Forrest enters administration
After weeks of speculation and a failed attempt to secure a refinancing deal, administrators have been called in at Bolton-based contractor Forrest.
Administrators at FRP Advisory have been appointed at the company, which employs around 230 people, roughly a month after it was first forced to deny rumours it was on the brink of collapse.
Three problem jobs – Citu NQ in Manchester’s Northern Quarter, and X1 The Gateway and X1 The Plaza – have been the root of the company’s financial woes.
Last week, the company confirmed it was looking to sell its energy and regeneration arms in a bid to stay afloat after talks with banks and lenders over a refinancing deal collapsed.
Some of the company’s regeneration contracts have been sold to Engie, saving 64 jobs, but the construction and housing divisions of the company will now be wound down.
Joint administrator Anthony Collier said: “Despite the best efforts of the directors, the legacy issues facing the company have been unable to be resolved, resulting in an unsustainable financial situation.
“We have successfully agreed a sale of certain contracts to Engie Regeneration Limited, which will preserve 64 jobs and provide continuity for customers in the refurbishment and energy divisions
“Unfortunately, it has not been possible to secure a sale for the construction and housing elements of the company, and we are working with all stakeholders to deal with the orderly wind-down of these divisions.
“We are pleased that during this process, working alongside management, we have assisted a large number of employees find alternative employment within the industry and will continue to work closely with agencies, including the Redundancy Payments Service, to ensure that employees receive every support at this difficult time.”
The group struggled to recover after admitting it had made “a series of incorrect pre-construction estimates” on some of its projects; industry sources told Place North West one of the contractor’s major jobs had been heavily under-costed by around £5m despite months of negotiations, while on another scheme, subcontractor packages had been “wildly under-estimated” making certain parts of the project “unprofitable”.
It is understood Forrest had attempted to renegotiate a number of jobs in the last month but these efforts were largely unsuccessful.
The contractor was replaced over the past two weeks on many of its major projects as it looked to stay afloat. These include the £100m Aura scheme in Liverpool for Elliot Group, where it was yesterday replaced by Vermont; the developer replaced Forrest on another of its projects, the £70m, 34-storey The Residence in Salford. Careys has been drafted in on this site to deliver the concrete frame while the developer looks to appoint a permanent main contractor replacement.
Developer Salboy also acted quickly to replace Forrest on the contractor’s loss-making Citu NQ job in Manchester following administration rumours last month, drafting in Domis, the company founded by former Forrest boss Lee McCarren, to complete the project.
Other projects the contractor was delivering included Plaza 1821 on Liverpool Waters for developer Peel, in a project designed by Hodder + Partners. Work on this scheme stopped last month after concrete frame contractor Heyrod walked away from the project following payment disputes.
Last year, Forrest made 30 staff redundant in a restructuring move after unearthing a pre-tax loss of £26m, which it said was down to accounting “errors”.
The company had previously reported a pre-tax profit of £3.6m in 2015 but this was revised heavily downwards to a pre-tax loss of £19.2m. This was followed by a £6.8m loss for the year to 29 February 2016.
Following this, the Greater Manchester Combined Authority agreed to step in with a £2m finance package to keep the contractor afloat. The GMCA was a new lender to the group replacing the Royal Bank of Scotland. At the time, Palatine Private Equity remained as majority shareholder, alongside Lloyds Development Capital.
Mark Nicholson, Carillion’s former managing director of building for the North, Midlands, South West, and Scotland, took over as chief executive in September 2017, following the exit of McCarren.
The company’s former finance director, Matthew Farrimond, was also jailed this summer for siphoning off nearly £370,000 from the company during his time in charge.
Nicholson and Forrest financial director Keith Reid have already established two new companies at Companies House: Forrest Services, and Forrest Construct.
Troubles at the contractor have already hit the supply chain with M&E company Proline forced to call in Cowgill Holloway in a bid to keep trading after being hit by cash flow problems following Forrest’s troubles.
It’s a shame that the guys responsible for the demise will walk away Scott free
By Scott
We need to start looking and questioning the fitness-for-purpose of Human Resource departments. They seem to always get off criticism free considering that businesses rise and fall base don their people.
By Lloyd Hitchmough
So which overpaid figurehead jobs for blabber-mouths are the executives responsible moving too? They are all so good at what the do, they deserve at least a million pounds annually just for attending meetings. Just because the business they were ruling has gone bankrupt should not in any way reflect upon their ability to run a business properly, should it? Oh, I forgot, the old boys network. Scratch my thingy, and I’ll scratch yours. See you on Sunday at the golf club! give my regards to Samantha.
By james yates
Lloyd – ridiculous comment. HR departments do not hire people they aren’t directly responsible for. Senior Managers will interview & hire those that report to them, and so on down the line
By Anonymous
Clearly the (past) management must shoulder most of the blame for a complete lack of governance, bordering on incompetence and negligence, when entering into contracts which were plainly not financially viable.
