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Metronet firms may pay for failure

Collapse of Tube maintenance company will impact on its shareholders’ ability to win Government contracts

Transport secretary Ruth Kelly has said the failure of Metronet could mean the Government will do less business with its shareholders in future.

Mrs Kelly told a parliamentary transport committee meeting last week that the reputation of Metronet consortium members including Balfour Beatty and Atkins had been damaged and this would make it more difficult for them to win Government contracts.

Mrs Kelly said: “I think this is a terrible failure. When we award contracts, we look at the competence and delivery record of individual companies, and these issues will be taken into account.”

Already between them the Metronet firms have written off £300 million but committee member Graham Stringer MP claimed that these losses would have been offset prior to its collapse by awarding renovation work to consortium members rather than opening it up to competition.

Graham Pimlott, who was chairman of Metronet from January to August this year, blamed the problems on Metronet’s relationship with Trans4m, its project management firm.

He said: “Metronet had a contract with Trans4m which gave us very little leeway. We had to pay when bills were presented. We couldn’t withhold for performance failure.”

London Underground chief Tim O’Toole said Metronet was hampered by a lack of control over subcontractors, and added: “In 2004 we were struck that there was a lack of delivery from Metronet. But Metronet was projecting an underspend. It wasn’t until 2006, when they carried out a baseline review of their costs, that they said ‘we’ve got a problem here’. And that’s when the scales fell from everyone’s eyes.

“I think that Trans4m didn’t give all the information to the Metronet board, though I don’t think that was part of a plan. I think it was structural ineptitude. If you have workers showing up and going home again and getting paid for it, you can have a problem very quickly.

“You have to have someone with an iron fist to stop that happening. And Metronet didn’t have the power to do anything.”

Mr O’Toole said that while he had lots of problems with the PPP structure, he was not necessarily opposed to further private sector involvement, and the delivery from Tube Lines - which does most of its own work in-house - had been “quite impressive”.

He said he would definitely employ private companies on some future projects because LU “doesn’t do that sort of work”.