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'Exceptionally high bid costs' forced Galliford Try off £600m Mersey Gateway

Exclusive: Galliford Try chief executive Greg Fitzgerald has told Construction News that concerns over project affordability and high bid costs caused it to withdraw its bid for the £600 million Mersey Gateway bridge project.

“The bid costs were exceptionally high,” he said. “We looked at the risk profile. We’re very risk averse in construction – we looked at the bid costs [and] there would have been a huge sum of money if we had lost.”

Mr Fitzgerald added that the contractor had previously had “worries” over the affordability of the project. “I think they’ve probably gone away now, but at the time we weren’t 100 per cent certain that the bridge could be built within the costs that the client had set.”

Bam Nuttall took Galliford’s place in the MGL consortium in October along with Hochtief PPP Solutions and Iridium Concesiones de Infraestructuras.

MGL is now facing off against a Balfour Beatty, Bouygues Travaux Publics and Egis Projects team, and the Merseylink consortium comprising Macquarie Capital Group, Bilfinger Berger Project Investments, Vialia Sociedad Gestora de Concesiones de Infraestructuras and FCC Construccion.

The three bidders are competing for a 30-year contract to design, build, finance and operate a new toll bridge over the River Mersey between Runcorn and Widnes, together with associated work in the towns.

Galliford Try is also currently engaged on the £790m Forth Replacement Crossing through Scottish construction and housing arm Morrison, which contributed to the decision.

“If you’re just bidding against someone [on] best price [or] best scheme that’s one thing, but you’ve also got in the back of your mind whether or not [the client] will do it,” Mr Fitzgerald said.

“It was a big diversion for the senior management – we were focusing more and more at that time on housebuilding so we decided to move away from it. There was no fallout.”

A spokesperson for the project said: “We’ve had a very constructive competitive dialogue phase over the last 18 months and have received three high-quality bids from our shortlisted potential private sector partners.

“This reflects our confidence that the project can be delivered within the costs that have been set to deliver maximum value for the public purse. We’re working hard now to formally evaluate the three bids and expect to appoint a preferred bidder in June, which will mean we are well on track to sign a contract and begin construction work by late 2013/early 2014.”

The government will commit a total of £478.85m to the project through an initial £86m capital towards land remediation and up to a further £14.55m each year for 26.5 years in PFI payments.

Planning permission was granted for the project in December 2010 and a consultation was launched by the Mersey Gateway Project through Halton Borough Council.

For the full interview with Galliford Try chief executive Greg Fitzgerald, see tomorrow.



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