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Balfour Beatty poised for £500M highways job

Balfour Beatty is set to win the second of the Highways Agency’s new-look maintenance contracts despite losing out on the first on a pricing technicality.

The first £400M Asset Support Contract (ASC) for Area 2 in south west England was awarded last month to an Atkins/Skanska joint venture only after current incumbent Balfour Beatty was ruled out.

NCE understands that concerns about the way elements of the first bid were priced by Balfour Beatty meant it lost out. ASC contracts are hard to price because they use a schedule of rates for individual items of work, whereas MAC contracts were priced on whole scheme cost estimates, known as sample schemes.

The next contract due to be awarded is the £500M Area 10 deal in the North West, and a decision is overdue.
NCE understands the Agency has reached the same stage in the decision making process for Area 10 as it had when the issues with Balfour Beatty’s bid surfaced in Area 2.

Once again Balfour Beatty is bidding with Mott MacDonald.

Area 10 win

Industry sources said it looked as if Balfour Beatty/Mott MacDonald was heading for the Area 10 win.

But rival bidders who spoke to NCE stressed that, because of the complexity in pricing the new contracts, they felt there “was still a way to go yet” before the award was finalised.

Highways Agency ASC manager Graham Bowskill confirmed that bids were being assessed and that the contract was “shortly being awarded”.

He added that there was “very much a focus” on the ­financial element of bids, with the award made on a 50/50 split between cost and quality ­components. Previously the Agency had been moving towards awarding contracts based 100% on quality.

Three more areas will go out to tender this year as the Agency looks to complete roll out of ASC contracts across the network as quickly as possible.

The contracts are designed with cost savings in mind, as the Agency’s budget has been cut from £2.5bn in 2011/12 to £2.1bn in 2014/15.

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