Defence support contractor Carillion fighting to stay afloat
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A Commons committee has announced it will hold an inquiry into government outsourcing following the demise of Carillion.
Bernard Jenkin, chair of the Public Administration and Constitutional Affairs Committee, said it would look at the "lessons to be learned from the collapse".
It will also look at wider issues in Whitehall around public procurement, IT and the relationship with non-public sector bodies.
Bernard Jenkin, chair of the Public Administration and Constitutional Affairs Committee, said it would look at the "lessons to be learned from the collapse".
It will also look at wider issues in Whitehall around public procurement, IT and the relationship with non-public sector bodies.
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"Robert Peston is quoted as saying:"
You would have thought he'd learned his lesson
Hint.
http://www.dailymail.co.uk/video/new...-swearing.html
You would have thought he'd learned his lesson
Hint.
http://www.dailymail.co.uk/video/new...-swearing.html
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For all those banging on about this being the end of PFi deals and public sector outsourcing, you need to look at Carillion's last published accounts. The PFO and public sector contracts are all fine, heathy and very profitable.
It is on the construction side that they have made huge losses, they are the UK's second largest construction company, and it is here that they have got it disastrously wrong.
The PFI and public sector deals will be easy for the liquidator to sell on.
It is on the construction side that they have made huge losses, they are the UK's second largest construction company, and it is here that they have got it disastrously wrong.
The PFI and public sector deals will be easy for the liquidator to sell on.
For the CEO of the second largest construction company in the UK that is hardly excessive.
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Carillion
For all those banging on about this being the end of PFi deals and public sector outsourcing, you need to look at Carillion's last published accounts. The PFO and public sector contracts are all fine, heathy and very profitable.
It is on the construction side that they have made huge losses, they are the UK's second largest construction company, and it is here that they have got it disastrously wrong.
The PFI and public sector deals will be easy for the liquidator to sell on.
It is on the construction side that they have made huge losses, they are the UK's second largest construction company, and it is here that they have got it disastrously wrong.
The PFI and public sector deals will be easy for the liquidator to sell on.
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Basic Contract Management Rule No 1:- Never award a major contract without performing due diligence on the Contractor.
This has clearly never been undertaken. The serious issues with Carillion have been known about for some time.
This has clearly never been undertaken. The serious issues with Carillion have been known about for some time.
Thread Starter
For all those banging on about this being the end of PFi deals and public sector outsourcing, you need to look at Carillion's last published accounts. The PFO and public sector contracts are all fine, heathy and very profitable.
It is on the construction side that they have made huge losses, they are the UK's second largest construction company, and it is here that they have got it disastrously wrong.
The PFI and public sector deals will be easy for the liquidator to sell on.
It is on the construction side that they have made huge losses, they are the UK's second largest construction company, and it is here that they have got it disastrously wrong.
The PFI and public sector deals will be easy for the liquidator to sell on.
As for the accounts being healthy for their public sector work, that makes no odds, you have to look at the totality of the accounts to say a company is healthy. As it is, it looks as though Carillion’s finance department had been engaged in all sorts of schemes - legal I should add - to mask the dire state of their cash flow such as rising debt levels which didn’t feature in the main debt numbers on the balance sheet and mixing financing and operating cash flows. It was all there if you did the requisite due diligence, going back a good few years. Some of it apparently due to unhappy customers not paying up after bodged jobs. But in all, a very good example of why cash is king in the business world - for all their multi-billion contracts they simply didn’t have sufficient cash to keep the lights on. And when that became apparent valuations went into free fall and it was only a matter of time.
And whilst the public sector contracts will likely be sold on, it won’t be a good deal for the public purse, as I suggested right at the start, most sensible firms will see they have us over a barrel.
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IT was some of the support companies featured on the news I feel really sorry for as they have already started to let staff go as they are owed a small fortune, one company was owed £1,000,000 in unpaid work.
An interesting point was made by Vince Cable on the radio yesterday - the Govt don't have specialist contract negotiators/writers (I believe we used to once upon a time) - the French have an academy for that specialisation, properly trained people with experience in due diligence and finance.
As a country we still haven't learned the warning about 'not putting all your eggs in one basket' and continue to believe that economies of scale work, both militarily or financially - that is how you create behemoths that are 'too big to fail'.
Couple that with a desire from both major parties to move things off the treasury balance sheet - welcome the PFI fiasco - and it's no surprise we have ended up here.
As a country we still haven't learned the warning about 'not putting all your eggs in one basket' and continue to believe that economies of scale work, both militarily or financially - that is how you create behemoths that are 'too big to fail'.
Couple that with a desire from both major parties to move things off the treasury balance sheet - welcome the PFI fiasco - and it's no surprise we have ended up here.
the Govt don't have specialist contract negotiators/writers (I believe we used to once upon a time)
Setting this aside, there are two sure-fire ways to a successfully and timely contract being awarded. One, get the company to draft it. Most delays are caused by Commercial faffing around for months over terms and conditions, trying to get the company to accept unsuitable ones. It ain't a contract until MoD agrees it is, so there can never be any harm caused. Two, the technical project manager negotiates and agrees the contract, as used to be the case with anything airworthiness or repair related. Commercial don't like this as they are taught, wrongly, only they can sign a contract. Read the regs and get over it. Underpinning this, make sure the Schedule of Requirements reflects what the Service really needs and what is possible; which seldom aligns with what DEC asks for. Downside - to achieve this you need experienced, trained technical staff. Otherwise, it's straight forward.
But none of this counts for anything if you get a political over-rule, to let the contract on a company who didn't bid, who happen to be in a Defence Minister's constituency. Perhaps not a million miles from the Carillion problem.
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Sometimes politics over rules sensible debate. I left a company in the defence industry when the technical director and sales chief decided not to accept my estimate of how many man years of work would be needed to design a new tank sight. I was Chief Designer and had been hired in to buck up their design department. I had already won the contract for the image intensified night sight for the SA80 rifle for them and introduced new more efficient working practices in the design area. They over ruled me and went ahead using a lower figure which I knew could not be achieved in order to undercut our oppositon. Money was lost, the parent company sold the outfit to the French (not long after I left) and all the culprits lost their jobs.
Earlier in my career I worked for a very large blue chip company in the heavy electrical business. They had a whole department whose job it was to work how long they could delay paying their sub contractors before legal action was on the cards.
Sounds like Carillion had both these things going on.
Earlier in my career I worked for a very large blue chip company in the heavy electrical business. They had a whole department whose job it was to work how long they could delay paying their sub contractors before legal action was on the cards.
Sounds like Carillion had both these things going on.
Throw in a few knob gags while you're at it and you'll get yourself an audience.
It will be an ignorant, brainless audience, but still an audience...
PDR
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