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Exclusive: Chinese contractors shortlisted for One Nine Elms as UK firms exit

Two state-owned Chinese contractors are among three companies shortlisted for Wanda One’s £400m One Nine Elms development after UK firms pulled out of the race, Construction News can reveal.

China State Construction Engineering Corporation 2 and China State Construction Engineering Corporation 8 are now in the running for the scheme, along with Mace.

Both CSCEC 2 and 8 are divisions of the CSCEC group but act autonomously and compete against each other for contracts.

Sources told Construction News the Chinese firms would have to enter joint ventures with UK contractors to have a chance of bagging the project.

Four UK contractors were originally shortlisted for the project, which is being developed by Wanda One, a subsidiary of Chinese commercial property giant Dalian Wanda.

They were Bouygues, Carillion, Mace and Skanska.

But sources confirmed that Bouygues and Carillion have pulled out of the bid after the tender was delayed by several months. Skanska is also no longer shortlisted, but Construction News could not confirm whether it had withdrawn or lost out on a shortlist place.

A potential Anglo/Chinese JV would allow the UK firm to bring “local expertise and knowledge” to the scheme, according to sources, while the Chinese partner could make use of a more competitively priced domestic supply chain, particularly for materials.

Last month Construction News revealed that Mace had entered into an agreement with construction research, materials supply and building standards company China Building Technique Group ahead of its bids for work at ABP and Stanhope’s £1bn Royal Docks development in east London.

In minutes from a July 2014 Nine Elms construction community meeting, Robert Hopkins, a project manager at consultants Second London Wall, said the sponsor would appoint a main contractor in November.

But the client is now understood to have set a target of mid-March 2015 to conclude the tender process, after which a main contractor will be chosen.

McGee is carrying out the demolition works on a floor-by-floor basis at One Nine Elms.

Its contract has been extended to cover the piling enabling works, which are expected to begin at the end of the year or in January.

Planning has been granted for two towers, measuring 200 m and 160 m and featuring 439 private residential units, 52 affordable homes and a 187-room hotel.

Wanda One hopes to finish the hotel first in 2018, with the residential units to follow.

One source close to the project said there were “plenty of other schemes to look at” for contractors that have pulled out of One Nine Elms.

The source claimed that procurement on this job had been “extremely difficult”, leaving contractors uncertain about the tendering process.

The move is another example of a high-profile London project from which contractors have decided to walk away, in part due to the volume of opportunities in London.

Earlier this month, Aecom’s annual survey of tier one contractors found that they were turning their backs on one in three schemes in London.

Aecom director Brian Smith said: “Stable relationships between clients and contractors are becoming ever more important.

“Procurement route, work type and location are also increasingly being given as reasons to tender or not to tender, with many contractors now only willing to accept work on a negotiated basis.”

Carillion is already working on the complex £400m first phase of Battersea Power Station, with Bouygues tipped to make a bid for the third phase.

Meanwhile, Mace has been shortlisted along with two other contractors for the first phase of Qatari Diar’s £3bn Chelsea Barracks scheme.

The firm also recently bagged a contract to build the first phase of Ballymore’s Royal Wharf development.

Dalian Wanda was unavailable for comment. All contractors have been contacted for comment.

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