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Costain decides it will no longer bid for waste contracts after Manchester difficulties

Date: Thu, 21 Aug 2014 | Author: Paul Sanderson

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Construction group Costain has revealed that it does not intend to pursue any further contracts in the waste sector.

In announcing underlying profits of £11.2 million for the first six months of its 2014 financial year, Costain said that its Natural Resources division had made a loss from operations of £2.6 million with the loss for the year to date including costs for the completion of its waste PFI contract awarded in 2007 for the Greater Manchester Waste Disposal Authority (GMWDA).

If these costs were excluded, then the division would have made an operating profit.

Costain therefore announced that it is not pursuing any further contracts in the waste sector.

In the results statement, the company said: “The [Natural Resources] division is completing a legacy PFI contract awarded in 2007 for the GMWDA, which utilises a range of sophisticated waste management technologies.

“Of the forty-six waste facilities under the contract, thirty-six have reached final acceptance, three are seeking to obtain final acceptance, six are currently in the post-completion (warranty) period and one remains to be completed.

“Design faults have been identified at four sites, including the site that remains to be completed, and the remedial work and testing is on-going in respect of that site which is expected to be completed in the second half of 2014.

“Costain is in discussions with relevant contract counterparties and the group’s insurers regarding the issues that have arisen. While the board expects a successful outcome to these discussions it believes it is prudent to take a provision for additional costs to complete the project. It has been the group’s policy since 2009 not to pursue fixed price contracts of this nature.”

In 2009, Costain was awarded the £397 million construction contract by the Viridor Laing consortium that manages the PFI contract for GMWDA.

The £3 billion PFI deal treats the 1.3 million tonnes of municipal waste handled annually by GMWDA. 

Category: Construction
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