High bid costs drive consultant to review involvement in government school building programme
Mouchel is reviewing whether to continue bidding for work under the government's £45bn Building Schools for the Future (BSF) programme as dissatisfaction grows with the scheme's high procurement costs.
The UK-based international consulting giant, which in partnership with Babcock recently reached financial close on the Hackney BSF, is believed to be the first major player to consider curtailing its involvement in the programme due to its high bid costs.
In an interim management statement today, the firm said: “We are continuing to monitor new contracts in the BSF programme, but in view of BSF's lengthy and costly procurement model, and the fact that we did not proceed beyond the last two in Southwark, we are now reviewing our approach to this market.”
The company also noted that it has recently seen activity on some of its Dubai projects scaled back amid the weakening market, particularly on the Dubai Waterfront development.
The company, which has a relatively small international operation, focused on the UAE, Kuwait and Ireland, said: “We are increasing our activities in Abu Dhabi where the current economic difficulties are expected to have less of an impact.”
However, the firm said it is trading in line with expectations and added that it has a strong forward order book of £2.1bn, the same as at its last year end, although its bidding pipeline has fallen slightly from £2.2bn to £2.0bn.
In its statement, the company said: “We are working in markets which generally still present us with opportunities and have very little exposure to the UK commercial property market. In addition, we are continuing to monitor prospects to further develop and grow the business as and when they arise, for example in sectors such as IT, energy, education and social care.”