Client on loss-making job that helped sink Tolent to finish off scheme itself

A mixed-use development in Durham singled out by Tolent’s administrators as a major contributor to the contractor’s collapse is set to be completed by the client directly. 

The £85.5m Milburngate job had become “significantly loss-making” for the renowned regional contractor, having a “profound impact” on its working capital, according to Interpath Advisory. 

In 2019, Tolent was named as main contractor for the scheme’s first phase, which involved building around 70% of the entire six-acre riverside site. 

One former Tolent staffer told Building last week that blame for the “truly awful” situation rested on the “stupid” decision to carry out the mixed-use scheme in the first place. “Taking on a job too big [Milburngate] has killed a great company and put a lot of good people out of work,” he said.

A spokesperson for developer Arlington Richardson, a joint venture of Durham-based property business Arlington Real Estate and the Richardson family, told Building it would now be finishing the scheme itself.  

“The current building work at the Milburngate is very near to completion. The sad news that Tolent has entered administration will not impact on the project,” he said.  

“The joint venture developers will continue the final stages of phase one by engaging directly with sub-contractors and relevant Tolent staff to ensure a timely end to construction work.” 

Building understands that subcontractors are not currently on site but when completed, the Milburngate development will include 5,000 sq m of speculative offices, 153 built-to-rent apartments, a boutique cinema and a 92-bed Premier Inn. 

While the structural streel frame for the development was completed last March, the contractor had already missed the initial target for completion – Q2 2022 – when it went into administration and subcontractors on the job told Building it had been blighted by chaotic management. “The management was all over place,” a source said.

Meanwhile, more details have emerged of efforts to keep the group alive in the weeks before its implosion last Monday. 

Several subcontractors told Building that Tolent Construction was being propped up with cash from its Tolent Living subsidiary to make up for its loss-making contracts. 

Tolent Living, which also went into administration built residential properties for social housing providers, local councils and private residential developers, reported increased turnover of £44.6m and pre-tax profit of £900,000 in 2021, while Tolent Construction made a pre-tax loss of £4m. 

One plumbing subcontractor for Tolent Living, who is owed £180,000 by the firm, said the subsidiary was still booking work just days before the collapse and that he did not think “anyone [at Tolent Living] knew” they were about to head into administration.