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Skanska Confirms Exit from US P3 Projects

Tuesday, November 13, 2018

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Major construction and development company Skanska (Stockholm, Sweden) confirmed in its third-quarter earnings press conference last week that it intends to stop bidding on United States “mega build” public-private partnership projects, in which it holds an equity stake.

The company also confirmed that it will be closing down the project development part of its infrastructure business.

What Happened

Skanska makes the announcement after recording a $100 million write-down on two major projects in its P3 business, though the company has refused to release any definitive details on which projects those are.

New York State

Major construction and development company Skanska (Stockholm, Sweden) confirmed in its third-quarter earnings press conference last week that it intends to stop bidding on United States “mega build” public-private partnership projects, in which it holds an equity stake.

Signs points to the $2.4 billion I-4 Ultimate project in Orlando and the $4 billion Central B Terminal project at New York City’s LaGuardia Airport, however, which have both been undergoing high-profile delays.

In a June report, Moody’s changed its outlook on the Orlando project, a P3 with the Florida Department of Transportation, from stable to negative based on extra cost claims of $100 million and the 245-day delay.

A status report on the LaGuardia project in July called construction “well underway” but noted that working around all the passengers while replacing three terminals was proving tricky. Partners in that project include the Port Authority of New York and New Jersey, LaGuardia Gateway Partners (LGP) and Delta Airlines.

At the time, officials said that unexpected delays, including weather and system glitches, shorten the operating window considerably even with crews working through the night, noting that activities such as pile-driving and concrete pouring must come with warnings days or weeks ahead of time.

Skanska is working with the Walsh Group on construction of a new 1.3-million-square-foot Terminal B.

Regardless of what’s in the works, Skanska reiterated that it will now be “more selective” about which projects to pursue and will be aiming for the “sweet spot” of profitability over volume.

   

Tagged categories: Developers; Earnings reports; Finance; Ongoing projects; Public-private partnerships (P3)

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