Amey to pay £215m to exit Birmingham highways PFI

Amey is close to striking a deal that could see it stump up £215m to walk away from its troubled Birmingham highways maintenance PFI contract.

Birmingham City Council chiefs are understood to have agreed a proposal with the highways maintenance contractor, which will be formally ratified next month.

It is understood that Amey could pay £130m in cash up front, with a further £85m in staged payments over five years.

Also Birmingham City Council would hold £85m of deductions and penalties imposed on Amey, which have been subject to legal disputes between the two.

Together this would amount to a £300m divorce settlement for the council from Amey’s Spanish parent Ferrovial.

Amey has been locked in a five-year legal battle with the council over performance on its £2.7bn PFI deal. This has already seen Amey Highways suffer serious losses.

The Spanish infrastructure group is aiming to sell-off its UK support services business Amey but the 25-year PFI contract has proved a major obstacle.

A council spokesman would not confirm leaks to Sky News of the proposed deal but said:  “It is now generally accepted by all parties to the contract that in order to move forward Amey must be replaced with a new subcontractor.

“This will require a managed release and handover to a new provider along with an appropriate settlement to rectify the liabilities Amey proposes to leave behind.

“While the terms of this settlement are yet to be agreed and would be subject to further agreement by the Council’s Cabinet, talks in recent days have established how an acceptable settlement could be reached and we will continue to work with all those involved to achieve an acceptable solution.”

An Amey spokesman said: “We are encouraged by recent progress and appear to be arriving at a deliverable solution guaranteed by Amey.

“The next few days are critical to finally concluding this issue.”

Galliford Try issues profit warning

Galliford Try is undertaking a strategic review of its construction business after issuing a fresh profit warning.


Further hits have been distilled on the completed Queensferry Crossing

The firm said it aimed to reduce the size of the construction business as it focused on key strengths in markets with sustainable prospects for profitability and growth.

Galliford Try warned it expected to report pre-tax profits £30m-£40m below previous forecasts, after final settlement on the £1.4bn Queensferry Crossing project.

Galliford Try’s joint venture with Dragados, Hochtief and American Bridge International had to meet costs of delays due to high winds on the Forth bridge project.

In a statement it said:  “The board anticipates that this review will result in reduced profitability in the current year reflecting a reassessment of positions in legacy and some current contracts and the effect of some recent adverse settlements, as well as the costs of the restructure.”

It said the single largest readjustment related to the Queensferry Crossing joint venture, which has recently increased its estimated final costs on the project.

It said its position over the claim covering the completed Aberdeen Western Peripheral Route, and the £38m work in progress balance in respect of three contracts for a single client was unchanged.

The review will scrutinise contract positions throughout the construction business and assess operational progress. The outcome of the review over the next few weeks will be reported in a trading update in mid May.

Streetwork contractors to be made to give five-year pothole guarantees

The Department for Transport plans to make utilities contractors guarantee their reinstatement’s for five years.

Transport secretary Chris Grayling has launched a consultation on increasing the guarantee on utility firms’ roadworks form two years to five years, so that if a pothole forms as a result within five years, the company must return to bring the road surface back to normal.

The consultation seeks views on a new edition of the Specification for the reinstatement of openings in highways, a statutory code of practice for street works. It also introduces new asphalt standards.

Transport secretary Chris Grayling said: “Road surfaces can be made worse by utility companies, so imposing higher standards on repairs will help keep roads pothole-free for longer. The proposals also allow for new innovative surfacing to be used, such as asphalt with a high bitumen content that is easier to compact to the required density. This makes it less prone to potholing.”

Article Courtesy of ‘The Construction Index’

£2.3bn London HS2 station contracts awarded

HS2 has named its preferred construction partners to deliver its two major station projects in London.

HS2 will more than double capacity at Euston station with 11 new platforms

A joint venture between Mace and Dragados has beaten rival bidder Costain/Skanska to secure Euston station with a bid of around £1.3bn, which is below the original project estimate of £1.65bn.

Eleven new platforms for HS2 will be built at the station in two stages as part of a phased approach that means less disruption for passengers.

Mace and Dragados have a strong track record of delivering complex and demanding infrastructure projects including Battersea Power Station (phase 2), Mumbai International Airport Terminal Two and work on delivering the Spanish high speed rail network, including the major new Madrid Atocha and Barcelona Sants stations.

The decision will be a blow for Costain/Skanska, which was considered a frontrunner because it had already mobilised at the London station where it is early works contractor.

Also Costain/Skanska/Strabag have the Hs2 tunnel contracts linking the two London stations.

