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  .ANY OTHER BUSINESS | MARTIN VANDER WEYER
  
  Carillion has not crashed because it held too many school-meal contracts, but because of delays and cost overruns in civil engineering projects such as the Aberdeen bypass and big new hospitals in Birmingham and Liverpool. Civil engineering businesses traditionally tend to be undercapitalised, relying on debt to manage the hair-raising cashflows of their project portfolios. Carillion was formed from many such businesses — starting in 1999 with the construction arms of Tarmac and Wimpey and adding Mowlem, McAlpine and others — but instead of gaining strength through amalgamation, it multiplied risk.
  
  Carillion’s catastrophe is not a parable of the evils of outsourcing, which remains the best value-for-money mechanism for many kinds of service delivery in both public and private sectors. Rather it’s a cautionary tale of lax financial control in over-expanded conglomerates. The best outcome now for some of its constituent firms would be to re-emerge from the rubble as independent operators — offering government a wider, safer range of contractors from which to choose.

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