Builders’ cash crisis delays work

A CONTROVERSIAL £30 million addition to Highgate’s Whittington Hospital – already hit by delays – could be under further threat, as troubled construction firm Jarvis carries out urgent cost-cutting measures.
The company, which has former Tory London mayoral hopeful Steven Norris on its board, won a private finance initiative (PFI) deal two years ago to build and maintain a new clinical services building for the hospital.
It issued a warning to City investors on Thursday that it faced severe cash flow problems following an urgent review of the group’s finances carried out by the recently appointed chief executive, Alan Lovell.
The trouble-hit firm is now looking to dispose of parts of its lucrative PFI business to recoup debts, which are now an estimated £80 million more than anticipated, but denies this will affect existing projects.
The new building, which will have an entrance from Magdala Avenue, will house clinics, theatres and a cardiology ward. It was Jarvis’s first acute health service contract and was originally due to be fnished this autumn.
A spokeswoman for the hospital said it now expected the building to be completed in the first half of next year.
She said: “The construction has been subject to several weeks’ delay, and renewed financial and trading difficulties within the Jarvis group have extended it to several months.
“In the event of any breach of the project agreement or associated contracts, the lending bank has rights and obligations to take remedial action at no cost to the Whittington.”
But according to critics of the PFI scheme, the hospital would find itself in serious difficulties if the firm went under.
Professor Allyson Pollock, head of public policy research at University College London, warned the New Journal in July that Jarvis would be entitled to compensation from the public purse if the PFI scheme collapsed.
Jarvis has admitted cash-flow problems have meant reduced activity and rising costs on its building sites. It is examining the possibility of bringing in new partners to help with the work.
A spokeswoman for Jarvis said: “We continue to work closely and amicably with the Whittington towards completion of the acute wing of the hospital. Construction continues and the structure is now complete.
“The early construction works proved more complex than expected and, together with other issues within Jarvis, there has been a regrettable knock-on effect.”