Departments scramble to deal with collapse of construction giant ISG

Authorities departments have been compelled to activate contingency plans for the supply of latest jail locations and colleges after one of many nation’s largest development corporations fell into administration.

ISG reportedly held round 69 authorities contracts with a price of a minimum of £1.84bn, the majority of that work was for the Ministry of Justice. One undertaking – the £300m enlargement of HMP Grendon Springhill in Buckinghamshire – was given the go-ahead in January this 12 months.

ISG’s collapse resulted in additional than 2,000 job losses on the agency. It comes six years and eight months after development and outsourcing large Carillion went bust, creating a direct disaster for the MoJ due to the agency’s facilities-management contracts for some prisons. Supply of two new NHS hospitals was additionally severely delayed in consequence. The £750m Midlands Metropolitan College Hospital in Smethwick, close to Birmingham, is because of open to the general public subsequent month – six years later than initially anticipated.

ISG is known to have had a minimum of 22 contracts with the MoJ, and work on the federal government’s prison-building programme was certainly one of its largest sources of earnings. The timing of the agency’s collapse, simply days after the brand new authorities’s early-release guidelines to ease overcrowding pressures on the nation’s jails got here into impact, will likely be an extra impediment to rising capability within the safe property.

Building-industry contracts database Barbour ABI has reported that ISG additionally held 16 contracts with the Division for Training and 16 contracts with the Division for Work and Pensions.

CSW understands that the DfE contracts had been valued at round £190m and associated to colleges initiatives, together with new builds and the restore of defects.

A authorities spokesperson mentioned preparations had been made forward of ISG’s collapse into administration on 20 September.

“We’ve got applied our detailed contingency plans and affected departments are working to make sure websites are secure and safe,” they mentioned.

An MoJ spokesperson described the division’s contingency plans for the jail and courts property as “sturdy”.

“We’ll work with directors and can discover other ways to ship these initiatives the place obligatory,” they mentioned.

DfE additionally described its contingency plans as “sturdy” and mentioned colleges would proceed to ship face-to-face training regardless of ISG’s collapse. It added that the division was working to minimise further prices and would “pursue all types of redress”.

DWP had not responded to CSW’s request for remark on the time of publication.