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Galliford highlights the shift in risky attitudes

Zak Garner-Purkis

There was a crackle of static on the line, then Bill Hocking drew a breath, weighing up the most diplomatic answer.

“Put it this way,” he said in his distinctive Zimbabwean twang. “When these jobs came up I decided not to bid on them.”

Galliford Try’s construction boss was talking about one of the jobs he’d inherited when he joined the business: the much-maligned Aberdeen Western Peripheral Route (AWPR).

The 58 km road runs from Blackdog to the north of the city down to Cleanhill in the south, crossing two rivers in the process, and has been beset by delays and disruption from the start.

“It’s a behemoth of a job,” Mr Hocking told me. “But it is what it is. We will get it over the line in the summer, which is a milestone that we’re very much looking forward to.”

Never has a motorway in this area of the world attracted as much publicity as the £550m AWPR, which is designed to reduce congestion in Aberdeen city centre. 

The AWPR has been a nightmare for the Connect Roads joint venture that won the contract. Original JV partners Balfour Beatty, Carillion and Galliford Try have flagged losses of close to £100m on the project combined.

In a business where margins are so fine, such losses can pose significant challenges.

That certainly proved the case for Carillion, with its Aberdeen losses among the major reasons behind the firm’s collapse.

So why did the three companies take the risk in the first place when they successfully bid for the AWPR in 2014?

Take a step back, and it is clear that tier ones had a different approach to major contracts four years ago.

High-value, higher-risk projects offer large rewards, and in 2014 there was greater confidence among contractors that such projects would pay out.

It is only in recent years that tier ones have shifted to more conservative strategies, as Mr Hocking recalled.

When he joined Galliford in the summer of 2016, he had to convince colleagues why they needed to change the risk profile of the jobs they bid on.

Mr Hocking used the stand-out examples in the Galliford portfolio, including the AWPR, to illustrate how the previous mindset had caused difficulties.

“We pointed out the pain some of these legacy contracts were causing us,” he said.

“We don’t want to and can’t remain in that position, so we strengthened our process and we instilled the discipline that, regardless of how good things look on the face of it, we’re not bidding.”

This mindset may not bring in as many high-profile projects, but it certainly appears a sensible way to avoid the same fate as Carillion. 

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