As part of the wider Euston station area development Lendlease is drawing up a masterplan that could support up to 14,000 new jobs and almost 4,000 new homes, as well as shops, cafes and public spaces.

Old Oak Common station designed by WSP and architects, WilkinsonEyre

The other station at Old Oak Common in north west London will be built by a Balfour Beatty/Vinci joint venture who as construction partner will work with HS2 and designers to coordinate the delivery of the station, including platforms, concourse and links to the London Underground and other rail services.

The full consortium is made up of Balfour Beatty Group /VINCI Construction UK/VINCI Construction Grands Projets /SYSTRA.

It beat bids from BAM Nuttall/Ferrovial Agroman (UK); Bechtel and Mace/Dragados, which under the rules could only secure one station project.

Balfour Beatty and Vinci have experience of some of the world’s most complex construction projects, including the new Tours-Bordeaux TGV, Thames Tideway tunnel and the London 2012 Aquatics Centre.

At Old Oak Common, the arrival of HS2 is expected to help kick-start the UK’s biggest regeneration project, transforming the former railway yards into new neighbourhoods supporting up to 65,000 jobs and 25,500 new homes.

HS2 trains will pass below the conventional station which has overbridge links to Crossrail

This complex station project has also come in just at just over £1bn, again less than the original budget estimates of up to £1.3bn.

A light and airy concourse will link both halves of the station with a soaring roof inspired by the site’s industrial heritage.

The six 450m HS2 platforms will be built in a 1km long underground box, with twin tunnels taking high-speed trains east to the terminus at Euston and west to the outskirts of London.

It is expected that around 4,000 jobs will be supported during construction of the two stations.

HS2 Chief Executive, Mark Thurston said: “Euston and Old Oak Common are two of the most important elements of the project – two landmark stations which will help unlock tens of thousands of jobs and new homes across the capital. Together with our Birmingham stations, they will transform the way we travel and set new standards for design, construction and operation.

“Mace/Dragados and Balfour Beatty/VINCI have a strong track record of delivering some of the world’s most challenging and exciting infrastructure projects and I look forward to welcoming them to the London teams.”

Article courtesy of Construction Enquirer – Feb 2019

Crossrail delayed again as costs rise by another £2bn

Crossrail has bust its budget by another £2bn as further delays to the opening of the project were confirmed.crossrail liverpool street passageway northern line moorgate
Another extra financing package worth more than £2bn was agreed on Monday afternoon as Crossrail chiefs admitted they couldn’t guarantee hitting the revised opening date of Autumn 2019. The network was originally due to open this week after being heralded for years by the previous management team as “on time and on budget.”

Mayor of London Sadiq Khan said: “It has been increasingly clear that the previous Crossrail Ltd leadership painted a far too optimistic picture of the project’s status.”

Crossrail first admitted this summer that the project had bust its original £14.8bn budget by £590m and was running late. The revised total cost of the project is now £17.6bn.

The latest financing package has been agreed by the Mayor of London, the Greater London Authority and Transport for London. It comes as an independent review by KPMG into financing and governance on the project nears completion. It revealed an estimated £1.3bn to £1.7bn shortfall in funding to complete the project plus the need for an extra £750m contingency fund.

New Crossrail chief executive Mark Wild also confirmed that “having reviewed the work still required to complete the project, an Autumn 2019 opening date could no longer be committed to at this stage.”

It was revealed that “core elements of the infrastructure being delivered by Crossrail Ltd, including the stations and the fit out of the tunnels, are at varying stages of completion and more funding is therefore required to complete it, as well as the extensive safety and reliability testing needed for the new railway systems.”

Mayor Khan said: “I haven’t hidden my anger and frustration about the Crossrail project being delayed. This has a knock-on consequence of significant additional cost to the project. It has been increasingly clear that the previous Crossrail Ltd leadership painted a far too optimistic picture of the project’s status.

“I have ordered the release of all Crossrail Board minutes in the last five years to provide transparency to Londoners on their decision making, and working with the DfT, brought in a new leadership team.”

Tony Meggs will become the new Chair of Crossrail Ltd replacing Sir Terry Morgan who resigned last week.

Meggs, who will step down from his role as CEO of the Infrastructure and Projects Authority (IPA), will oversee the final stages of delivering the Crossrail project.

The Crossrail Ltd Board will be further strengthened with the nomination of former MP Nick Raynsford as Deputy Chair.

