The Collapse Of Carillion – An Update

It was at the start of this year that construction company Carillion collapsed, resulting in uncertainty in the construction industry. Questions have been asked ever since – how did it happen? What will happen to the company’s employees and contracts?

It’s been a few months since the company folded so we’ve found some updates of what’s been happening with Carillion.

There are plenty of sources discussing the company, but we’ve found some of the facts from a few different places.

Construction

  • The official Parliamentary Select Committee investigating the collapse of the company has found that there were a lot of problems with Carillion leading up to what happened. It suggests that one of the main problems was the lack of focus on long-term sustainability and the pursuit of quick money and acquisitions the company couldn’t really afford. As well as this, the report also suggests that the way Carillion was managed meant it was always going to fail at some point.
  • The Express And Star have written that around 1,100 people work at Carillion now, down from 18,000 during the collapse. However, on a good note, a lot of people have been able to stay in employment – with the movement of over 13,000 jobs to other companies. Over 3,600 people have either been made redundant or left the company.
  • An article from The Independent talks about how another outsourcing company, Serco, has seen a drop in profits – part of which it blames on taking some Carillion contracts. The organisation now has a few health contracts which were originally given to Carillion.
  • The Telegraph says the crisis could happen with another company if there’s no change to how the Government allocates contracts. It also says that currently a lot of contracts are given because of the price, which the companies renegotiate later.
  • According to The Guardian, the collapse leaves a lot of contracts going unfulfilled. Many have new providers, but the article suggests major construction projects are still feeling the effects. Another article by the paper believes that the company was always going to fail, it was just a case of when. It goes on to suggest that Parliament should look into the whole system which let Carillion manage itself in the way it was.

It’s not a pretty picture. However, an article by the Evening Standard shows that in the first part of 2018, the Government awarded £3 billion worth of contracts to companies. The article also goes on to say that many of these were to small and medium sized businesses.

At the moment, the collapse of Carillion is a bit of a mixed bag – the news is bad, but not as bad as it could be. Most of Carillion’s contracts across various sectors look like they’ve moved to other companies – although construction might be a different picture.

Looking at employment though, the news is good as so many people have either left of their own accord, or been found work. In this respect the collapse doesn’t seem to currently be having as bad an effect as it could have.

The one big question about the collapse of Carillion has to be whether Government outsourcing regulations and policies will change. As of right now, they definitely haven’t.

One thing is for certain though – it appears that what happened to Carillion had been building for some time. Another is that the ramifications of the collapse may continue in the construction sector if nothing changes in terms of contracts moving to other companies.

However, on a brighter note, the Government is continuing to outsource to companies of all sizes. Therefore, at the moment there are still contracts available as a result of this practice.

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Relevant Posts

The 2018 Budget And Construction

Construction Industry Update – Spring 2018 Overview

Construction Industry Sector Update – May 2018

 

The full Parliamentary Select Committee Report into Carillion’s collapse is available here: https://publications.parliament.uk/pa/cm201719/cmselect/cmworpen/769/76902.htm .

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