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Amey fined £50M for late replacement of four damaged bollards

Amey gully sensors

Birmingham City Council has fined contractor Amey almost £50M for taking a year to repair four damaged bollards.

As part of Amey’s PFI contract with the city council, the contractor was ordered to replace the bollards as a matter of emergency.  

Marked as a “category-one repairs” job - meaning the bollards posed a risk to the public - Amey was contractually obliged to replace the bollards within 24 hours of being notified. 

However, Amey took one-year to repair the first set of bollards, and seven-months to repair the second set, racking up a £48.5M fine in the process. 

Due to the category one classification, the fine for delays in the repair started at £250 and doubled every hour the work remained incomplete. 

 A Birmingham City Council spokesperson accused Amey of being unaware of the damage it was causing, and said the council would do not hesitate to safeguard public pennies. 

“We take our responsibilities to manage our contractors seriously and where a contractor is found to be underperforming then we will not hesitate to take appropriate action in order to protect the public purse.

“The contract was established to make sure that our highway network is kept safe and is maintained. Dangerous issues that are not dealt with by Amey will therefore attract financial adjustments; the longer they are left and the more dangerous they are, the more those adjustments increase. We have managed Amey’s performance in line with the contract, although the statements we have seen regarding these adjustments wildly exaggerate the amounts we have applied.”

The spokesperson added: “Amey has unfortunately refused to put forward proposals that provide the investment in our roads and pavements that it is contractually required to deliver. In such circumstances the council cannot approve these programmes. This has now been the case for over a year and it is disappointing that Amey does not recognise the damage it is doing by allowing the city’s roads to deteriorate.”

The massive fine, which equates to 56% of Amey’s value, is the latest in a long running battle over the 25-year £2.7bn private finance imitative contract – stemming from residents’ complaints about potholes. 

The on-going row has damaged the contractor heavily, with parent company Ferrovial slashing Amey’s value to just £88M in a bid to sell the company earlier this year. In its previous financial update released in May 2018, Amey was valued at £748M

The Council has also reportedly fined Amey £12M for a sinlge pothole and £14M for adding cable ties to three lamp posts, according to The Times. 

In March, the troubled contractor offered the council £175M cash, and to write off £70M of unpaid work, to settle the dispute. The council reportedly rejected the £245M offer. 

Amey has not been paid by Birmingham City Council for works on the contract since December 2017 as a result of contractural differences.  

An Amey spokesperson said the contractor was working hard to resolve the issues with the PFI contract. 

“Amey remains committed to talking to Birmingham City Council, and has put forward numerous offers to settle all disputes, including that of the bollards, and is happy to work with the politicians and officers of the city to resolve this matter promptly,” the spokesperson said.

The spokesperson added that Amey maintains on average a “98% performance rate” on meeting its monthly key performance indicators with Birmingham City Council. 

Under the contract, which expires in 2035, Amey is responsible for improving and maintaining Birmingham highways infrastructure, including 2,500km of road network, nearly 100,000 street lights, and more than 850 highway structures and bridges across the city.  

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Readers' comments (8)

  • Philip Alexander

    It's a pity that Crossrail didn't have such harsh financial remedies within their contracts for non-performance. Instead, just to show how genuinely incompetent they are, they intend throwing extra money at their contractors just to get them to deliver on their contractual obligations.
    It's a pity that Birmingham City Council isn't in charge of Crossrail instead of TfL.

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  • Amey have got off lightly. If it really doubled every hour they would owe more money than exists or could even be counted.

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  • if the situation was that dangerous, shouldn't the council have dealt with it and counter-charged Amey rather than wait a year?

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  • Philip Alexander, why are you taking the easy way out and blaming the contractors for all Crossrail's ills? The other day you were blaming Crossrail's management!

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  • Irrespective of the rights and wrongs of the dispute, and whilst not trying to play down the safety aspects of damaged bollards, I previously understood that damages and penalties arising from an alleged or real failure to meet contract clauses had to be reasonably justifiable and proportionate. £50M seems to go against this.

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  • David Hall

    Ah, another fantastic example of industry-best practices ... doesn't this exemplify lose-lose? I'd venture the result of relationships driven by the contract ahead of customer outcomes and satisfaction.

    What is it about infrastructure delivery culture that pulls for contracts being put ahead of people? There's such a bit difference between solving and resolving .... Solving = finding solutions that deliver customer outcomes i.e. outwards looking ... Resolving = agreeing the cost of not Solving i.e. inward looking = not delivering customer facing outcomes.

    I'm sure the inhabitants of and visitors to Birmingham (which includes me) feel reassured that, for a further 15 years, the asset owner and their supply chain partners have an excellent base to work from and will continue to deliver these high levels of customer facing outcomes, safe, secure, good value. As a visionary man once said " I have a dream ...."

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  • Interesting to see a PFI scheme work not-in-favour of the Contractor.
    It could be argued that the collapse of Carillion et al. is down to the public bodies getting better at writing favourable PFI contracts?

    £50m does seem disproportionate for the works in question. I assume that Amey did not simply send a gang out to resolve it because they got too hung up on the contractual small text rather than seeing the bigger picture?

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  • If the defective bollards were such a safety problem then over the 12 months there must have been numerous accidents. In which case should the Council be prosecuted by the HSE failing to act to eliminate such a serious safety problem?

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