Despite the huge political ambiguity we are all surrounded by as we plough into December with an election just around the corner, the officials at HS2 are ploughing on with costly tender exercises like there is no tomorrow and as if there is no uncertainty as to the future of the project whatsoever.
The new station in Birmingham has had the tender documentation published with a valuation of around £270 million and this is just weeks after the publication of the The Oakervee review which warned that despite the project is still considered viable, there were several major civil engineering contracts that should really be retendered.
Oakervee has been very critical of the procurement process that has been used so far which he claims has completely misjudged the risk transfer process from contractor to authority and that contractors have hugely inflated their costs to cover risks that they are simply not bearing. The report has been quoted saying HS2 is “carrying most of the risk and all of the pain with little gain”.
Household name major contractors stand accused of lining pockets with taxpayers money and the review states that these contracts should be re-procured to get best value for those who will be footing the bill for the project. It has been revealed in the review that instead of the originally claimed economic benefit of £2.30 back for every £1 spent on this project instead we are looking at only £1.30 to £1.50 – still viable, but the gulf looks like it is being swallowed by not just contractors, but the fact that these procurement processes are costly exercises in themselves.
One must wonder what kind of salary the HS2 officials are taking from all of this as well. The £1.5 tender for overhead power cables and new tracks has been torn up and started afresh, and the Curzon street station has also had to be restarted due to lack of interest shown by the market.
The bid teams at the likes of Skanska/Costain/Strabag; Bouygues/VolkerFitzpatrick/McAlpine; Eiffage/Kier; Balfour Beatty/Vinci; and Mace/Dragados will be thoroughly stretched if they decide to retender these contracts. These tenders are huge undertakings and can often take over 12 months to properly prepare. Thankfully most of the bids we see day-to-day are not such a daunting size, but can still be a stretch to our clients who either do not have the time or skill to complete them to a high standard. Christmas time can also be a challenge for resources so don’t be afraid to drop us a line if you have some January deadlines that you need some expert input on over the festive period.