London Underground (LU) will next week announce whether it has chosen Spanish contractor Dragados or a Costain/Vinci joint venture for the hugely complex £625M Bank station upgrade.
LU has chosen its preferred bidder but is waiting for the Transport for London (TfL) board to ratify its decision.
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/Morgan Sindall and Balfour Beatty/Alpine Bemo.
LU has now decided which team it wants to deliver the project and will explain its decision to the Transport for London (TfL) board next week.
Costain and French contractor Vinci have 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 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.
In a paper to be submitted to the TfL board, LU says that the ICE process has worked, and that the winning bidder had come 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 Bank station project manager Simon Addyman stressed this at NCE’s London Rail 2013 conference yesterday.
“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,” says the paper.
“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.”
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.
Compensation for bidders
London Underground (LU) has accepted that it must set aside far more cash to pay bidders if it is to reuse its new Incentivised Contractor Engagement (ICE) procurement tool.
Bid teams for the Bank project racked up costs of more than £2M while using the new procurement method on the £625M Bank Station upgrade.
But LU only set aside £200,000 for the four shortlisted consortiums to help cover their bid costs. The procurement tool is intended to bring out money saving ideas through a lengthy dialogue phase with bidders.
LU has promised that it will buy innovative ideas off the losers if the ultimate winner uses them.
The idea is backed by Treasury body Infrastructure UK and has been widely welcomed by the construction industry.
LU believes the tool has been a success and will mean it “easily” exceeds its target of squeezing 15% of additional value from the tender process.
But it has also accepted that the process has been far more expensive for bidders than it had anticipated.
“It is expensive to bidders. It was also expensive to us. If it was done again we would set aside more for bidders,” LU Bank station upgrade project manager Simon Addyman told NCE’s London Rail conference last week.
“Yes, it is very costly.
“As a client we have spent a fortune and the bidders have spent over and above [what could have been expected], which we appreciate.
“But we have absolutely done the 15% [in added value].