Notwithstanding, in incidences such as this, you never hear any criticism of the Clients. Well, here it is: entering into these contracts was also grossly negligent on their part, as they would have been fully aware, through their cost consultants, that the contract sums proposed were not realistic. When any part of a supply chain is certain to lose money (be that a contractor, subcontractor, supplier, or in this case – all three) that project is doomed to fail.
Just another in the long line of examples confirming that the UK construction industry is broken.
By Vincent Morecambe
Anonymous – keep reading the Ladybird books…
Vincent – good stuff. Did you work there perchance – I can smell the passion.
By Lloyd Hitchmough
The overall shambolic decision making by those at board level (past) and (present) are responsible for this sad state of affairs, how on earth can they month by month by pass the fact they have legacy jobs costing them a fortune and just continue like it will just go away……
Instead they will let staff lose their jobs weeks before Christmas, and to have a contractor replace them on a job they were on and an ex Director whom is now the head of that company all sounds very iffy.
By Anonymous
James moaning Yates…… get a job. You seem a tad bitter my old friend.
By Jimmy 5 bellys
Once again decent hardworking subbies take the kicking for totally incompetent management/directors … who no doubt will have filled their boots over the last few weeks.. it will not be a great Christmas for lots of families this year because of this and an even worse new year with I’m sure many of said subbies going out of business… total disgrace once again …..
By D Cooke
Well we saw that coming didn’t we! Ex Carillion staff ruin another company, blame it on others, and then undoubtedly roll onto the next job- probably for even more money! The sheer amount of senior managers there must have cost the business hundreds of thousands and wasn’t sustainable
By Anonymous
Lloyd you have definitely been reprimanded by HR somewhere along the line and have a slight chip on your shoulder I think!!
By AR
I worked for 8years for Forrest and got no respect no gratitude nothing wages was always wrong I’m glad there going under it was badly managed to many office staff at Dodd lane bolton directors dident have a clue what was going on good riddence
By Gary jones
“I know, lets strip out the profit then not pay our subcontractors….. that will win us the scheme”…… evil laugh …….
on a serious note, the tendering processes have to be robustly reviewed with more stringent quality measures in place to prevent clearly incompetent companies buying schemes. once that’s in place, its may the best company win.
By Anonymous
Totally shambolic business models, their nickname was Farillion in the industry as they had upwards of 40 ex Carillion staff. They were in trouble for circa 18 months though and people in the industry knew they could go under at any time. To be fair it was the regime from 18 months ago that sewed the seeds of their demise they have just about managed to stave it off ever since with re-structuring debts, exacerbated through buying more work to realise cash flow. They paid staff around 20% more than the going rate to entice people in or you wouldn’t have joined them as they were too shaky!!
By TBC
Sounds like the books were well and truly cooked by the previous directors, I find it hard to beleive that someone can make an accounting error of £26m! The industry needs a complete shakeup as this happens too often. Clients need to be more responsible, what other industry would take on so much risk for a 2% profit margin which is what most Main Contractors make.
By Anonymous
AR – dribbly comments like that are the exact reason why we find it so hard to move to an improved condition in our industry. Instead of listening to, reflecting on, and contributing to intelligent debate (which is one of the first steps to *real* change) you come out with a dead-end comment that takes a critical debate nowhere.
By Lloyd Hitchmough
Just gotta thank all you directors and decision makers at Forrest. We worked our balls off for you and you have done us for 40k. At what point does it get personal???
By Scott
It’s interesting that all the blame is aimed at estimating, there are a number of schemes which have been completed over 6 months late and in one instance aiming to be over 12 months late all with significant damages.
The influx of a significant number of Carrilion staff change the delivery dynamic from that of a tier 2 contractor to a tier 1 contractor utilising tier 1 subcontractors.
There was no pipeline of work for construction and housing with the only scheme that was bid under the new management being the Liverpool football club Training academy in whivh they finished 3rd on price beaten by 2 tier 1 contractors.
Many of the schemes were bid based on self delivery of M&E unfortunately the management team decided to close the decision down.
So not a simple case of jobs being under priced ……. Just a convenient scapegoat after all with all the Carrillion staff why would it not be a success ……
By Employee
Another case of buying to much work at low margin !
By Anonymous
Unfortunately – the usual story of great leadership. Lets buy work cheap & fudge the numbers so they pick up bonuses. Ride into the sunset and then go again. Carillion- Forrest- Lagan – Interserve.
By Anonymous
Dear Jimmy 5 bellys: I assume you are one of those who scheme and scam to fill your own pockets and just do not give a damn if your ruin decently-run businesses, other people’s careers, and other people’s lives. Yes, to cheat, steal and swindle others is one way of getting up the corporate ladder. Your Christian values are shining through. And, I do have a job. I have luckily not yet been made unemployed by money-grabbing actions of others.
