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£1bn Aberdeen bypass to finally open today

awpr pix

Today the 58km Aberdeen Western Peripheral Route (AWPR) will finally open in full, with the project costing at least £1bn. But is it the end of the road for the saga which has taken a huge toll on the firms building it?

The 7.5km stretch of road from Craibstone to Parkhill is the final section to open. The whole construction project includes 46km of new dual carriageway; the upgrading of 12km of existing carriageways; 40km of side roads; 75 structures – including two major river crossings of the Dee and the Don; and 77 culverts.

But the project has also dealt significant financial blows to the firms building it, it has raised tensions with client Transport Scotland and was ultimately delivered late.

The scheme was built by Aberdeen Roads Limited (ARL), originally a joint venture between Balfour Beatty, Carillion and Galliford Try in a design, build, finance and operate deal. The clients are Transport Scotland, Aberdeen City Council and Aberdeenshire Council.

Scottish transport secretary Michael Matheson said ahead of today’s opening: “The bypass was first proposed over 65 years ago but it took this government to take the project forward in a meaningful way back in 2007. Despite the many challenges since then, we have taken a responsible and steadfast approach to delivering for the long-term benefit of the people and businesses of the North East and Scotland as a whole.

“We will continue to work constructively with Aberdeen Roads Limited (ARL) as it moves into the operational phase of the project and it builds stronger relationships with the community it now serves.”

The project had to overcome numerous obstacles. Opponents went all the way to the Supreme Court to get it scrapped. Construction finally started in 2015, six years after being formally approved in 2009. Problems also included delays caused by bad weather from the Beast of the East last year which slowed construction. There were also technical issues with the River Don Crossing  which delayed the opening by around 13 months.

IThe JV also encountered difficulties with services diversions involving more than 300 water pipes, electricity cables and overhead lines and gas pipes.

The worst flooding in the region since records began also hampered work.

But the most significant impact on the project was the collapse of Carillion at the beginning of 2018. After this, Galliford Try and Balfour Beatty were obliged to complete the rest of the contract funding shortfalls resulting from Carillion’s liquidation shared equally.

At the end of last year, project bosses admitted to MSPs on the Scottish Parliament’s rural economy and connectivity committee that the cost of the AWPR project had broken the £1bn barrier. The original price tag was £745M.

Transport Scotland is reluctant to pick up the tab for all of the cost overrun. “The Scottish government is not willing to pay over the odds for the road on account of mistakes or miscalculations that are of the contractors’ making,” it has said. “It would therefore be wrong to assume the contractor’s total cost, whatever that turns out to be, is automatically borne by the public purse. This misconception fails to understand the nature of risk in public infrastructure projects.”

The financial issues concern bridge maintenance – particularly after concrete panels on the River Don Crossing had to be replaced.

On Friday Transport Scotland said that it now had the technical assurances it was seeking regarding the River Don Crossing repairs, meaning the scheme could fully open.

But negotiations between client and contractors have been tense. At the end of January Transport Scotland said the structure failed to meet contractural requirements. It said: “Transport Scotland has been seeking necessary technical assurances on the bridge, including enhanced monitoring and inspection of the structure both during the 30 year contract and beyond into the lifetime of the structure should significant future maintenance be required.” 

Transport Scotland has said Aberdeen Roads Limited spent two years bidding for the deal and “went into it with eyes wide open”. The JV is not publicly talking about the project, but the impact has been seen on the firms’ balance sheets.

Last year Galliford Try said it had to raise £150M to cover extra project costs. It aso ruled out bidding for more large fixed price infrastructure jobs, for example  the Stonehenge Tunnel. 

But last week, Galliford Try announced that its pretax profits had risen by 4% year on year to £84.2M for the six months ending December 31, despite incurring additional losses from the AWPR project. The contractor’s half year results revealed that the company had taken a further £26M hit on the project, even though construction workhad finished.

In August last year Balfour Beatty revealed that it had written off a further £23M against the project, having previously taken a £44M hit.

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