Haydn Mursell says government should re-tender to get best value for money

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Contractors have been warned against taking on collapsed construction giant Carillion’s stalled contracts under their current terms.

Haydn Mursell (pictured), chief executive of JV partner Kier Group, said it would be unwise for any company to step into the much-publicised problem contracts.

Speaking on BBC Radio 4’s Today programme, Mursell said: “Fundamentally, Carillion have said those contracts were loss-making, so it would be daft for any contractor to step into the same terms and conditions.”

His comments come as work on a number of Carillion jobs such as the much-maligned £335m PFI Royal Liverpool University and £350m Midland Metropolitan hospitals has been left in the balance following Carillion’s collapse last week. The firm was the primary contractor on both of the jobs.

Mursell added the government had two options for getting work on the failed contractor’s stalled projects up and running.

“Does it want them completed to a certain programme, a certain time frame, in which case they need to engage with the contracting fraternity quite quickly or is it about value for money in which case a re-procurement might occur.”

He also said both government and industry had lessons to learn from Carillion’s liquidation.

“From the contracting side, be selective with your bids, be aware of all the risks you’re taking on when you sign the contract. It sounds very obvious this, but when you’re in the depths of recession and people are hunting for work sometimes those disciplines can become a little bit looser than they need to be.

“On the client side, on the government side, value for money is a theme we hear a lot but actually that drives lowest cost and lowest cost isn’t always the best answer. It’s much better to engage with the supply chain and the contractors to get the best result.”

Earlier this week, Kier said it will take on more than 200 staff at Carillion who it had been working in joint venture with, including two HS2 contracts to dig tunnels in the Chilterns between London and Birmingham.

Called CEK, the other members were Kier and French contractor Eiffage, who will now both be 50/50 partners for the work which has a pricetag of £1.3bn. Kier has offered jobs to all 51 Carillion employees working on the scheme. 

It has also agreed a deal wqith Highways England to take over full responsibility for a number of smart motorway schemes it was carrying out with Carillion.

In 2015, a joint venture between the two landed £475m worth of work upgrading parts of the M6 between Stafford and Stoke and another stretch running through Cheshire. The deal included similar work for part of the M20 in Kent as well a section of the M23 near Gatwick Airport.