Jarvis under fresh scrutiny

Jarvis has defended its maintenance of track at Potters Bar

The derailment of a train outside London's King's Cross station has thrust engineering firm Jarvis plc back into the spotlight.

The company, which is responsible for maintaining the track where the incident occurred, has said work carried out on the line by its engineers may have been faulty.

"It would appear that, after undertaking lengthy overnight rail maintenance work, the Jarvis maintenance team omitted to make the final disconnection on one of the points in question," the firm said, stressing that enquiries were still under way.

The derailment happened at low speed, and did not cause any injuries, although it has seriously disrupted rail services from London to the north-east and Scotland.

This is not the first time that Jarvis has come under scrutiny following a rail accident.

Contract growth

It was also responsible for track maintenance at Potters Bar, scene of a rail crash in May last year in which seven people died and dozens more were injured.

Jarvis has defended its maintenance of the track at Potters Bar, and the crash is still being investigated by the British Transport Police and the Health and Safety Executive.

But the latest incident is likely to reinforce calls from safety campaigners for tougher controls on companies which win contracts to maintain public service infrastructure.

This is an activity which has served Jarvis well.

A small and nearly bankrupt construction firm in the mid-1990s, Jarvis had by the end of the decade transformed itself into a services company with a 10,000-strong workforce and annual sales of £1.2bn.

Jarvis' flamboyant Iranian-born chairman Paris Moayedi, who served as chief executive between 1994 and May this year, is credited with masterminding the turnaround.

He achieved the transformation by spotting and exploiting the trend for contracting out government services which took hold in the UK during the 1990s

Responsible for about 4,700 miles of track, Jarvis is the biggest railway maintenance company in the UK.

Its engineers also maintain and upgrade long stretches of the UK's road network.

Jarvis' railway and road maintenance operations form the backbone of its business.

The remainder of the company's revenues are generated through the contracted management of premises for schools, universities and hospitals.

Track record

It is also part of the Tube Lines consortium which won the contract to modernise the Jubilee, Northern and Piccadilly lines on the London Underground.

Many of the company's contracts fall under the government's private finance initiative (PFI), a scheme aimed at making public construction projects more efficient.

Under the PFI, construction firms which put up part of the money for major public building projects are offered a guaranteed revenue stream from government funds for a number of years in return.

Critics allege that it would be cheaper to fund the construction projects directly from the public purse.

But Jarvis has generated healthy returns from its various activities, with pre-tax profits climbing more than a third to £62.7m in the most recent financial year.

City investors were unfazed by Tuesday's derailment, with Jarvis shares up a penny at 341p in mid-afternoon trade.