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Waste job loses Hochtief £15m

Contractor pays price for late design, confusing drawings and incorrect estimates

HOCHTIEF has lost at least £15 million on a project to build a waste incinerator plant in Kent.

And the German contractor's UK arm is expected to report more woe at the Allington project when it posts its 2005 accounts at the end of next month.

The scheme was priced at £27.5 million but one source told Construction News this week: 'It was bid in Germany and they went in at far too low a price. They didn't give it a lot of thought.'

The £15 million number is revealed in the company's 2004 accounts - its latest available figures - which were finally filed at Companies House last week, over nine months late.

In the year to December 2004, Hochtief made a £14.8 million pre-tax loss after posting a £691,000 profit last time.

In a statement the firm said: 'The trading result for 2004 has been completely overshadowed by the result of one project that has made a substantial loss in the year.'

As a result, Hochtief's parent in Essen has pumped £17 million into its UK operation through a share purchase.

Spokesman Bernd Putter said: 'We don't comment on individual projects. I can't tell you exact figures at Allington but the UK is an important market for us. In the future we will be bidding for more building projects.'

The firm won the job from process engineering client Lurgi, another German company, at the site in an old quarry close to Maidstone.

The complex, which is in its testing and commissioning phase, will be operated by specialist waste recycling firm Kent Enviropower when it opens at the end of October.

Hochtief was responsible for the design and construction of the civil and building works, which house the process plant.

The source added: 'The UK team came in at the end.

Until then, it was tendered in Germany and designed by Hochtief's designers in Frankfurt.

'It was all done in Germany with not much of understanding for how the market works over here. It was not an international approach. The client was in Germany, the design was done in Germany and the job was in south-east England.

'The design was late, it was under specified and there were drawings no one could understand.

They got a lot of the subcontractor prices wrong.'

Problems at the scheme came to light last November when the Austrian parent of collapsed engineering firm FMT blamed a 'serious miscalculation' at the Allington plant for its UK subsidiary's demise.

Once fully up and running, over 500,000 tonnes of household waste from Kent will be recycled and the remainder incinerated.

Planning permission required that the plant be hidden by earth bunds constructed up to the same level as the roof heights, which are 26 m above ground.

The heat generated by the incineration of the waste will produce electricity that will then be fed into the National Grid.