Imagine how happy Amey's shareholders felt when their £1bn investment (2002) was knocked down to £81m last Wednesday (see news).
And imagine how delighted they were for the five former directors who left staggering under the weight of their payoffs. Departed chief executive Brian Staples got £361,036 – less than he's entitled to, apparently, but more than he deserves. For all their ire, though, they had little choice but to accept the bid from Spain's Ferrovial, which valued the business at 32.25p a share. At its 2001 peak, the price was 443p, but this had slid to 17.5p at one point, so it was probably time for them to cut their losses. There were other suitors – including, remarkably, former Atkins boss Robin Southwell – but only Ferrovial put money on the table. The Spaniards' timing was impeccable, too: as Andrew Gay pointed out last month, Amey had to buy back its £60m stake in Tube Lines in June if it was to survive. Amey's plight is no tragedy (Ferrovial pledges to retain all 9000 staff), but its demise was calamitous. It is only six years since the effervescent former chairman Neil Ashley recounted how he bought a roadbuilder for £6m in 1989 and turned it into a facilities management-led contractor with an £800m order book and £30m in the bank. In 2002, Amey lost £130m. Did Staples squander Ashley's legacy? Was Ashley's strategy flawed? Gay argued that Amey just didn't realise how tough it was to grow a support services outfit in a bear market, as well as underestimating the costs of the PFI. How pitiful that its nemesis should be the Croydon Tramlink.

Perversely, it was Amey's PFI stakes that attracted Ferrovial. Amey, say the Spaniards, is the "best fit" of any UK firm in the sector. In theory, perhaps – but that won't help much in the task of reviving the sickly firm. Ferrovial has got one decision right, by ruling out any change of name. That's always a sign that the patient's condition is terminal. But it will soon have to administer harsh medicine. Gay's prescription included cash injections and cost-cutting, which will be on Ferrovial's agenda, and leaving PFI, which won't. So can they succeed where others failed? Well, here's hoping. After all, they could hardly do any worse.

All hail, McEgan

No surprise to learn that MSPs have been stung into action by the outrageous cost overruns on the Scottish parliament. After estimates leaped eightfold to £338m, MSPs have decided to appoint a construction overlord to advise on future projects (see news). Welcome McEgan. In principle, the idea is sound. But it will be hard to find the right candidate, and harder still for them to make an impact. If they start by reflecting on the parliament debacle, though, they will learn lessons about being an effective client. For instance, if you triple the floorspace and the number of committee rooms, and make the external envelope blastproof, don’t be surprised if your contractor needs to jack up the cost a bit. It’s invariably cheaper to decide what you want before you start.

Postscript

Adrian Barrick, editor

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