Carillion forced to soothe fears over HS2 award

Russell Lynch
Carillion has won a slice of the £55.7 bn HS2 project, which stretches 140 miles between London’s Euston and Birmingham: Getty Images

Crisis firm Carillion on Monday grabbed a share of a £6.6 billion building bonanza on the HS2 rail project — but its bidding partners have been forced to soothe government fears over its ability to carry out the work.

Carillion shares jumped 13.8p or 25% to 69.9p after its tie-up with fellow builder Kier and French civil engineer Eiffage won two of the seven main packages of work, worth £1.3 billion in total.

But the firm has been placed under extra scrutiny by the Government-backed HS2 after a shock profit warning a week ago exposed its dire balance sheet and devastated the share price.

An HS2 spokesman said: “In the light of last Monday’s announcement by Carillion, HS2 has carried out additional due diligence and sought reassurance of both it and its two partners in the joint venture — Kier and Eiffage — that they remained committed and able to deliver the contract. Each company’s boards have both given that assurance and confirmed that they underwrite the performance of each other in delivering the contract. HS2 will continue to monitor the situation.”

Carillion said the awards “reflected the strength of our joint venture”.

Its team has won two contracts for surface works between the Chilterns and Long Itchington in Warwickshire on the £24.3 billion first phase of the £55.7 billion project, which stretches 140 miles between London’s Euston and Birmingham, but has faced intense criticism over its cost.

The other big winners from Monday’s contract awards were listed builder Costain, whose consortium with Austria’s Strabag and Gherkin builder Skanska has won two deals worth £1.85 billion in total for tunnelling works taking the route from Euston to Old Oak Common and out to the M25.

Emirates and Olympic stadium builder Sir Robert McAlpine has teamed up with France’s Bouygues and VolkerFitzpatrick — part of the privately owned Dutch construction empire VolkerWessels — to win another £965 million tunnelling deal.

Balfour Beatty and France’s Vinci have claimed the biggest share of the work, picking up the two northern sections of the route, worth £2.5 billion in total.

The seven contracts include all civil engineering works on the route such as tunnels and embankments, but not track laying and building stations.

Full details of the HS2 contracts:

South

• S1: Euston Tunnels and Approaches – SCS JV (Skanska Construction, Costain, STRABAG) £740 million.

• S2: Northolt Tunnels – SCS JV (Skanska Construction, Costain, STRABAG) £1.1 billion.

Central

• C1: Chiltern Tunnels and Colne Valley Viaduct – Align JV (Bouygues Travaux Publics, VolkerFitzpatrick, Sir Robert McAlpine) £965 million.

• C2: North Portal Chiltern Tunnels to Brackley – CEK JV (Carillion Construction, Eiffage Genie Civil, Kier Infrastructure and Overseas) £724 million.

• C3: Brackley to South Portal of Long Itchington Wood Green Tunnel – CEK JV (Carillion Construction, Eiffage Genie Civil, Kier Infrastructure and Overseas) £616 million.

North

• N1: Long Itchington Wood Green Tunnel to Delta Junction and Birmingham Spur – BBV JV (Balfour Beatty Group, VINCI Construction Grands Projets, VINCI Construction UK, VINCI Construction Terrassement) £1.32 billion.

• N2: Delta Junction to WCML Tie-In – BBV JV (Balfour Beatty Group, VINCI Construction Grands Projects, VINCI Construction UK, VINCI Construction Terrassement) £1.15 billion.

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