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Carillion enters liquidation.


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On 1/17/2018 at 09:33, Honest_Man#1 said:

It's also very difficult to win any work without bidding extremely low now, so most companies will pitch at a ridiculous level that will likely in the end give them little/no profits (as the budgeted spend always goes over unless corners are cut) and then try to make it back through doing extra works after the main projects are complete.

Indeed. I did a bid for a job fairly recently in the Highlands. We looked at the costs we incurred on a similar project elsewhere bid lower and we were still undercut by half. The winning bidder was ludicrous. 

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Indeed. I did a bid for a job fairly recently in the Highlands. We looked at the costs we incurred on a similar project elsewhere bid lower and we were still undercut by half. The winning bidder was ludicrous. 
Construction industry has been rife with this nonsense for last ten years at least.

My mates gaffer bid for full joiner fit out at new school last year. Bid accepted at 600k. A month before he was told he had to drop it to 300k. Told them to forget it.

Management level at these large companies, haven't got a clue. Bottom line drives everything even to the detriment of the finished product.

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I’m involved in the construction related sector though at the other end, i.e. small scale stuff and mainly domestic rather than commercial.

Even at this level it is not unusual for contracts to be entered into that it is impossible to compete with only for companies to then go bust without paying their suppliers and/or scamming customers for deposits.

 

 

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9 hours ago, Scary Bear said:

IMG_1516269922.451628.jpg

There’s an Official Receiver. Never heard of this before.

IMG_1516269993.383115.jpg

Hope they don’t get stiffed.

From what I read, Carillion didn't have sufficient cash left to pay for a receiver, ie the man/outfit

that does the liquidation...., I think the government had to guarantee the receiver's fees. 

Watching the Ch4 news just now, interview with the headmaster of a large school that was supposed to have

all it's maintenance done by Carillion...... , he looked rather cheerful. On the basis that the work was never done, Carillion was bust, the contract was null and void,

and other, in-house, arrangements would eventually be made. 

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Carillion were really bad at any FM stuff. They won’t be missed. No wonder they Headmaster is cheerful. However, it’ll most likely be out of the frying pan and into the fire. FM companies are all shite, or at least the big ones all are.

The only sector to plumb the depths as much as them are some of the utilities companies - specifically EDF who are terrible to deal with, string you along and never get anything done in the way of completing actions they’ve been given.

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I’m involved in the construction related sector though at the other end, i.e. small scale stuff and mainly domestic rather than commercial.
Even at this level it is not unusual for contracts to be entered into that it is impossible to compete with only for companies to then go bust without paying their suppliers and/or scamming customers for deposits.


My dad ran a printing business many years ago and said that his was something that happened a few times in that business. One company stiffed everyone he owed and then when his equipment was repossessed he tried to buy it back himself at the auction!
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On 1/16/2018 at 21:53, welshbairn said:

Is it normal pitch to aim a huge building project at 3% profit? I'd have thought there would be too many variables to give a decent prospect of returns at those margins.

Pricing jobs at 3% margins would lose most contracts. I was with one of the big construction companies as a laddie. Spent time in estimating when one major job was up for grabs. From what I remember we went in at -2% margin.

They bank on there being changes that can be charged at stupid rates and screwing their subcontractors.

I'm now on the other side of the fence, working for the subcontractor, and some of the liberties main contractors take are infuriating. They go to tender with their packages, but expect ridiculous amounts of discount, you're lucky if you get paid within 90 days of submitting your monthly valuation, they take 5% (at least) retention that you end up having to beg for, and they just generally pay you what they want for any variations. To sum up Main Contractors are c***s.

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21 hours ago, Father Ted said:

Construction industry has been rife with this nonsense for last ten years at least.

My mates gaffer bid for full joiner fit out at new school last year. Bid accepted at 600k. A month before he was told he had to drop it to 300k. Told them to forget it.

Management level at these large companies, haven't got a clue. Bottom line drives everything even to the detriment of the finished product.
 

