Sir Robert McAlpine singles out Fitzroy Place after £89m loss

Sir Robert McAlpine slumped to a £89.7m loss last year, which the contractor blamed mainly on losses incurred on the huge Fitzroy Place mixed-use scheme in central London.

Building has learned the 291-flat residential portion of Exemplar’s Fitzroy Place scheme is running three to six months behind schedule, with opening currently scheduled for this autumn.

In a statement issued this week after its results went up online on Companies House last Friday, Sir Robert McAlpine said its £89.7m pre-tax loss in the year to October 2014 was “to a great extent, due to one difficult project – Fitzroy Place”.

The problems on the project, which was won by McAlpine at the bottom of the market in June 2012, are thought to be partly caused by the collapse during construction of fit-out subcontractor Mivan in January 2014. The firm has since been bought out of administration.

Sir Robert McAlpine’s loss compared with a slim £4.4m pre-tax profit the previous year. The heavy loss meant the contractor lost £1 on every £9 of business, with the loss made on £787.8m of turnover. Turnover was broadly flat, up marginally on the previous year’s £780.4m.

In the firm’s accounts, the directors said losses were caused by “one project in particular”, but elsewhere disclosed the “significant deterioration in the performance” was due to a “number of poorly performing contracts which have incurred considerable losses”.

The directors said market pressures - including “high cost escalation with a very stretched and limited supply chain”, particularly in London - and “weaknesses within our own operations” had contributed to “delays and cost escalations”.

The directors said that in response to the contract losses they had “reviewed and corrected” some processes, namely “risk management during tendering and the management of our design responsibilities and changes”.

Last October Sir Robert McAlpine’s London boss Vince Corrigan exited the firm after 30 years with the company and was replaced in his role by the firm’s director of operations, Tony Aikenhead. The offices and retail portion of Fitzroy Place is complete and was unaffected by delays, Building understands.

A spokesperson for Exemplar said: “The Fitzroy Place project was carried out in full accordance with the contract agreed by the developers and Aviva. We are extremely pleased with the development which is due to complete this autumn. We can’t comment on SRM or any other member of the construction team’s affairs.”