KPMG called in to review project controls at Balfour Beatty
Big Four firm called in as Balfour Beatty's UK construction services division sees margins eroded
ANOTHER PROFIT WARNING at Balfour Beatty has prompted the construction business to call on KPMG to undertake further cost control and project reviews.
The profit warning, Balfour Beatty’s fifth in less than two years, sees a shortfall of £75m revealed in its Construction Services UK division. KPMG, which has been working on contract control and reporting disciplines within the engineering services and parts of its regional business, has seen its remit increased.
The Big Four firm is to review commercial controls, on ‘cost to complete and contract value forecasting’ at project level. KPMG are expected to report back to the board by the end of the year.
The £75m profit reduction is split across: £30m within engineering services; £20m within large London area building projects; £15m within regional construction; and £10m within major infrastructure projects.
“There has been inconsistent operational delivery across some parts of the UK construction business and that is unacceptable. Restoring consistency will take time and it has our full focus,” said Balfour Beatty executive chairman Steve Marshall.
Marshall will step down as interim CEO and as chairman when replacements are found for the roles.
The total number of problem contracts has increased to 25, from the 21 previously disclosed. Of these, 19 are due to reach operational completion in 2014.
Balfour Beatty had previously indicated that its withdrawal from bidding on any other tier 1 contractors in London, and withdrawing from bidding on new contracts in the south-west region.
The firm is trading at 5.4p down in this morning’s trading, at 185.1p – a value of £1.3bn by market cap.
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