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Tube cost dispute looms

London Underground upgrade contractor Tube Lines has vowed to fight PPP Arbiter Chris Bolt’s decision to cap upgrade work on the Jubilee, Northern and Piccadilly Lines between 2010 and 2017 at £4.4bn.

Tube Lines chief executive Dean Finch said the decision was “wrong” and accused Bolt of “ducking the issue” by failing to address the client’s role in work on the Tube.

Speaking exclusively to NCE Finch said that the decision would effectively force Tube Lines and London Underground (LUL) to adopt an adversarial approach to the upgrade contract.

He promised to fight hard against Bolt’s draft ruling over the next six weeks.

“What he [Bolt] is saying is that £4.4bn is the baseline from which Tube Lines would have to derive other sources of income,” he said.

Clawing back costs

Finch was referring to the fact that it would have to make claims against LUL for inefficient procurement, and inability to work in partnership to ensure it gets all the revenue it needs.

“I think he [Bolt] and his advisers are wrong and they have asked the wrong questions,” he said. “London Undergound is not a perfect client and I think his advisers have to take that into account in their assessment.”

Tube Lines had originally asked to spend £6.6bn between 2010 and 2017 but this figure was revised after de-scoping to £5.75bn. London Underground argued that this work should only cost £4bn.

The Arbiter ruled in December that the work should cost £4.4bn.

“A company operating in an overall efficient and economic manner could deliver its obligations at a substantially lower cost than projected by Tube Lines, though not as cheaply as suggested by London Underground,” said Bolt.

“Tube Lines has already secured £100M of claims against London Underground’s inefficiency and we have another £500M on the table,” said Finch.

“The Arbiter is now encouraging us to pursue even more claims which of course we will do but I question whether that is a sensible way forward in what is supposed to be a partnership,” he added.

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