Bbc news where did it go wrong for carillion

Carillion, a British construction and services company, went into liquidation in January 2018, leaving thousands of employees and subcontractors without jobs and millions of pounds in debt. Here are some key factors that contributed to its downfall:

1. Over-reliance on government contracts: Carillion's business model was heavily reliant on government contracts, which made it vulnerable to changes in government spending and procurement policies. When the UK government reduced its spending on construction projects, Carillion's revenue and profitability suffered.
2. Poor financial management: Carillion's financial performance was poor, with high levels of debt and low profit margins. The company's debt had increased from £200 million in 2012 to over £1.5 billion by 2017.
3. Aggressive expansion: Carillion expanded rapidly in the early 2010s, taking on too much debt to finance its growth. This led to a significant increase in its debt-to-equity ratio, making it difficult for the company to service its debt.
4. Lack of diversification: Carillion's business was heavily concentrated in the UK construction and services sector, making it vulnerable to fluctuations in the market. The company did not diversify its revenue streams, leaving it exposed to risks in a single industry.
5. Weak risk management: Carillion's risk management practices were criticized for being inadequate. The company did not adequately assess the risks associated with its projects, leading to costly delays and overruns.
6. Dependence on a few large contracts: Carillion's business was heavily reliant on a few large contracts, including the £1.4 billion Royal Liverpool Hospital project and the £300 million Aberdeen Western Peripheral Route project. When these contracts were delayed or cancelled, Carillion's revenue and profitability suffered.
7. Lack of transparency: Carillion's financial reporting was criticized for being opaque, making it difficult for investors and analysts to understand the company's true financial position.
8. Regulatory issues: Carillion faced regulatory issues, including a £10 million fine from the UK's Health and Safety Executive (HSE) in 2017 for breaches of health and safety regulations.
9. Brexit uncertainty: The uncertainty surrounding the UK's exit from the European Union (Brexit) created a challenging business environment for Carillion, with many of its contracts and projects affected by the uncertainty.
10. Lack of effective governance: Carillion's board of directors was criticized for its lack of effective governance, with some directors accused of being too close to the company's management and not providing adequate oversight.

These factors combined to create a perfect storm that ultimately led to Carillion's collapse. The company's liquidation had significant consequences for its employees, subcontractors, and the wider construction industry.