Balfour Beatty boss Leo Quinn has pushed again in opposition to ideas by HS2 bosses that development contracts on the London to Birmingham rail scheme might be renegotiated.
In December, Development Information reported comments made to MPs by HS2 chief financial officer Alan Foster, saying that contractors accepted that the authorized agreements in place to construct the road might be modified.
Nonetheless, Quinn right this moment instructed monetary publication Metropolis AM that he was lower than enamoured with the concept.
When requested whether or not the contracts needs to be amended, Quinn instructed the paper: “No, probably not, the contracts for the time they have been written have been applicable.
“There’s no contractor within the UK that might even have a steadiness sheet to ship one thing of that measurement, so it has to return to the exchequer.”
He stated that if liabilities for the associated fee overruns suffered by the undertaking thus far had fallen onto the scheme’s contractors, “you wouldn’t have a development trade within the UK”.
His feedback appear to contradict Foster’s testimony to Parliament’s Public Accounts Committee (PAC), the place he stated: “I’ve personally spoken to all the CEOs of the father or mother firms.
“We’ve received 14 important entities that sit above the JVs [joint ventures], and all have expressed a willingness to debate and work by way of a renegotiation.”
The unique HS2 contracts have been awarded in July 2017 to 4 JVs: SCS (Skanska, Costain and Strabag), Align (Bouygues, VolkerFitzpatrick and Sir Robert McAlpine), CEK (Carillion, Eiffage and Kier), and BBV (Balfour Beatty and Vinci).
Initially valued at £6.6bn, the contracts have been renegotiated in 2020 to take into consideration project-wide price inflation.
The brand new phrases shifted danger from contractors to HS2 Ltd, decreasing legal responsibility for price overruns above a set goal worth however imposing penalties for failing key efficiency indicators.
In 2023, HS2 Ltd reported that the contract values had risen by £6bn (in 2019 costs) since renegotiation.
In February, a PAC report stated HS2’s construction contracts were “extremely poor value for money” and that the committee was “unconvinced” that they might be renegotiated to attain important financial savings.
The report described HS2 as a “cycle of repeated failure” and “a casebook instance of how to not run a serious undertaking”.
The committee discovered HS2 Ltd and the Division for Transport had “did not work collectively successfully” and lacked the mandatory abilities to ship the programme, including that early plans for Euston “carry big dangers”.
In December, transport secretary Heidi Alexander stated price will increase had been pushed by components together with Covid and excessive inflation. However she additionally criticised components of the undertaking’s administration.
“There have additionally been important supply points, together with price underestimation with massive will increase in design prices and lower-than-planned productiveness,” she stated.
