The move comes after the FTSE 250 company revealed last week that it had been forced to make £845m worth of writedowns on contracts against a background of deteriorating cash flows and increasing debt.
The Big Four firm was appointed “with immediate effect” yesterday to focus on cost reduction and cash collection as Carillion’s board undertakes a comprehensive review of the group’s business and capital structure.
Carillion said that it was also taking immediate action to generate significant cash flow in the short term and to reduce its average net borrowing.
It has identified further cost efficiencies, as well as ways to improve its management of working capital.
“We are moving forward quickly with the actions outlined last week,” said Keith Cochrane, the group’s interim chief executive.
“Alongside our own efforts, EY will provide support across the business and bring an external perspective to our cost reduction and cash collection challenge.
“My priorities are to reduce the group’s net debt and create a balance sheet that will support Carillion going forward.”
He added that the group needed to simplify its business and focus on its core markets, including infrastructure and property services.
Carillion, which employs around 43,000 people based in the UK, Canada and Middle East and provides support, project finance and construction services, says that it has already exited from a number of construction projects, as well as construction markets in Qatar, Saudi Arabia and Egypt.
The group’s problems came to light during a review by Carillion auditors KPMG of more than 50 contracts, four of which turned out to be problematic and led to the £845m provision (three large public private partnership contracts in the UK accounted for £375m and one Middle Eastern for £470m).
As a result of the crisis, the group lost its chief executive Richard Howson. He resigned last week and was replaced by Cochrane until a permanent replacement is found.
A Scottish chartered accountant, Cochrane was previously Carillion’s senior independent non-executive director.
He recently left the Weir Group after 10 years on the board, first as finance director and for the past seven years as chief executive. Before that he was director of finance and CEO at Stagecoach Group and director of group finance at Scottish Power.
It has not all been bad news for Carillion – yesterday the UK government announced that its joint venture with Eiffage and Kier had won two contracts worth £1.4bn to build tunnels for the proposed HS2 high speed line link to Birmingham.