Queensferry Crossing firm facing £98m bill

Galliford Try hit by higher costs on bridge build and road infrastructure

Shares in Queensferry Crossing contractor Galliford Try have taken a battering after the group revealed it was setting aside £98 million to cover unexpected costs in its construction division.

Galliford’s stock plunged by more than 9% in early trading after it admitted it was facing the huge sum in extra costs, principally due to two “legacy contracts”.

The group did not identify the projects other than to say they were joint ventures and one was due to complete this summer and the other next year.

The first project is the Queensferry Crossing and the second is understood to be the Aberdeen Western Peripheral Route.

The bridge is one of the largest single infrastructure works ever undertaken in Scotland, with a total construction cost in excess of £1 billion.

Galliford Try owns Scottish contractor Morrison Construction.

It is part of the Forth Crossing Bridge Constructors consortium alongside Hochtief, Dragados and American Bridge International that was awarded the build contract for the Forth Replacement Crossing in 2011.

In its update to the stock exchange, Galliford said its “anticipated liability to conclude the legacy contracts” had “substantially increased” following a review.

The group reported its half-year results on February 21 but the group said the additional costs had come to light in the period since that disclosure.

Around 80% of the total £98m projected additional outlay relates to the two joint venture projects.

Galliford Try chief executive Peter Truscott said the group was no longer taking on major infrastructure contracts on a fixed price basis.

“The impact of the legacy projects in construction, in particular the two large infrastructure projects, is regrettable,” Mr Truscott said.

“Galliford Try is no longer undertaking large infrastructure jobs on fixed price contracts. There are no other similarly procured major projects in our current portfolio and we are encouraged by the performance of the underlying portfolio of newer work.

“Excluding the non-recurring charge, we remain confident in delivering a strong performance over the full year, and we plan to pay the dividend in line with previous guidance.”

Aside from the exceptional costs, Mr Truscott said the group was making good progress on its long-term strategy.

“Whilst we remain cautious of continuing macroeconomic uncertainty, all three businesses are focused on exciting targets and clearly defined plans to improve operating efficiency and grow both margins and revenue,” he said.

Shares in Galliford Try closed down 135p at 1,327 last night.

Picture: Transport Scotland. The Queensferry Crossing is due to open later this year.