A snap poll of Carillion engineering sub-contractors shows that many companies are facing huge financial losses from the collapse of the construction giant. That’s according to new data obtained by the Building Engineering Services Association (BESA) and the electrotechnical and engineering services trade body ECA.
Carillion owes around £75 million to around 80 engineering services firms, who provide vital services such as electrical, plumbing, gas, fire and security, and heating and ventilation. The overall losses are likely to be far higher, given there are thousands of businesses operating in the industry. The engineering services sector is the largest part of the construction industry by value.
The ECA and BESA survey shows that contractors of all sizes have been affected by Carillion’s demise:
- The total value of ongoing contracts with Carillion is worth £47.2 million, which are now at risk.
- Micro businesses (less than 10 employees) are owed on average £98,000. One of these SMEs is owed over £250,000.
- Small firms (10-49 employees) are owed £141,000 on average. One of these contractors is owed £800,000 by Carillion.
- Medium-sized businesses (50 – 249 employees) are owed on average £236,000. One of these firms is owed almost £1.4 million.
- Large businesses (250 employees +) are owed on average £15.6 million. This figure includes Balfour Beatty’s widely reported £45 million loss from joint ventures with Carillion.
Both ECA and BESA have long called for reform to unfair payment practices within construction. Carillion was widely known to take over four months to pay suppliers, despite 30 day payment being industry good practice. To tackle this slow payment, the two trade bodies are calling on the Government to pay small and medium-sized businesses directly, using ‘project bank accounts’.