Subcontractors have stopped work and removed equipment on some Carillion Network Rail sites, the transport body has confirmed.
Ground engineering specialist Van Elle’s chief executive Jon Fenton told Construction News it had “demobilised from sites” and would not return until it had a “firm contractual arrangement in place”.
Network Rail confirmed to CN that a “handful” of suppliers had withdrawn from Carillion sites and that the impact on the overall project was “negligible”.
Mr Fenton said that communication from Carillion’s special manager’s PwC had been “sporadic” and was “nothing we could rely on in court if we had to take them to task”.
He confirmed negotiations were ongoing between the transport body, Carillion and PwC, but could not put a timescale on any resolution being reached.
Van Elle yesterday announced its results for the six months to 31 October 2017, reporting a 22 per cent rise in revenue to £52.6m. The company also confirmed £1.6m of bad debt from jobs carried out for Carillion.
Mr Fenton told CN this debt was for work undertaken in the months of December and early January.
The significant volume work carried out over the Christmas period meant Van Elle’s exposure to Carillion’s collapse was higher than if it had occurred at a different time of year.
The Van Elle boss expressed his shock at Carillion’s sudden demise and said the government’s decision to place large orders with the contractor had been “deceptive”.
“The government was placing massive contracts with Carillion right up to the end on HS2, so the messaging out there was deceptive,” he said.
“It’s a crying shame when there are a multitude of subcontractors out there trying to make a living and then a big beast like that goes bust and lets everybody down.
“We had a huge effort over Christmas, that’s where the bulk of the money was. It’s disappointing there are not mechanisms in place to safeguard that.”
A Network Rail spokesman said: “A handful of suppliers have withdrawn their goods or services but they have been mitigated and managed, and the impact on the overall project is negligible.
“Some suppliers have had direct calls from our people and returned to the job having had that comfort and reassurance.”
In the aftermath of the Carillion collapse, the contractor’s rail supply chain director sent a letter to suppliers telling them they would not be paid for any work carried out before the firm went into liquidation.
At the end of last week Network Rail said Carillion staff working on its projects would be guaranteed pay until mid-April, despite the contractor’s demise.
The client added that it was working closely with PwC to evaluate the cost of work done on Network Rail contracts in the period up to liquidation and would try to provide clarity to suppliers as quickly as possible.
Van Elle updated CN on its search for a new chief executive, as current incumbent Jon Fenton is stepping down due to a family matter.
The firm said the replacement process was “full steam ahead” and it hoped to make an announcement in due course.