Contractor's plight worsens as hospital hits delays and university looks for replacement on hall of residence.
Jarvis’ fight for life took a turn for the worse this week after problems emerged on two of its remaining contracts.
The firm, which is £230m in debt and in the middle of a sell-off of parts of the business, is encountering problems on its £30m, 30-year PFI contract at Whittington Hospital in Highgate, north London.
A Jarvis spokesperson said: “Early construction works proved more complex than expected and, together with internal issues within Jarvis, it has impacted on the resources available for the project.”
A spokesperson for Whittington Hospital NHS Trust said the scheme has been several weeks behind schedule for some time, but that renewed financial and trading difficulties at Jarvis had extended that to several months.
She said the hospital was working closely with Jarvis and the two banks providing finance. She said: “Both Jarvis and the banks have a strong financial incentive to get the scheme complete as quickly as possible.”
Work was continuing at the hospital project on Wednesday, as Building went to press. However an M&E agency worker who joined the site on Tuesday said: “The site is definitely not fully staffed at the moment. We’ve heard rumours that work will stop completely.”
On a separate project, a £130m student accommodation block for Lancaster University, the client is considering finding a replacement main contractor for the third phase of work.
The client said it was working “extremely closely” with Jarvis and its partners to ensure that the project was completed in the most efficient way.
In a statement the university said: “With Jarvis’ assistance, a potential replacement contractor has begun to plan and price remaining work, with a view to making a proposal to take over the construction.”
The statement added that in the meantime Jarvis was concentrating on the completion of phase two.
The statement said: “Wider financial issues within the Jarvis group have led to some construction delays recently. A revised method to ensure that payments reach the subcontractors in a timely manner has now been agreed with the project company and the banks.”
The statement added that discussions with subcontractors were continuing to ensure that they were confident with the arrangements.
Andrew Neal, director of finance and resources at the university, said: “We are all determined to do everything that is practically possible to put this project back on track and get our students into the new accommodation.”