Thinking clearly · Chapter 12
Why did Carillion collapse?
The parliamentary inquiry described an unsustainable business built on debt, expansion and a continuing search for cash. It criticized accounting, risk management and oversight that presented strength while the business unravelled.1
Sudden collapse, older causes
The committees contrasted positive 2016 accounts with the profit warning in July 2017. Their report describes rising debt, exploitation of suppliers and accounts that misrepresented the business. Those are the committees' findings, not my private allegation.1
The last cash problem does not explain away the decisions that produced it. What could the board see, what did assurance challenge, and what did the figures fail to show?
What an audit does not decide for you
The inquiry criticized the board, auditors and wider scrutiny. Chapter 12 puts Carillion beside other failures of group judgment. My point is not that audits lack value. An assurance label cannot answer every question about liquidity, incentives or project performance.1
Ask what was checked, what the check establishes and what remains outside its scope. A conclusion is only useful for the question it actually answered.
A check you can use
- Read cash, debt and obligations beside profit.
- Ask what assumptions would make the reassuring account wrong.
- Give concerns a route to the decision-maker, not another reassuring summary.
Why did Carillion go into liquidation?
The report treats the January 2018 collapse as the culmination of an unsustainable model and governance failures. Final rescue discussions were not the whole cause.1
Zafar Alam is a civil engineer and Chartered Construction Manager with about 12 years on major projects. He is the author of What Are We Missing? How to Think More Clearly Before You Decide, planned for 13 February 2027.
Keep thinking
Why did the 2008 financial crisis happen?Chapter 2 · The Machinery of ThinkingHow can you prevent groupthink?Chapter 12 · Group Judgment and Failure PreventionUse this on a real decision
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