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  • You are here:HS2

HS2: Contractor rejects tier two role on phase one

The boss of a major contractor has rejected working for HS2’s phase one joint ventures because it would mean serving in a tier two role.

In an interview with CN, John Homer said the newly rebranded NMCN (formerly known as North Midland Construction) had been approached by HS2’s phase one contractors to work on the £55.7bn project.

However, while Mr Homer said the group would not rule out working on HS2, it did not want to serve as a subcontractor for a tier one.

“We don’t want to work as a tier two contractor, which would mean that we would get paid by a tier one contractor,” he said.

Mr Homer also told CN that the tier one business model was being “squeezed really hard” and “does not appear to work”.

Citing Carillion’s collapse earlier this year, the chief executive said: “Consciously or naively, they [Carillion] took on risks that proved terminal.

“It killed them. They took on risks that they didn’t understand and couldn’t manage. The model has to be rethought in terms of what it is you need to do.”

Mr Homer said NMCN wanted to change the tier one business model by offering a “full service offering” through design, build and offsite manufacturing services.

His comments follow HS2 boss Mark Thurston’s appearance at the CN Summit last month, in which he told delegates that the government would not grant the project any more money.

He also said HS2 was currently in talks with phase one civils contractors to reduce costs by spring next year.

Mr Thurston would not disclose the size of the current cost gap.

“We’ve got to come together as an industry to make HS2 affordable,” he said.

Clients bypass tier ones

This year’s in-depth Specialists Index reveals the top 10 firms in the major specialisms and how clients are increasingly contracting directly with tier twos.

HS2’s phase one civils packages, budgeted at £6.6bn, were awarded to joint ventures involving Balfour Beatty, Bouygues, Costain, Eiffage, Kier, Sir Robert McAlpine, Skanska, Strabag, Vinci and VolkerFitzpatrick in July 2017.

Responding to Mr Homer’s comments, an HS2 spokesperson said: “We agree to payment terms with our supply chain on a case-by-case basis and are committed to paying promptly and fairly. As a default, we commit to pay all suppliers within 30 days.”

They added: “We also mandate our tier one contractors to include in their subcontracts that cash retentions will be disallowed for any subcontractor at any tier of the supply chain, ensuring SMEs will also benefit.”

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