Costain Group

Costain is one of the fifty subsidiaries of Skanska, Scandinavia's largest construction group which ranks 5th in the top 225 global contractors. ^[1] Costain dates back to 1865 when Richard Costain founded the original construction business.

Costain's website laments that:

"countries that aren't as lucky as we are... suffer natural disasters and wars." But guess what? "The construction industry can help them rebuild their lives AND THEIR HOMES!" ^[2]

In fact, Costain wants to help so much that it recently recommended bypassing the UN to obtain reconstruction contracts in Iraq. Its chief executive, Stuart Doughty, said it didn't want to compete under World Bank tendering because it would push prices down and slow the award of contract.

"If you go down the UN route, that means you go to the world to get the best price... [which is not only] political dynamite, but morally awful... Let's ensure that those who have been violently against this conflict don't share in the reconstruction." ^[3]

Seven years ago, Costain nearly went bankrupt and was forced to dispose of its last non-core businesses to concentrate on its engineering and construction businesses. Its overall turnover had decreased to £392m which was just a quarter of the value generated in 1990. There was a change in the ownership structure that became mainly Malaysian and led in turn to more restructuring and the sacking of employees. It was at this time that Skanska acquired a 7.6% stake in the company with the option to increase it to 40% over the next three years. 1999 saw Costain appointed its second non-executive director from Skanska. The two companies now have a joint venture agreement to bid for major projects worldwide. ^[4]

In 2002 there was a 30% increase in pre-tax profit to £11.3m on turnover of £543.4m. The firm has shifted away from dependency on large one-off contracts, but has not followed much of the rest of the industry into facilities management. ^[5]

In January 1996, a consortium led by Costain and Securicor won the contract to design, construct, finance and operate the 800 person Parc prison in South Wales – the first PFI prison contract in the UK. Securicor had no previous experience of running prisons, and ran into what a Parliamentary Select Committee described as "operational difficulties" when the prison opened. ^[6]

In June 1996 Costain won the contract to build the $150 million Newbury by-pass in the UK. The construction of the road faced probably Britain's largest ever environmental protests, resulting in around 1,000 arrests. Most recently, it has been involved in an attempt to fell hundreds of trees to make way for a £30 million, two mile stretch of feeder road for the expanding General Dynamic company in Blackwood, South Wales. ^[7] One of the many nice products parent company General Dynamic produces is the unguided Advanced Precision Kill Weapon System. ^[8]

Under previous chief executive, John Armitt (who's now Chief Executive of Network Rail), Costain were repeatedly fined by the HSE. First, they were fined £7,500 for dropping steel sections onto the road below the Avonmouth bridge in 1999. Five months later four workmen on the same bridge plunged to their deaths when Costain's gantry collapsed, leading to a £250,000 fine. The HSE again fined the firm, this time £200,000, after Paul Davies was crushed to death between a thirteen tonne excavator and a concrete wall while building a sewer near Bridgend, South Wales. ^[9]

Along with Balfour Beatty, Costain worked on the $300 million Cardiff Bay Barrage – the largest dam in Europe outside of The Netherlands. The completion of the barrage was nine months behind schedule, with $7.5 million cost overruns. ^[10]

The major shareholders in Costain are: Daedalus Projects Limited (itself 93% owned by Malaysian company Intria Berhad), private Kuwaiti company Mohammed Abdulmohsin Al-Kharafi & Sons WLL, and Bahrain-based Raymond International WLL. ^[11]

External Links

• Costain Building Awareness http://www.buildingawareness.com/
• Engineering News-Record (ENR) http://enr.construction.com/
• The Observer http://observer.guardian.co.uk/

Notes

1. ^ The Top 225 Global Contractors 2006, Engineering News-Record website http://enr.construction.com/people/toplists/topGlobalcont/topglobalCont_1-50.asp
2. ^ 'The Construction Industry', Costain Building Awareness website http://www.buildingawareness.com/constructInd_do.html
3. ^ 'Fury at Costain's 'bypass UN' advice', Faisal Islam & Nick Mathiason, The Observer 30/03/03 http://observer.guardian.co.uk/economy/story/0,1598,925499,00.html
4. ^ 'The rise and fall of global players in construction – a UK perspective,' Bernd A Siehler, University of Glamorgan http://www.brookes.ac.uk/other/conmark/IJCM/issue_02/010201.pdf. Viewed: 11.03.04
5. ^ 'Unison Companies Update,' Unison, 09.04.03. See: http://www.unison.org.uk/acrobat/B798.pdf. Viewed: 26.01.04
6. ^ 'Company Profile: SKANSKA AB,' Ilisu Dam Campaign. See: http://www.ilisu.org.uk/skanska.html. Viewed: 03.02.04
7. ^ See: http://alt.venus.co.uk/weed/roads/r04/r0401291.htm. Viewed: 03.02.04
8. ^ MoD Announcements – MoD Contracts. See: www.contracts.mod.uk/cgi-bin/dc_public/newsreader.pl?action=show_list. Viewed: 15.03.04
9. ^ 'Off the rails,' Solomon Hughes, Red Pepper, 01.11.02. See: http://www.redpepper.org.uk/KYE/x-kye-Nov2002.html. Viewed: 28.01.04
10. ^ 'Company Profile: SKANSKA AB,' Ilisu Dam Campaign. See: http://www.ilisu.org.uk/skanska.html. Viewed: 03.02.04
11. ^ 'Major shareholders in Costain...' See: http://www.costain.com/news/bpFeb01/3d.htm. Viewed: 03.02.04