Indeed, it's mad. I bid for a job in Dundee area with a very specific and good spec. Priced it, submitted tender documents, spending a bit of time on it. Lost by miles. Winning tenderer was from Essex or or thereby. It required people to visit a specified number of times and attend a number meetings too. For the price they quoted they'd have been losing money on travel costs alone. Needless to say it was re-tended 2 months later. Didn't bother second time and it should have been obvious to a project manager that bid was ludicrous. 

As you say all bottom line like 80/20 price/quality. Luckily some clients still value quality. 

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This is true.  There's also a massive food-chain of consultants>prime contractors>secondary contractors>main suppliers>subsidiary suppliers> ad infinitum.  The numbers of snouts in the trough and the the barriers to good business practice would amaze many.


Totally unfair writing off of a large and sophisticated industry with lots of skilled and intelligent people involved. Undoubtedly there are some/many bad practises but we are not all snouts in the trough.
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8 hours ago, Dunlop Don said:

Totally unfair writing off of a large and sophisticated industry with lots of skilled and intelligent people involved. Undoubtedly there are some/many bad practises but we are not all snouts in the trough.

For sure it is a large and sophisticated industry and for sure it employs many skilled and intelligent people.  However, it is also extraordinarily poorly managed and when you get the likes of Carillion going bust then you know that's true.  This is a company that the government basically threw billions of pounds at and they still couldn't stay afloat.

Factor-in the multi-million pound losses posted over the past 2 years by the likes of Kier, Balfour Beatty, Interserve, Laing O'Rourke, Mitie, Sisk and Bouygues in the UK and you can see that the sector is rotten to the core.

Prompt payment is anathema to the construction industry.  I'd wager the sector average is 90 days - which means that most main contractors pay their suppliers 4x a year - which should be criminal.  Carillion negotiated payment terms of 120 days with some suppliers which indicates how poorly-run they were.

I think I was fair to write off said industry.  My own firm supplies engineers on contract to various sectors but the only time we'll do so to construction contracts is if we get payment in advance and agree 30 day terms.  We had 3 draughtsmen working for a £ multi-million construction company (working on a Cross Rail contract) that went tits-up  last year.  Because of our fee structure we only sustained a modest £2k loss.  I know a competing agency sustained a loss of £180,000 and they have laid of staff AND the directors are having to remortgage their homes to keep their firm afloat.

So totally unfair?  I think not.

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On 15/01/2018 at 14:04, Cardinal Richelieu said:

Nah. Bought them a few months back when they were in free-fall. Without wanting to sound like Theo Paphitis, it was a bit of a punt so I won't be homeless if the share's end up worthless.

I also sold all my William Hill shares due to the imminent gambling review and the limitation on the FOBT cash cows. They've been on the up since the second I clicked the SELL button. 

Not sure I'm cut out for this malarkey 

Looks like you did the right thing with WH.

Quote

William Hill fell 13% before midday on Monday, cutting its stock market value by £364m.

https://www.theguardian.com/business/2018/jan/22/ladbrokes-value-falls-800m-ahead-of-ruling-on-fixed-odds-betting

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31 minutes ago, welshbairn said:

Aye, but the price they're at now is still higher than what I sold them for a few months ago. What a diddy. 

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31 minutes ago, welshbairn said:

Aye, but the price they're at now is still higher than what I sold them for a few months ago. What a diddy. 

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On 15/01/2018 at 09:12, Cardinal Richelieu said:

Cheers mate. I must have missed the massive headline on the BBC News website when I read it this morning. 

A few months back, I was buying some shares, and saw that their price had dropped considerably. Going by the old bollocks adage that "they're too big to fail", I bought a few hundred pounds' worth. Vince Cable was on the news yesterday saying "The government cannot bail them out"... I don't normally shout at the radio, but this time I yelled "Aye they bloody can". 

Anyway, would anyone like to buy my shares? I paid £300 ... will accept £150. 

https://moneyweek.com/how-investors-can-spot-the-next-carillion?utm_campaign=money-morning-newsletter&utm_medium=email&utm_source=newsletter

 

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19 minutes ago, Scary Bear said:

Cheers lad, some good advice. 

Although I'll be honest, every time I'm tagged / quoted in this thread, I leap back in with the vein hope of some mysterious Chinese equity firm buying out Carillion in multi-trillion pound deal, only to be left sorely disappointed every time :/

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