HS2 civil engineering projects.

All 51 Carillion staff, including apprentices, have been offered the chance to switch to the other two companies.

Another 150 Carillion workers on smart motorways schemes have also been offered jobs with Kier, which said it had also been talking with the project’s supply chain, “ensuring continuity of skills, resources and suppliers.”

Kier chief executive Haydn Mursell said: “We have been working collaboratively with our clients and are pleased to have reached agreement with government concerning these joint ventures. We have been able to take action quickly and reassure the project teams that they continue to play an important role in the delivery of these contracts.”

Economy secretary assures parliament over jobs and future of AWPR

Keith Brown on a visit to the AWPR site last year

Cabinet secretary for the economy, jobs and fair work, Keith Brown, has moved to reassure MSPs that disruption and job losses caused by Carillion’s collapse would be minimised in Scotland, though the minister stopped short of giving an opening date for the Aberdeen Western Peripheral Route (AWPR).

The UK’s second-biggest builder entered liquidation on Monday after racking up debt and pensions burdens of around £1.5 billion.

The firm formed one-third of the Aberdeen Roads Ltd (ARL) consortium leading the £745 million AWPR work alongside Balfour Beatty and Galliford Try.

In a topical question at Holyrood, Aberdeenshire East MSP Gillian Martin raised concern for jobs dependent upon the project and also the knock-on effect on smaller companies in the supply chain in the North East and throughout Scotland.

In response, Mr Brown said that support is available to any workers who may be concerned for their jobs, with help and advice to be made available to subcontractors through a designated Scottish Enterprise helpline.

Furthermore, the cabinet secretary assured parliament over the contract to deliver the AWPR scheme with the other firms involved in the consortium making clear that they will fulfil their contract obligations and had “very quickly” notified the London Stock Exchange of their intention. Mr Brown confirmed that Transport Scotland will support and work with them throughout this process.

The economy secretary said he was unable to give a “cast-iron guarantee” that jobs would not be lost as a result of the liquidation of the company, but said there was a “good chance” employees would continue to work on existing projects.

When asked about the future of Carillion employees working on the bypass, Mr Brown said: “I think it is likely that the two remaining contractors will require work to be done that was previously done by the employees of Carillion.

“I don’t want to be too definitive, but there’s around 70-plus employees, direct employees of Carillion, employed on that contract plus 190 employed on other terms, including some agency staff.

“We can’t give a cast iron guarantee on the workers but I think there is a good chance that many of those will be reemployed and for those that are not we have offered the assistance I have previously mentioned.”

On the day of Carillion’s collapse, the joint venture firms indicated that the announcement leaves a financial hole of £40-80m in the AWPR project.

Galliford Try said: “The terms of the contract are such that the remaining joint venture members, Balfour Beatty and Galliford Try, are obliged to complete the contract.  Our current estimate of the additional cash contribution outstanding from Carillion to complete the project is £60-80m, of which any shortfall will be funded equally between the joint venture members. The companies will discuss the position urgently with the official receiver of Carillion and Transport Scotland, to minimise any impact on the project.”

Mr Brown had said the Scottish Government’s Partnership Action for Continuing Employment (PACE), which helps people facing redundancy, would be available for those under threat.

He said PACE would also be available if anyone should lose defence jobs.

Gillian Martin MSP said: “Our first thoughts when businesses face such serious difficulties should always be for those who may be facing uncertainty over their jobs and their future, and it was encouraging to see parliament united in support of them today.

“I am grateful to the cabinet secretary for the support being made available both to Carillion employees and to subcontractors who may have concerns at this time.

“Early confirmation from the other partners in the Aberdeen Roads consortium that they intend to press ahead and deliver the AWPR contract will be hugely reassuring for my constituents. I know people and businesses across the North East are looking forward to the opening of the much-needed £750 million new route this year, and I will be engaging with the Scottish Government and Transport Scotland going forward to ensure that remains on schedule.”

Meanwhile, the Scottish  Government has set up helplines for anyone who may be affected by the failure of the construction firm.

Scottish companies affected by the Carillion insolvency can call Scottish Enterprise on 0300 013 3385 or register their details here.

The redundancy helpline operated by Skills Development Scotland is 0800 917 8000, with help also available here.

It was also announced today that banks and government were working together to mitigate the effects of Carillion’s collapse on businesses within the supply chain.

Contingency plans take hold in wake of Carillion collapse

Carillion is part of a coalition delivering the Aberdeen Western Peripheral Route (AWPR)

Clients and joint ventures partners of collapsed contractor Carillion have taken steps to begin contingency plans after the firm entered compulsory liquidation today.

An application was made to the High Court for a compulsory liquidation of the UK’s second largest construction company before opening of business this morning after talks with the UK government to save the company were unsuccessful.

The firm had been involved in the £745 million Aberdeen Western Peripheral Route (AWPR) and had contracts with Registers of Scotland, the Scottish Children’s Reporter Administration, West of Scotland Housing Association and NHS Greater Glasgow and Clyde among many others.

