UPDATE: Oct. 26, 2018: In a statement to Construction Dive, a Skanska USA spokesman said that while the company does not plan on pursuing future design-build P3s in which it has an equity stake, it will still bid on and perform alternative delivery U.S. infrastructure projects, including design-build.
In addition, the company's decision to no longer go after EPC contracts are in relation to combined-cycle generation facilities and Skanska USA's decision to explore divestment options in the power and industrial sectors.
Skanska said it remains "fully committed" to its U.S. civil construction and infrastructure business.
Dive Brief:
- In a recent third-quarter 2018 preliminary earnings conference call, Anders Danielsson, Skanska's president and CEO, announced that the company's U.S. division would no longer bid on "mega design-build PPP" (public-private partnership) projects after a projected US $100 million write-down on two major P3s. Danielsson also told analysts that, effective immediately, Don Fusco would take over Richard Cavallaro's position as president of the company's USA civil division.
- Danielsson told analysts that the losses on the two "complex" P3s were due to cost overruns related to low productivity and delays. The Skanska chief also said the company would stop pursuing engineering, construction and procurement work in the U.S.; explore divesting from its power business and not engage in any future infrastructure development. Danielsson said he did not expect further losses on the problem P3s as the projects were far enough along to make reliable forecasts.
- Danielsson would not comment as to which projects were responsible for the write-down. He did report, however, that the company's leadership made these strategic decisions after a full analysis and review of its U.S. operations. Skanska will release its full and final third-quarter results on Nov. 8.
Dive Insight:
Among the mega P3 projects that Skanska has underway right now in the U.S. are the $4 billion LaGuardia Central Terminal B project and the $2 billion I-4 Ultimate expansion of Interstate 4 in Orlando, Florida.
Skanska said its share of the LaGuardia Gateway Partners consortium represents its largest single project ever. But the group did not meet the 50% completion deadline scheduled for May, and is instead projecting a September date.
In July, Moody's Investors Services made a note of the curtain wall-based delay in its new credit opinion report but added that Skanska USA and Walsh would likely meet the substantial completion deadline. The main section of Terminal B is under construction, and Concourse B, where new passenger arrival gates are located, should open this year. The elevated walkway that will connect the terminal and concourse is expected to open in 2020.
Moody's also updated its credit opinion on the 21-mile I-4 toll-road project recently. The rating company changed its outlook from "stable" to "negative" because of a 245-day delay and $100 million in extra costs. The delays were caused by geological conditions, design elements and May floods.
Despite the negative rating decision, Moody's did not change the P3's I-4 Mobility Partners' risk rating, giving credit to the group for its combined experience and financial stability.