Mike Brown, London’s Transport Commissioner, said: “Crossrail Ltd’s announcement of the delay to the Elizabeth line is extremely disappointing and, only now, is the scale of what is yet to be completed becoming clear.

“The confirmation of this funding agreement will now allow Crossrail Ltd and its new leadership to focus on finishing the remaining construction work on the stations and tunnels and then completing the vital safety testing in order to open the railway for passengers as quickly as possible.

Mark Wild, Chief Executive, Crossrail Ltd, said: “Since I joined Crossrail Ltd in November I have been reviewing the work still required to complete the core stations and rail infrastructure and begin the critical safety testing.

“It is evident that there is a huge amount still to do. Stations are in varying stages of completion and we need time to test the complex railway systems. This means that I cannot at this stage commit to an autumn 2019 opening date.

“My team and I are working to establish a robust and deliverable schedule in order to give Londoners a credible plan to open the railway and provide a safe and reliable service.

“Once that work is completed we will then be in a position to confirm a new opening date.”

Article courtesy of – Grant Prior (Construction Enquirer)

Birmingham’s Curzon Street station worth up to £435m

HS2 has begun the search for a construction team to deliver the design-and-build package for Birmingham’s Curzon Street station worth up to £435m.

The new station, which is set to open in 2026, aims to unlock 36,000 jobs and 4,000 new homes. The contract has an estimated value of between £355m and £435m.

Early works contractors are on the site in the centre of Birmingham preparing for main construction works.

Designed by WSP and Grimshaw Architects, the new Curzon Street station is described as the first new intercity station built in the UK since the 19th century.

Featuring 400 m-long platforms to accommodate the high-speed services, the station will include seven platforms in 2026 when the first phase of HS2 is expected to open.

The station will be fully integrated into Birmingham’s tram network and will offer connections to the wider West Midlands.

The winning construction bidder will take over the design functions from the WSP-Grimshaw team once the scheme has been granted planning permission.

HS2’s CEO at the CN Summit
Mark Thurston will be on stage tomorrow for Day One of the two-day CN Summit. There’s still time to book your place, plus look out for all the Summit coverage and reaction over the coming days.

HS2’s other Birmingham stop – Interchange – will form part of a new gateway station for the region and is part of a larger transport hub serving the West Midlands, Birmingham Airport and the NEC.

Over the weekend the Sunday Times reported that HS2 could be delivered more than a year late and exceed its official £55.7bn budget.

The newspaper reported that negotiations over the main civils contracts for the new lines had come in “several billion pounds” above the £6.6bn budget.

Commenting on the Curzon Street procurement, HS2 chief executive Mark Thurston said: “HS2 is already unlocking new opportunities to create skilled jobs across the West Midlands and, over the next decade, the winner of the Curzon Street contract will go on to build one of the most exciting and high-profile elements of the project.

“We’re looking for the best the construction industry has to offer. Companies that share our commitment to safety, good design, environmental protection and value for money.

“Together we will deliver an iconic new gateway to Birmingham – a building the city, the wider region and the travelling public can be proud to call their own.”

HS2 unveils Crewe Link £1.6bn civils bid plan

HS2 has outlined plans to split the proposed West Midlands to Crewe section of the high speed railway into two civils contract packages.

Procurement chiefs said they are still keeping procurement options open with the possibility of running a competition between its four existing phase one joint venture contractors instead of a pre-qualifying a fresh field of bidders.

A current market testing exercise will help to inform the decision about which procurement route to take later next year.

The 39km southern section of the HS2a route is expected to cost up to £870m while the shorter 28km northern section including two short tunnels is estimated to cost up to £750m to build.

The procurement process could start by the third quarter of next year, with bids being invited in the first quarter of 2020, and the winning bidder announced by Spring 2021.

Design work for phase 2a is expected to begin next year, with construction scheduled to start as early as 2021

Article courtesy of Aaron Morby – Construction Enquirer

Winners revealed for Highways England work bonanza

Highways England has chosen the winners for one of its biggest ever framework deals.

It is thought the names will be officially confirmed shortly of contractors who have bagged places on the programme worth up to £8.7bn over the next six years.

It is understood the winners are:

  • North West/North East/Yorks/Humber: Costain, Balfour Beatty, Kier
  • South West: Vinci, Galliford Try
  • East & West Midlands: BAM Nuttall, Skanska
  • South East: BAM Nuttall, Balfour Beatty
  • East: Skanska, Galliford Try, Costain

The framework replaces the present Collaborative Delivery Framework and sees Interserve, Morgan Sindall, Hochtief and Sisk miss out on the work carve up.

