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February 2018 UK Project Management Round Up

Carillion Collapse, Classic Cars, Research Projects Abandoned, Speculative Engineering, Oil and Gas Looking Up, Short Reports and Changing of the Guard

REPORT

By Miles Shepherd

Executive Advisor & International Correspondent

Salisbury, England, UK

 



INTRODUCTION

Some years start slowly as befits the weather and people’s mood after the holiday period but 2018 has come in with a bang!  The major news this month has been the collapse of a major company with consequent job losses, contract implications and concerns about the validity of its auditing.  Other newsworthy items include takeover battles for a major UK defence contractor, an upswing for off-shore oil and gas, disappointing news on the drugs research front and a changing of the guard at the major PM research journals.  Needless to say, all this and more will be covered in this month’s report.  On with the show!

CARILLION COLLAPSE

Readers may know that Carillion plc was a major facilities management and construction company.  It was listed on the London Stoc Exchange (LSE) and is the second largest UK construction company with some 43.000 employees world-wide including about 20,000 in UK.  Reports of financial problems emerged last year (see my report of August 2017) and the firm has rarely been out of the financial news since autumn 2017.  On 15 January, Carillion went into compulsory liquidation.

Carillion has government contracts to supply services ranging from catering in hospitals and prisons, managing the Ministry of Defence housing estate, and a wide range of Private Finance Initiative schemes.  It also has HS2 contracts and is involved with the revamp of Battersea Power Station.  The impact on the day to day businesses has varied with some work continuing after local and national government support but many projects, including a newly awarded contract for High Speed 2 (HS2) have been affected.

The collapse also hits many suppliers as many of the 30,000 firms affected will not have any insurance cover to off-set defaulting payments.  The position of individuals is also dramatic as the 28,500 pensioners may have problems being paid in both the long and short term.  Nor are these problems confined to UK as four Canadian subsidiaries have also been forced to file for bankruptcy protection.

Warning bells were sounded in July last year when Carillion warned of a £845 million impairment charge in its construction services division.  At this stage, many observers felt that the firm was too big to fail and It’s relationship with successive Governments through PFI schemes made it seem unlikely to default.  Then in September, the acting CEO Keith Cochrane, claimed that the firm had accepted too many projects which had turned out unprofitable and income did not reflect the work done.

Needless to say, the politicos are having a field day with Her Majesty’s Loyal Opposition blaming the current Government for the collapse and the BBC reminding these doom-sayers that it was their party that introduced PFI and similar contracts during the reign of the sainted Tony Blair.  MPS and other politicos are good at criticizing others, ignoring their own responsibilities and being wise after the event.  It will be project managers who will have to sort out this mess.  What s quite clear is the need to learn many lessons from this debacle.  For many observers, the main issue is one of governance, or rather, lack of it.

More…

To read entire report, click here

 



About the Author


Miles Shepherd

Salisbury, UK

 

 

Miles Shepherd
is an executive editorial advisor and international correspondent for PM World Journal in the United Kingdom. He is also managing director for MS Projects Ltd, a consulting company supporting various UK and overseas Government agencies, nuclear industry organisations and other businesses.  Miles has over 30 years’ experience on a variety of projects in UK, Eastern Europe and Russia.  His PM experience includes defence, major IT projects, decommissioning of nuclear reactors, nuclear security, rail and business projects for the UK Government and EU.   Past Chair and Fellow of the Association for Project Management (APM), Miles is also past president and chair of the International Project Management Association (IPMA).  He is currently a Director for PMI’s Global Accreditation Centre and is immediate past Chair of the ISO committee developing new international standards for Project Management and for Program/Portfolio Management.  He was involved in setting up APM’s team developing guidelines for project management oversight and governance.  Miles is based in Salisbury, England and can be contacted at [email protected].

To view other works by Miles Shepherd, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/miles-shepherd/.