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Multiplex's false start

Multiplex's troubled debut into UK construction left a few casualties in its wake, not least among them Martin Tidd, who left a year ago in despair at the builder's decision to pull out of third party construction work. David Rogers looks at the firm's progress since then

IF A WEEK is a long time in politics, then a year, it would seem, is a heck of a long time in construction.

It was 12 months ago next week that Multiplex's then boss of its UK construction arm announced he was leaving the group he had joined three years previously - privately, he was in despair at the decision the firm had taken just a few weeks earlier to pull out of third party construction work.

When he finally did go in March this year, Martin Tidd rather pointedly said: "I enjoyed immensely working with Multiplex founder John Roberts."

There was no mention of John's son, Andrew, whose decision as chief executive of the group it had been to pull the plug on UK contracting. The relationship between Mr Tidd and Andrew had long seemed to be strained - Mr Tidd, as his parting shot indicated, was a big fan of his father, less so of his son, clearly. Andrew's decision was the final word on a rift between the pair over future strategy that had grown beyond repair.

The Australian builder, mauled relentlessly by the problems at Wembley Stadium, had decided enough was enough. It later said Mr Roberts' decision had all been a big misunderstanding by the press: it was not pulling the plug on work over here, it was just not doing third-party work any more. It seemed as if it was pulling up the drawbridge on the UK in readiness for a phased withdrawal.

The plan back then was to only carry out work for its developments arm, and that was not something Mr Tidd and many others had signed up for.

The writing was on the wall when, a month before Mr Tidd's announcement, the firm struck a deal with a fellow Australian firm, the shopping centre developer Westfield, for that firm to take over responsibility for building the giant White City retail complex in west London. With that decision Andrew Roberts had, in effect, ordered a complete reversal of his father's strategy, which had been to breach the UK market with the battering ram of Wembley Stadium.

What it was left with was a scheme to redevelop the centre of commuter town High Wycombe, a PFI hospital scheme in Peterborough it had still not reached financial close on and a deal to build a very tall tower in the Elephant & Castle, south London. There were other bits and bobs but, after all the fanfare when it was appointed the preferred builder for Wembley Stadium six years previously, that was pretty much it. But throughout this year, the firm has begun to notch up some successes. It finally reached financial close on the PFI scheme in Peterborough where the construction contract is north of £300 million. And next month it will start work on the £120 million Castle House scheme in south London.

There have been some knockbacks as well. There is a planning glitsch over the height of another scheme, a residential job on West Cromwell Road at Earl's Court in west London, and rivals are quick to point out that, because of Wembley, it is having to use some subcontractors that are still relatively unknown in the UK. An Irish firm called Mercury will carry out the M&E works at Peterborough and a Dubai-based company it uses out in the Middle East will carry out the facade package on Castle House. It is, of course, difficult to mention Multiplex without casting a glance back to Wembley. It will take some years for it to shed this millstone.

There is no doubt that Multiplex's problems on Wembley and the subsequent legal action have frightened many. To the casual observer, the job was riddled with problems from day one, all of which were overseen by a bullying overseas contractor that would brook no argument. It was not quite as simple as that, of course, but there is no doubt Wembley did the firm's reputation with UK subbies a lot of damage. Its court battle with Cleveland Bridge was the biggest legal bust-up for years.

What would essentially be a rather technical case - enlivened only by the occasional juicy email - last year pulled in a media crowd that staff at the Technology & Construction Court in central London had never seen before. It was quite some feat. And the case has still not been sorted out. It is slated to last another two months next spring.

In the meantime, two more Wembley cases have blown up. Multiplex has counterclaimed a œ33 million writ slapped on it over the summer by its US building controls specialist on the job, Honeywell, and last month German ceiling contractor Lindner put in a œ5 million-plus claim. Again, Multiplex will issue a counterclaim. And it still has to sort out a spot of bother with PC Harrington, its concrete contractor on Wembley, that has been bubbling away outside the courts. It has still not signed off its final account with the firm and the numbers being talked about regarding what is owed by whom are big.

Privately, Multiplex believes some firms have used its Wembley problems to crank up the pressure. They know, the argument goes, that by issuing a claim they can be guaranteed headlines, more negative press for Multiplex and then force the firm into brokering a deal. There might be a ring of truth in this but Multiplex must have known this was always bound to happen. Wembley, for the moment, is something it will have to live with and hope the sheen wears off in time.

It no doubt has a point to prove in the UK and the recent news that it has the pre-construction contract on the 288 m-high Pinnacle tower in the City of London is the first step in a rebuilding process. Multiplex has made it clear it will look at work in its core skills of high-rise, both commercial and residential, retail and health. Much of its third party work will be in London, while work for its developments arm will send it further afield.

One source said: "If it's appropriate and has the right risk profile, then we will look at it. We're looking at steady growth over the next five years; we're not looking to do a Laing O'Rourke overnight."

The firm is in the process of being bought by a Canadian asset management firm - basically someone who can pump in a lot of cash - and already the managing partner of Brookfield, Geoff Blidner, has described construction as the "heart and soul" of the Multiplex business and will be expanded.

The source added: "We're excited by Brookfield. They can get finance and cash quickly. If they're looking at grade A property in London then we can do it. We don't have to rely on a client."

The last point sounds a little bit like what was said last year, so what is the point of third party work? The source said: "We have to turnover to drive the business forward and we can remain in touch with the market. "And we want to make a profit as well. Third party work develops the business and individuals."

Its main rivals will be Sir Robert McAlpine, Bovis Lend Lease, Laing O'Rourke and, probably, Skanska. It might not be quite exactly what John Roberts, who died last year, had in mind back in the late 1990s but this model looks something more like what Mr Roberts Senior had in mind than the version being offered just one year ago. Pullquote: 'If it's appropriate and has the right risk profile, then we will look at it. We're looking at steady growth over the next five year' Multiplex insider

MULTIPLEX JOBS IN THE UK

1999 Enters UK market with £30 million Chelsea West Stand project

2000 Appointed preferred contractor to rebuild Wembley Stadium for a construction fee of £445 million

2002 February Begins work on £140 million 199 Knightsbridge luxury residential scheme

July Starts £105 million hotel and residential job in London's Docklands called West India Quay September Begins work on Wembley Stadium

2003 Starts work on £580 million White City retail scheme

2004 Work begins on £45 million deal to build 15 luxury high class apartments in Chelsea, west London

2005 £100 million plan to transform centre of High Wycombe starts 2006 Offloads White City to Westfield

2007 March Gets practical completion on Wembley

July Starts work on £333 million Peterborough PFI hospital scheme

September Begins pre-construction work on œ500 million Pinnacle tower project in City of London

October Due to start on £120 million Castle House scheme in south London

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