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Crossrail discourages suicide bidding

Crossrail’s implementation director has insisted that contractors will not be forced to squeeze their margins as the project’s team strives to remain within its £15.9 billion budget.

David Bennett – the man responsible for ensuring the central section of the project is delivered on time and to budget – said that while the market was extremely competitive and cost was a significant factor in bids, it was not the only thing being considered.

He said: “We need to drive the budget down and we will. We are driving it down as far as is humanly possible, consistent with scope and value for money for the sponsors.

“What we’re interested in is getting the best overall bids for Crossrail and that doesn’t mean you’re looking for people to expose themselves commercially.

“You’re looking for the contractors who can bring the most value to Crossrail and who can deliver the job for us.”

“It’s absolutely in our interests that contractors take this on in the best possible way. There is no point in them coming in envisaging either that they’re not going to take any risk or that they’re going to take an awful lot of risk, because then they won’t be able to price it, resource it or manage it in the best interests of the programme.”

There has been some recent speculation in the industry that contractors would make little money on the project, due to its prestige, the dearth of other work available and the long-term nature of delivery.

But Mr Bennett said he found this hard to believe given the “very strong interest” that had been shown by construction companies so far.

Four international consortia – Costain/Skanska/Bilfinger Berger; Kier/Ferrovial/Bam Nuttall; Laing O’Rourke/Bouygues; and Balfour Beatty/Beton- und Monierbau/Morgan Est/ Vinci – are currently in the running for Crossrail’s major tunnelling packages, with a fifth team of Hochtief and Murphy also looking at opportunities.

Two of the project’s main tunnelling packages, C300 and C305, should be awarded in the second quarter of 2010. Procurement for the third major tunnel package, C310, is expected to begin around the same time.

Station platform and tunnelling packages for Tottenham Court Road and Bond Street stations, thought to be worth about £100m each, are also in procurement, as are similar jobs at Whitechapel and Liverpool Street with a combined total of £200m.

Mr Bennett said that Crossrail’s procurement regime was flexible enough to allow for one team to win large tranches of the work.

“If the big world player feels able to take on multiple packages, that’s something that can be considered, but there’s also room for the more conventional but still quite major players to come in and take packages appropriate to their expertise and their ability.”

He added that there would be enough work to filter through the supply chain given the specialist nature of some jobs on the project.

Mr Bennett said he understood the substantial costs firms faced in bidding for work and added that Crossrail was working to manage procurement efficiently, but said contractors who lost out would not have bid costs refunded.

The project’s scope freeze, known as Yellow Diamond day in Crossrail’s offices, is due on 30 November. But Mr Bennett said he preferred to call it a “control point” because change will still be possible thereafter.

He said: “It is colloquially a freeze, but a freeze in itself doesn’t mean things can’t change. What it means is you only change in a very controlled manner. “