Amec’s losses on A13 road contract put at £9m

Amec is understood to have lost £9m on the £245m A13 PFI roads job, but will almost certainly recover the £7m it spent on winning the £167m Colchester Hospital PFI, which the government scrapped at preferred bidder stage.

The A13 is known to have been one of the problem contracts that Amec has undertaken in the past 12 months, although the scale of the scheme’s troubles was uncertain.

City insiders were dubious that the contractor would be able to recover its bid costs on the Colchester scheme, but a senior health official has hinted that payment was likely.

Amec has declared £140m in costs due to exceptional items in the past year. Sir Peter Mason, the outgoing chief executive, was particularly critical of problems on two PFI roads contracts, which are thought to be the A1(M) Darrington–Dishforth and A13 contracts.

The US parent of one of Amec’s consortium partners, KBR, wrote off $17m (£9.1m) on a UK road contract in its second quarter results, almost certainly for the A13. It’s likely that Amec took a similar hit, and a source close to the company confirmed that the amount “would not be too dissimilar”.

Problems on the contract included a fire in the Limehouse tunnel last year.

The Darrington–Dishforth contract is thought to have cost Amec about £5m.

Many have questioned Amec’s refusal to write off £7m bid costs for the Colchester Hospital, but the company has argued that the 1997 Bates report recommended that a company in its position be reimbursed.

A senior DoH source admitted that, although there is no precedent for reimbursement in healthcare schemes, there were examples of this at the Ministry of Defence.