Network Rail awarded Carillion a contract last year to deliver platform extension works and the firm is also responsible for two facilities management contracts worth £158m with the Ministry of Defence (MoD) which cover 83 military sites in Scotland.

Contingency plans have now been put into effect with the hope to minimise disruption to the projects.

Galliford Try is in joint venture with Carillion and Balfour Beatty on the construction of the £550m section of the AWPR between Balmedie and Tipperty for Transport Scotland.

“The Scottish Government are in discussions with the liquidators and the UK government to support Carillion employees and secure the completion of contracts.”

Economy secretary Keith Brown

Galliford Try said: “The terms of the contract are such that the remaining joint venture members, Balfour Beatty and Galliford Try, are obliged to complete the contract.  Our current estimate of the additional cash contribution outstanding from Carillion to complete the project is £60-80m, of which any shortfall will be funded equally between the joint venture members. The companies will discuss the position urgently with the official receiver of Carillion and Transport Scotland, to minimise any impact on the project.”

A Transport Scotland spokesman reiterated the bypass project will be completed by the spring.

He said: “We expect that any impact on the AWPR will be mitigated by the fact that Carillion’s construction partners are joint and severally liable and as such, the other two construction partners remain fully responsible for the completion of the works.

“Aberdeen Roads Limited, the construction joint venture for the project, confirmed recently that they remain committed to the delivery of this project.”

Amey has incorporated joint ventures with Carillion to deliver the regional prime and national housing contracts for the MoD, through the Defence Infrastructure Organisation (DIO). These contracts maintain the MOD estate in the UK.

It said: “The terms of the joint ventures’ arrangements mean that Amey will continue the services now that Carillion has announced it is entering into immediate compulsory liquidation. Amey is committed to doing this and ensuring continuity of service to the DIO and MOD and the service men and women in the UK.

“For the past few weeks, Amey has been working on detailed contingency plans with the DIO and the Cabinet Office to ensure it can effectively continue to manage the contracts and these are being implemented today.

“Amey confirms it is fully prepared to continue the service obligation of the contracts without adverse effect on the employees of the joint ventures or the supply chain.”

Network Rail commissioned Carillion for both the Waverley platforms extension project and the electrification of the railway line through Shotts.

In addition, the firm was also contracted for platform works at Broughty Ferry and Aberdeen railway stations.

Carillion Powerlines secured an £11.6m contract to carry out electrification work on the Shotts line in December

A Network Rail spokesman said: “We are activating our contingency plans as a result of this unfortunate news.

“We will be working closely with the administrators and Carillion’s management team to ensure projects that they are working on continue and that the supply chain is maintained for this important work.

“Our aim is to ensure that this news has as little impact as possible on our projects to grow and expand the railway network.”

Kier Group, which currently operates joint ventures involving Carillion on HS2 and the Highways England smart motorways programme, jobs, will now have to take them on alone or seek a new partner.

A Kier spokeswoman said: “We have put in place contingency plans for each of these projects and are working closely with clients so as to achieve continuity of service.

“Following today’s announcement and after a short period of transition for these contracts, we do not expect there to be an adverse financial impact on the group arising from these joint venture contracts.”

The Construction Industry Training Board (CITB) said that it was “taking steps to secure the future of the 1,400 Carillion apprentices” by redeploying them to other firms.

CITB chief executive, Sarah Beale, said: “The news of Carillion entering insolvency is clearly a significant blow to the UK construction sector. While this will present the sector with a number of challenges, CITB’s priority is to do all it can to ensure that Carillion apprentices can continue their training so their skills are not lost.

“We have established a project team to work with the apprentices and will be offering in principle grant and apprenticeship transfer incentives to our employer base in order to retain these learners. We will be working closely with the ESFA, the official receiver and our network of college providers so that every possible support is in place to help these apprentices continue their training. We will be liaising with the official receiver with a view to contacting the apprentices as soon as possible.”

The Scottish Government said it is in talks to support Carillion employees and secure the completion of contracts in Scotland.

Cabinet secretary for the economy, Keith Brown, said: “Our first thoughts are with those Carillion employees who will be concerned for their jobs today and we are in discussions with the liquidators and the UK government regarding the measures they intend to put in place regarding private sector, Network Rail and UK govternment-backed contracts in Scotland to support Carillion employees and to secure the completion of these contracts.

“The Scottish Government has been working to manage or eliminate risks associated with Carillion’s difficulties since July last year and we have contingency plans in place for affected contracts, including the AWPR where the contract contains a mechanism for the remaining two joint venture partners to deliver the project and we expect that work to continue.

“I have spoken to the Secretary of State for Scotland this morning and my officials have also spoken with PwC to establish the situation and should it be necessary we stand ready to support for any affected employees through our Partnership Action for Continuing Employment (PACE) initiative which aims to minimise the time individuals affected by redundancy are out of work.”