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Dragados beats Costain/Vinci in battle for £625M Bank job

Transport for London has today rubber-stamped London Underground’s choice of Dragados to carry out the hugely complex £625M Bank station upgrade.

LU picked its preferred bidder earlier this month but needed the Transport for London (TfL) board to ratify its decision and approve funding.

Last month NCE exclusively revealed that LU had decided that it would choose one of the two as preferred bidder and make the other first reserve.

In doing so it knocked out of the process Bam Nuttall/Ferrovial/Kier and Morgan Sindall/Balfour Beatty/Alpine Bemo.

Costain and Vinci had brought in Mott MacDonald as their consultant, while Spanish giant Dragados is using its own in-house design expertise.

The project will create a new ticket hall at surface level and includes the diversion of around 570m of the southbound Northern Line running tunnel plus the formation of a new southbound platform, south west of the existing platforms.

The contract is the first to use LU’s new Incentivised Contractor Engagement (ICE) model which rewards bid teams for money saving ideas even if they ultimately lose out on the construction contract. The process has been expensive with teams spending up to £2M on their bids.

The four bid teams have been working on designs since LU issued a prequalification notice in November 2011. They were shortlisted in April 2012 and then entered several months of structured dialogue before tender documentation was issued in November. Tenders were returned in February for evaluation ahead of the preferred bidder announcement in May.

LU’s the paper to the TfL board says that the winning bidder came up with a solution that “substantially” exceeds the target of a 15% increase in value for money as well as offering the lowest bid price of the two remaining teams.

LU capital programmes director David Waboso confirmed this today.

“We used the new ICE procurement process for the first time with this project. The process has been designed to allow bidders to bring their expertise and knowledge to drive innovation that will reduce cost and risk to the project. We’re delighted with the outcome. The lead bidder represents both the lowest bid price [of the final two] and offers the greatest benefits.”

LU Bank station project manager Simon Addyman stressed this at NCE’s London Rail 2013 conference last week.

“We have absolutely done the 15%,” he said, adding that he expected LU’s decision to be ratified. “It’s been easier going through board approval to contract award than it was getting board approval to start the [ICE] process in the first place.

“The original target was an increase in value of 15%, made up by a combination of reduction in the estimated final cost, improvements in the benefits, reduction in disbenefits or an improved schedule,” he said.

“The process has been successful with three out of four of the bidding consortia exceeding this target. The lead bidder substantially exceeds this target and offers both the lowest bid price [of the two remaining bidders] and the highest increase in benefits.”

TfL has confirmed that the lead bid score was an “overall improvement” of 49.8%, which includes a 19% improvement on customer journey times and 23% cost reduction compared to LU’s reference design.

But the winning bid was not the cheapest of the four.

The paper says that while three of the four bidders were within the price range expected by LU’s cost consultants Gardiner & Theobald and EC Harris, one bid was below this and as such could be considered “abnormally low”.

But because it was not scored as one of the top two bids this pricing was not investigated further.

In accordance with European Union (EU) procurement regulations, TfL will now notify all contract bidders of the outcome of the procurement and start the standstill period. This will end at midnight on Monday 15 July, after which TfL will formally award the contract.

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