15 Both hospital projects had significant difficulties before Carillion's collapse and their openings had already been delayed. Both projects were running around a year late by January 2018:
• At Midland Metropolitan, construction was originally expected to be complete by July 2018. By late 2017, the structure was complete but delays to the designs for the mechanical and electrical fit-out had delayed the completion date by 11 months to June 2019 (paragraphs 1.12 to 1.15).
• The Royal Liverpool's construction had been delayed due to problems including asbestos discovered on the site and issues with the power supply. During 2017 Carillion was investigating the cause of some cracks in structural beams, while work continued. By late 2017 the hospital was at a late stage of construction and Carillion expected to complete it in April 2018, some 13 months late (paragraphs 1.16 and 1.17).
16 Carillion stopped work on both sites when it collapsed on 15 January 2018, which created more delay on both projects. The Cabinet Office provided funding to the Official Receiver to enable the Trusts and the PFI companies to secure the sites, retain key staff and maintain essential services such as ensuring water pipes were used to avoid bacteria building up (paragraph 2.2).
17 The PFI company and the Trust discovered further construction issues at Royal Liverpool following Carillion's collapse. Initially, the Trust and the PFI company thought only modest remedial work was necessary, but in April 2018 the PFI company commissioned the engineering consultants Arup to review the structural design and perform a fire safety review. Arup reported that major work was needed to strengthen the structure at multiple points, which required the new fittings, piping, wiring and heavy plant and equipment to be stripped out across three floors of the building. Further work identified other construction problems, including shortcomings in internal fire protection and the fire safety of external cladding (paragraphs 1.17 to 1.20).
18 It is not clear why the design problems at both hospitals occurred. PFI arrangements are meant to lead to better design and performance by transferring the risk to the most appropriate party. The Trusts require the PFI companies to build the hospitals to the required specification. The PFI companies and their investors are meant to be able to rely on their contractors to manage the design of the projects. The investors' payments to the PFI companies are made in line with technical adviser reports that track progress against plan and provide no assurance over the design. We have not looked at the detail of what went wrong with the design process within Carillion and its subcontractors. NHS England and NHS Improvement and a few individuals involved in the construction projects told us that one of the causes may have been that Carillion's original pricing was too low to meet the required specification (paragraphs 1.5 and 1.21).