A Scottish subcontractor has warned it is under “extreme financial pressure” after becoming embroiled in a payment dispute with Galliford Try.
Power One, a Paisley-based M&E subcontractor with an £8m annual turnover, is in dispute with Galliford Try Infrastructure over a subcontract to replace street lighting across Northumberland.
Construction News understands this has put Power One at risk of insolvency.
The two sides were set to meet on Wednesday in an attempt to resolve the row.
Power One was employed by Galliford Try Infrastructure, which was acting as main contractor for the £25m scheme to replace nearly 17,000 lamp posts across Northumberland. The value of the subcontract is estimated to be worth £9m.
Galliford Try Infrastructure was appointed as main contractor on the deal in April 2014, with work starting on the project in March 2015.
CN understands the original contract period for Power One was 93 weeks, with works due to complete in January this year.
It is understood that Power One asked for a delay to the completion of the project in late 2016, with Galliford Try giving the subcontractor an additional 14 weeks to complete the subcontract.
Power One, however, is believed to be claiming that Galliford Try had not supplied the necessary information to allow it to complete the works and that further time was requested to complete the subcontract. However, both parties failed to reach an agreement.
As a result, Power One referred the case to adjudication last month to request compensation.
The adjudicator, Terence Vaughan, found in favour of Power One this month, with an extension of time and an entitlement to compensation found to be due in principle to the subcontractor under its NEC3 contract.
Despite this, Power One is understood to be alleging that Galliford Try has issued two payment certificates to the subcontractor with no money against the additional time awarded, and that it has also reduced the value of works that Power One claimed it had carried out.
CN understands that the estimated difference between Galliford Try and Power One’s valuation of the works carried out is between £2m and £3m.
In a statement to Construction News, Power One Group chairman Mark Ward said: “We can confirm that the non-payment of a £9m subcontract by Galliford Try relating to the replacement of street lighting columns and lanterns in the Northumberland County Council region has put the business under extreme financial pressure and jobs are at risk.”
A spokesman from Galliford Try Infrastructure said: “The total value of our contract with Power One is £9m and, to date, we have paid them £6.8m of this sum in line with the terms of the contract.
“We are currently liaising closely with Power One and their advisers to agree terms of payment for the balance. The project is due to complete in early 2018. We have consistently assisted Power One with their cashflow throughout the project and continue to do so.
“Galliford Try’s policy is always to deal fairly with subcontractors, suppliers and clients.”
As a result of the dispute, it is understood that Power One has had to put all of its operatives on notice and has suffered cashflow issues.
However, Galliford Try declined to comment on whether the dispute had put Power One at risk of insolvency.
Other projects the subcontractor has worked on include a £2m scheme to retrofit LED lights for Salford City Council, where it also worked under Galliford Try.
As part of that project, Power One removed and disposed of 23,000 lights and replaced existing stock with LED lighting.