BAM to switch focus from State-funded projects

One of the Republic’s biggest construction groups plans to switch its focus away from State-funded projects because of difficulties with the contracts used by public bodies.

BAM Group Ireland yesterday said it earned €7.5 million in pretax profits last year, an increase of more than 25 per cent on the €5.9 million it made in 2012.

During 2013, the group, a subsidiary of Netherlands multinational, Royal Dutch BAM, won the €260 million Newlands Cross-N11 road construction project, the biggest State- funded contract to be awarded for several years.

It also landed a number of other publicly backed infrastructure schemes, including the development of a number of a number of schools for the Department of Education. It is currently a preferred bidder for a similar contract.

Private sector

However, its chief executive, Theo Cullinane, has signalled that difficulties with the way that State contracts operate have forced it to turn its focus from State – or publicly funded building projects – to the private sector.

“Regrettably our experience in recent years with the ‘new’ forms of contract for public works has proven difficult and they mitigate against a partnership approach which is essential for the successful delivery of complex construction projects,” he said.

Following criticism over the way that a number of high-profile schemes such as road developments were delayed and came in over budget during the bubble era, the Fianna Fáil-Green coalition introduced new public contracts that transferred much of the risk – such as dealing with the cost of unforeseen difficulties – to the companies leading the construction.

Increase in disputes

Industry bodies such as the

Construction Industry Federation

warned that these arrangements could lead to an increase in the number of disputes between the State and the companies it hired to for construction and engineering work.

At the same time, they also criticised the arbitration mechanism established to deal with that eventuality.

Mr Cullinane said yesterday that the use of contract forms accepted internationally by the construction industry would help ease the situation but added that this still seems to be some way off.