Britain’s biggest privately owned contractor Laing O’Rourke has crashed to its biggest ever loss following problems with projects in London and Australia.
The Dartford based business said it fell £288 million into the red in the year to end March on turnover up £500 million to £3.6 billion. Its previous biggest deficit was the £246 million loss in 2016.
The company said business in the UK had been hit by “continued inflationary pressures, challenging delivery on projects experiencing significant change and delays to capital investment in UK public sector work”.
It would not identify the specific schemes that have caused the problems but according to industry news website Building.co.uk they are related mainly to the regeneration of Olympia and work on the former Whiteleys shopping centre in Bayswater.
Both were signed on fixed-price terms and finance chief Baker said: “We are reducing our exposure to fixed-price. There is a place for fixed-price where we completely understand the design and the costing of the job.”
The £600 million Olympia scheme was signed with client Yoo Capital in May 2021 but a few months later dozens of design changes were submitted to the local council.
Chairman Sir John Parker said in a statement to the accounts that “factors impacting Laing O’Rourke’s UK profitability” included “new clients, with high-value projects, requesting major design changes post-contract”.
Chief executive Ray O’Rourke also pointed to the unprecedented surge in construction cost, adding: “We have sought to collaborate with clients to manage the impacts of this and keep projects on track but our commitment to finding solutions in a difficult environment has not always been reciprocated. Inequitable risk-sharing adds to the ongoing turbulence across construction.”
The firm’s order book stands at £10.5 billion with income in the six months to 30 September reaching £1.9 billion, up 22% on the same period last year,.
Major projects include the first phase of a tech and life sciences scheme called Oxford North