Under the new Regional Delivery Partnership arrangement, contractors will become delivery integration partners, designing and constructing motorway and major A-road projects across England under NEC4 standard terms, with suitable amendments.

Article courtesy of Grant Prior – Construction Enquirer

HS2 firms gearing up to create 15,000 jobs by 2020

Contractors and consultants working on HS2 are gearing up to employ a 15,000-strong workforce by 2020.

Over 7,000 roles are already supported by the project, and over 2,000 business have already won work with HS2, ahead of the main construction start next year.

According to a new HS2 project skills strategy document a whole generation of engineers, designers, architects and geologists will benefit from the construction of the new high speed railway as the project gears up to support 30,000 jobs at peak construction.

Mark Thurston, Chief Executive of HS2 Ltd said: “Our skills strategy shows how we will create a sustainable pipeline of jobs and skills for companies across the whole country, which boost regional economies and help Britain compete internationally.”

Opportunities will be opened up through a new Job Brokerage Service to help people access the jobs created by the HS2 supply chain, and a new Secondary Education Engagement Programme will help the next generation to enter transport infrastructure careers.

Laing O’Rourke’s Explore Manufacturing factory in Worksop is gearing up to produce precast elements for five major bridges with 35 jobs due to be created to deliver the order.

Balfour Beatty Vinci JV is set to be the largest HS2 recruiter in the West Midlands, offering thousands of jobs to local people.

Consultant Mott MacDonald has already created 300 jobs, set to double in 2019, to deliver design for the BBV joint venture.

Earthmoving contractor, CA Blackwell (Contracts) is planning to create 500 new jobs in Buckinghamshire as it gears up to lead on HS2’s earthworks in the region.

While Costain Skanska JV has created 500 jobs already as it prepared to deliver its southern route sections of the project.

In total, 500 people at consultant WSP offices around the country are working on HS2, including 220 people on the Phase One stations with 39 different specialists on each station.

Presently over 100 apprentices are working on the project, with 2,000 expected over its lifetime.

Lendlease Reveal Value of Euston Redevelopment

The redevelopment of the area around HS2’s Euston station could be worth nearly £6bn, the company behind the project’s masterplan has revealed.

Lendlease, which won the master-developer contract in February, said it expected the overall Euston redevelopment covering the area around the station to be worth AUS$10.2bn (£5.8bn) when fully completed.

The value was revealed as part of Lendlease’s results for the year to 30 June 2018, in which the company recorded an estimated global development pipeline of AUS$71.1bn (£40.5bn).

The pipeline was boosted by a number of new developments in the UK, including the Silvertown Quays scheme in east London valued at AUS$6.1bn (£3.47bn) and the High Road West regeneration in Tottenham, worth AUS$2bn (£1.14bn).

Lendlease also won a development role on Milan’s Milano Santa Giulia with a development value of AUS$3.6bn (£2.05bn), taking the total European development pipeline to AUS$29.3bn (£16.68bn).

As part of Lendlease’s focus on the European market, former CEO of international operations and Europe Dan Labbad will now focus solely on Europe.

Lendlease posted global pre-tax profit for the year to 30 June of AUS$1.07bn (£610m), up from AUS$1.01bn (£570m) in the previous 12 months.

Global revenue for the company stood at AUS$16.57m (£9.43bn), down from the previous year’s figure of AUS$16.66bn (£9.48bn).

Lendlease’s UK construction arm saw gross profit hit £48.4m for the year to 30 June 2018, up from £44.8m in the previous 12 months.

The UK business reported EBITDA (earnings before interest, taxes, depreciation and amortisation) of £12.8m on revenue of £389m, giving it an EBITDA margin of 3.3 per cent.

Lendlease Construction managing director for Europe Neil Martin said the improved performance had been driven by more selective bidding in the division.

He said: “Our tight control on costs [… and] our focus on profitability rather than revenue has led to further growth in gross profit for Lendlease’s construction business.

“Our recent focus to manage risk exposure across the portfolio means that a significant amount of our workload is now construction management.

“Achieving this balance between fee and risk work has been key to this year’s positive results.

“Whilst revenue is down, the profit margin is up and this positions us strongly as we continue to deliver on the expanding pipeline.”

Despite the increase in UK profit, Lendlease’s global construction operations saw full-year profit drop 77 per cent from AUS$338m (£192.4m) to AUS$78m (£44.4m).

Much of this was down to the group’s Australian construction business, which was hit by losses of AUS$23.1m (£13.2m) for the year, compared with a profit of AUS$201m (£114.4m) for the previous 12 months.