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London Rail special: Better compensation for losing bidders promised

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 yesterday.

“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],” he said.

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