M&E contractor writes off profit on the west London project as Laing seeks to recoup some of its losses.
M&E contractor NG Bailey is understood to have paid Laing more than £3m in an out-of-court settlement after problems at the troubled National Physical Laboratory in Teddington, west London.

Laing has written off £75m on the project as a whole, for which Bailey is carrying out work on a high-tech air-conditioning system.

A Laing source at the site said the agreement with Bailey was just the start of the group's attempts to recoup some of its losses.

He said: "This is not the end point; it is the start of negotiations – and not just with Bailey." He said Laing had been in talks with the client (the DTI) and other subcontractors over changes to specifications and designs. "We want to give the client what it wants in a way that can be delivered," he added.

A Bailey insider said the firm had paid Laing £3m, adding that it would not now make any profit on the £30m contract, which had been expected to provide a 10% return.

Bailey refused to comment.

The NPL project ran into difficulties over the high-specification air-conditioning systems required in some of the development's laboratories. This led to the appointment of US troubleshooter Bechtel, which has 11 staff on site.

It is understood that Bailey's director of operations, Alan Jones, is now based at the site. The Laing source said the subcontractor was concerned the project had put a drain on its resources and Jones was there to ensure everything went smoothly.

The decision to move Jones to the NPL site came after the resignation of Bailey's managing director Mike Carpenter and its marketing director Mark Lench in August. Martin Bailey, the firm's engineering director and a member of the Bailey family, has taken over as acting managing director.

The insider said Martin Bailey would ensure that the Bailey family were in charge.

He said that Carpenter's resignation was not directly linked with the NPL project but a private matter. He added, however: "There were a number of high-profile projects that cost the firm money and I think the family wanted to regain control."

Bailey's spokesperson reiterated that Carpenter's departure from the board was not linked with speculation over proposed project losses.

She added that Bailey was working with Bechtel to ensure the project was completed by next spring.

In February last year, Bailey was reported to have lost £4.5m on an £80m environmental testing facility at Dunton, Essex, after the client went into voluntary administration.

Bailey is also understood to be close to concluding a court battle with Amec over work undertaken in 1997 on the £36m Sun Life building in Bristol.

The insider added that the company had expected to win another big project for the Ministry of Defence but was not successful.