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Galliford Try suffers fresh £20m Aberdeen bypass hit

Galliford Try has written off a further £20m in costs related to delays completing the £745m Aberdeen Western Peripheral Route.

The contractor, which is building the bypass in a joint venture with Balfour Beatty, said anticipated direct costs meant its final bill to complete the contract had risen by £20m. 

In a trading statement, Galliford Try said: “On AWPR, the completion date for the final section, including the bridge over the River Don, is now expected to be in December owing to increased complexity and weather delays in implementing repairs to the bridge.

“As a result of higher-than-anticipated direct costs, and the further delay to completion, our estimate of the final costs to complete the contract has increased by approximately £20m.

“The final impact on Galliford Try’s financial results will be determined more importantly by the result of the group’s significant claim, in respect of which the board continues to pursue constructive discussions with the client.”

The latest writedown comes on top of a £98.3m charge the firm reported following problems with the AWPR announced in September 2017, and a £157.6m rights issue of new shares following the collapse of Carillion, which had been a partner in the AWPR joint venture.

Despite the £20m charge, the group said it expected pre-exceptional profits before tax for the financial year to be in line with previous guidance of between £170m and £190m.

Last week in a special statement to the Scottish parliament, MSP Michael Matheson revealed that the £745m project would not open this autumn and was now targeting a December opening, but that no firm date could be given.

The SNP politician also accused Galliford Try chief executive Peter Truscott of “inconsistency” in his communication with the minister over the AWPR’s progress.

Mr Matheson’s claims centred on Transport Scotland’s efforts to open a 31.5 km section of the road from Stonehaven to Craibstone and Charlestown.

The opening of this stretch is outside the original agreement and requires a variation to the contract between Transport Scotland and the Aberdeen Roads JV delivering the bypass, comprising Balfour Beatty and Galliford Try.

The troubled AWPR project has been beset by delays, having originally been scheduled to complete in spring 2017.

In December 2016 the Balmedie-to-Tipperty section was put back until late 2017, before further delays shifted final completion to spring 2018 and then autumn.

Explaining the reasons behind the scheme’s latest delay, Mr Matheson noted that in May the contractor had reported a technical issue on the new bridge over the River Don.

Minor defects were identified while post-tensioning a small number of concrete panels.

In August Balfour Beatty chief executive Leo Quinn revealed to CN the company was carrying out remedial works worth millions on the AWPR’s River Don bridge.

At the time, Mr Quinn said the cost of the work was not signifcant and was in“the single-digit millions – and quite low at that”.

The same month Balfour revealed earlier it lost £23m on the AWPR in the first six months of 2018.

This followed both firm’s suffereing from increased liabilities on the scheme after the collapse of the third JV partner Carillion in January.

Balfour Beatty said that, of the £23m AWPR loss for the first half of 2018, £8m was as a direct result of taking on Carillion’s liabilities on the job.

An investigation by CN also uncovered allegations of serious health and safety allegations on the project. 

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