By James Yates
It seems the blame sits squarely with whoever was directing the pre-construction team. It doesn’t sound like they were deliberately buying work, more likely uncovering errors as they went. For it to happen with the frequency and severity it has the pre-construction director should not be in a position to sit and relax on their backside counting bonuses, they should be directly culpable for this mess. over 140 people lost their jobs through this .. .scandelous
By Anon 1
I love unicorns and sunshine! Let’s spread some love folks and not make the comments section an extension of the passive aggressive Twitterati.
Peace and love to all during this festive month xxx
By Fr Christmas Helper
Pass the soap.
By Matt F
Daaaad, I think you got it wrong again
By Marty
Interesting
By Andrew Green
Who in the right mind would believe that a well established pre -construction team would under estimate a job by £5 million.
There are enough processes in place for the figures to be checked and rechecked by the supposed hierarchy prior to offering the price to the client.
Forrest were a tier 2 contractor which was reiterated by Mr Nicholson on several occasions so why did he outsource a tender to a Carillion friend to “review” to find the £5million deficit. Of course there was a deficit, every price obtained was from a tier 1 contractor with increased prelims and prices. Stop trying to make scapegoats out of people who worked their arses off and focus on the people who actually made the decisions to offer the price to the client!
The increased wage bill after the jobs for the boys certainly did not help and the previous comment is correct – the hr team did not employ most of the ex Carillion staff as they were offered jobs by their mates with over inflated salaries!
By tier 2 my arse
“Who in the (sic) right mind would believe that a well-established pre-construction team would under estimate a job…..”, you say?
Just wondering if you’ve found that floor you completely missed off the X1-Gateway project yet…
You really couldn’t make this up!
By One of Our Floors is Missing
200k gone the business we built gone Xmas 2019 gone hopefully can save the house all the while the two at the top have already set up 2 new companies and will be on holiday in the Bahamas this Xmas with pocket fulls on mine and many hard working others cash.
So who cares No one I wonder how much Engie paid for the parts of the company and were will it end up
By Anon
Carrilion high rollers came in to save the day by the sounds of it on their big Tier 1 salaries and decided they knew best and ran projects how they felt rather than how a smaller contractor would do so, that’s the sound of things it seems. It appears they didn’t know best, very easy to sit back and blame previous structures (that’s what seems to be happening) from years gone by rather take a long hard look at themselves it seems
By Tier 2????
Any cups for dishwasher
By Rita the cleaner
As a now ex-employee my view is multiple errors has caused it all. The largest part of that business was construction and bringing in a large number of ex Carillion staff on huge wages with no job on the ground, how do they expect to recover their wages, as well as having tier 1 contractors price your work. All failings on part of the senior management. You also had accounts staff and commercial staff that didn’t know how the systems worked correctly past & present meaning cost accruals were inaccurate and undervalued so its no wonder losses were miss reported. Imagine being a QS and not knowing how to cost a gross pay cert so when Mr Sub-Contractor comes chasing for retention there is nothing on the system for it. Lack of pure control if you ask me and its the good staff left that have had to pay with their jobs.
Total shambles
By No name
So the first set of Directors made a complete mess of it as were let go. Now they’re back for another bag of money picking the flesh from a corpse they helped kill.
A Pre-con director who shouldn’t be allowed to run a cockle stall let alone a company that size. Imagine trusting the future of a company to someone who not only wakes up and can’t remember where his car is, but secretly submits $50m bids on behalf of the company and it goes belly up.
Then let’s bring in the Carrillion lot, all on vast salaries and all denying Carrilion was their fault. Any surprise they repeat the result here ??
Thankfully I’ve got a good boss now that looks after his staff.
By Ted's fluffer
they have taken us for a fotune.
these two at the top are to blame, lack of control and no fear of what was about to happen to people below.Their staff, supply chain, hard working subcontactors. making 40% on our figures for passing invoices . and then not paying the subcontractor at all .
should be a prison sentance its theft . hope these two are investigated fully and dealt with severly.
By subcontractor
Once again small sub-contractors will bear the brunt of this total fiasco …. reading some of the posts above it clearly has happened.
These small subbies have now had their world turned upside down by the greed of a handful of leaches…
The Law needs to change very soon so these individuals can be pursued and not be able to hide behind ‘the limited liability flag’.
Also, no doubt tens of thousands of pounds in retention has now gone up the swanny … Ring fenced retention bank accounts are a must or better still lets get rid of the totally abused outdated practice … It’s a scam … an excuse for sc*m to keep hold of the monies of hard working small businesses…
By Jim B
It’s a crying shame the way this once good firm was allowed to crumble due to mismanagement. It takes a hardman to have no compassion for the many who they directly forced out of work as well as the subbies caught up in this. By their own admission pre-construction was to blame, but I doubt those in charge of that will be crying into their hymm books this midnight mass. Probably more concerned with their reputations
By Sally Army