Construction firms are partnering for the UK’s biggest infrastructure projects after three schemes worth around £50 billion took major steps forward this week.
CN understands that contractors and consultants are finalising teams to win work on the first phase of HS2, after the £33bn scheme won the backing of the High Court on nine out of 10 claims last week, a decision the government insisted would ensure construction starts as planned in 2017.
Sources told CN that discussions on HS2 are ongoing between major contractors and consultants who have already won work on the scheme and there are hopes that procurement can be accelerated.
Consultants including Atkins, Arup, Capita Symonds and Mott MacDonald are among those to have won work on the scheme to-date.
HS2 Ltd commercial director Beth West has confirmed HS2 wants to work with the construction industry to ensure quicker procurement of the scheme in the coming months.
Meanwhile it is understood that Thames Water has reassured consortia this week that it wants to procure construction contracts on the £4.1bn super sewer as early as May, with an industry day penciled in for the start of that month.
Although the financing model discussions are ongoing, industry sources said the government support for the scheme means they are confident it will proceed and are willing to incur the short-term procurement costs.
On HS2, a senior source at a UK contractor said: “Anything that throws construction work into the market place at the moment is a good thing from a contractor perspective.
“There are obviously hurdles and politics to overcome but all the big players are lobbying for it and working out who to partner with. All the big consultants who have won design work have pet contractors and we all want to know how it will be procured now.”
The government plans to introduce a paving bill as part of the Queen’s Speech which will allow money to be brought forward on the scheme and HS2 Ltd confirmed to CN it intends to hold industry days later this year to explain its procurement plans.
The paving bill would allow the project to incur “essential expenditure on preparatory works” before its proposed hybrid bill achieves Royal Assent, which would allow construction to proceed more quickly than the original timetable.
New spending powers could finance work such as letting contracts for designing the construction of the line, designing the realignment of existing railway, ground investigation work and planning the movement of utilities.
HS2 has set up an Efficiency Challenge group that is working with Infrastructure UK and the industry to explore ways of reducing the cost of delivering a new high speed rail network that will provide an engine for growth.
The group has met with a variety of companies as part of its work, but so far, any other activity with the construction industry has been informal.
HS2 Ltd commercial director Beth West said the procurement strategy for HS2 construction is currently being developed and HS2 Ltd plans to “work with the construction industry and companies like train systems manufacturers over coming months to build momentum in the run up to the construction procurement process, which we expect to begin whilst the hybrid bill is in Parliament”.
“HS2 Ltd is planning a series of industry-wide events to brief interested companies on the project and understand their interest in the project.”
HS2 Ltd commercial director Beth West
Meanwhile, Thames Water this week moved to reassure contractors over their concerns over potential delays to the construction procurement of the super sewer with the first package set to go to market in May or June.
There are understood to be around 10 consortia, including some of the UK’s biggest contractors, looking at packages split into the single-drive £300 million western and £500m eastern area contracts, and the bigger double-drive £800m central contract.
Although Thames Water has consulted with industry on whether to lump the contracts together into one major £1.6bn contract, it is expected to stick with the three existing packages.
Procurement of an infrastructure provider to finance and deliver the project was set to start in spring, alongside the construction procurement.
Thames Water told CN last month it had been “slightly” delayed while it gets the “right assurances and agreement” needed from government and regulator Ofwat to finalise the funding model.
Contractors had raised fears this would delay construction procurement until early autumn, but are understood to have been told the client can start later, but work to a shorter infrastructure provider procurement period.
One industry source conceded there is risk in pursuing the scheme and investing in the procurement process before funding is finalised, but said his firm was confident the project will move forward due to its support within government, which has already pledged a contingent financial liability.
The source told CN: “It’s a bit of a risk [for us], but there’s been so much government support on this one. Other than the Northern Line extension, they have probably been more vocal on this than anything else. If you want to be in this thing you will have to get your cheque book out.”
A Thames Water spokesperson said it is continuing discussion on the delivery model with government and Ofwat and remains on track for its scheduled completion date.
Hinkley Point C:
Energy secretary Ed Davey granted the 175-hectare scheme development consent, which is required before construction can begin.
The energy giant still needs to make a final investment decision on the project, based on ongoing talks with the Department of Energy about a strike price at which electricity can be sold following its construction.
Two new reactors will be built at the site, supporting up to 25,000 jobs during construction and 900 permanent jobs during operation.
The proposed plant would become the first new nuclear development to be built in the UK since 1995.