Carillion to seek settlement on Mowlem's problem jobs

Carillion has revealed it plans to settle disputes it has inherited after it acquired rival contractor Mowlem for £313m in February.

A source close to Carillion said the firm had set aside reserves following the buy to settle Mowlem's ongoing disputes. These include wrangles with Bath council over the Bath Spa scheme and Dublin City Council over the port tunnel project.

The source said: "They do not want to end up fighting a lot of battles."

A Carillion spokeswoman said the company would aim to settle Mowlem's disputes out of court.

She said Carillion would make £10m in savings through the synergies achieved by merging the two businesses. Carillion claims it will make £15m annualised savings thereafter.

Staff will be cut where roles are duplicated and Mowlem's HQ at White Lion Court will be closed.

Bath and North East Somerset Council is gearing up for potential litigation against Mowlem as well as Grimshaw, the architect on the delayed and over-budget Spa scheme.

We have not at the moment worked out our strategy. But it’s quite obvious that it’s not all Mowlem’s fault

Nicole O’Flaherty, councillor in charge of Spa

Nicole O'Flaherty, councillor in charge of Bath Spa, said: "The council is now dealing with all the parties involved in terms of their costs and potential claims. Hopefully it will be (a case of) negotiation but it maybe litigation. People want to settle it as cleanly as possible."

Last week Bath council agreed to earmark an extra £521,000 to pursue legal claims relating to the spa. The money brings the total amount the council has set aside for the anticipated battles to £3.6m.

O'Flaherty said the council would soon be negotiating with Mowlem and Grimshaw and "lots of others". She added: "We have not at the moment worked out our strategy. But it's quite obvious that it's not all Mowlem's fault." Bath is being advised by law firm Taylor Wessing.

The Spa's opening has been pushed back yet again. It was due to open at Easter but is now likely to welcome the public a month later. Capita Symonds is currently overseeing remedial works on the scheme before handing the building over to the Spa's operator, Thermae Development Company. TDC said there was no official opening date. A TDC spokesperson said: "We are waiting for the building handover at the end of April. We will then have the final fit-out and staff training to do. It will take a few weeks."

TDC is a spa development company. Its past projects include Thermae 2000 in Valkenburg, Holland.

The Carillion spokeswoman said: "We only inherited the Mowlem business a month ago so we are still in the process of standardising everything as part of the integration process. The process is due to run until at least September. (As part of the acquisition) we did due diligence on Mowlem but you do not get all the details until you takeover the business. If we uncover new things we will obviously give them the right amount of time so the integration process may last beyond September."