Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Contractors under pressure

News

Contractors warned this week that Network Rail renewals contracts will be used to make cuts in spending.

New ve-year deals for London & North East and East Anglia were announced last week.

But rather than setting up alliances between the contractor and Network Rail with all jobs in the pot, the new deals are frameworks for jobs up to £0.5M only.

Margins are understood to have been slashed to 2% and all contracts above £0.5M will be competitively tendered.

'An £850M underspent is a lot, ' said a contracting source involved in the bidding process.

'But if Network Rail is looking for an opportunity to delay or defer, this is it.' Network Rail confirmed that the new deals will 'deliver cost reductions and significant improvements in value for money'.

Measures include competitive pricing, benchmarking unit rates for standardised work types and pain/gain incentives tied to key performance indicators.

It added that the contracts are 'framework' and have no guaranteed work levels.

The London & North East deal, worth an estimated £25M per annum, has gone to May Gurney. The £20M East Anglia deal has gone to Kier. Existing contracts for the Thames Valley, the South West & Wales and the South East have yet to be retendered. Decisions on Scotland, the Midlands and the North West are expected in the next two months.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Please note comments made online may also be published in the print edition of New Civil Engineer. Links may be included in your comments but HTML is not permitted.