{"id":516411,"date":"2025-03-14T12:45:55","date_gmt":"2025-03-14T12:45:55","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=516411"},"modified":"2025-03-14T11:13:17","modified_gmt":"2025-03-14T11:13:17","slug":"balfour-boss-pours-cold-water-on-hs2-contract-renegotiation","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/civils\/hs2\/balfour-boss-pours-cold-water-on-hs2-contract-renegotiation-14-03-2025\/","title":{"rendered":"Balfour boss pours cold water on HS2 contract renegotiation"},"content":{"rendered":"

Balfour Beatty boss Leo Quinn has pushed back against suggestions by HS2 bosses that construction contracts on the London to Birmingham rail scheme could be renegotiated.<\/span><\/p>\n

In December, <\/span>Construction News<\/span><\/i> reported<\/span> comments made to MPs by HS2 chief financial officer Alan Foster<\/span><\/a>, saying that contractors accepted that the legal agreements in place to build the line could be changed.<\/span><\/p>\n

However, Quinn today told financial publication City AM that he was less than enamoured with the idea.<\/span><\/p>\n

When asked whether the contracts should be amended, Quinn told the paper: \u201cNo, not really, the contracts for the time they were written were appropriate.<\/span><\/p>\n

\u201cThere\u2019s no contractor in the UK that could actually have a balance sheet to deliver something of that size, so it has to go back to the exchequer.\u201d<\/span><\/p>\n

He said that if liabilities for the cost overruns suffered by the project so far had fallen onto the scheme\u2019s contractors, \u201cyou wouldn\u2019t have a construction industry in the UK\u201d.<\/span><\/p>\n

His comments seem to contradict Foster\u2019s testimony to Parliament\u2019s Public Accounts Committee (PAC), where he said: \u201cI\u2019ve personally spoken to all of the CEOs of the parent companies.<\/span><\/p>\n

\u201cWe\u2019ve got 14 significant entities that sit above the JVs [joint ventures], and all have expressed a willingness to discuss and work through a renegotiation.\u201d<\/span><\/p>\n

The original HS2 contracts were <\/span>awarded in July 2017<\/span><\/a> to four JVs: SCS (Skanska, Costain and Strabag), Align (Bouygues, VolkerFitzpatrick and Sir Robert McAlpine), CEK (Carillion, Eiffage and Kier), and BBV (Balfour Beatty and Vinci).<\/span><\/p>\n

Initially valued at \u00a36.6bn, the contracts were renegotiated in 2020 to take into account project-wide cost inflation.<\/span><\/p>\n

The new terms shifted risk from contractors to HS2 Ltd, reducing liability for cost overruns above a fixed target price but imposing penalties for failing key performance indicators.<\/span><\/p>\n

In 2023, HS2 Ltd reported that the contract values had risen by \u00a36bn (in 2019 prices) since renegotiation.<\/span><\/p>\n

In February, a PAC report said<\/span> HS2\u2019s construction contracts were \u201cextremely poor value for money\u201d<\/span><\/a> and that the committee was \u201cunconvinced\u201d that they could be renegotiated to achieve significant savings.<\/span><\/p>\n

The report described <\/span>HS2<\/span><\/a> as a \u201ccycle of repeated failure\u201d and \u201ca casebook example of how not to run a major project\u201d.<\/span><\/p>\n

The committee found HS2 Ltd and the Department for Transport had \u201cfailed to work together effectively\u201d and lacked the necessary skills to deliver the programme, adding that early plans for Euston \u201ccarry huge risks\u201d.<\/span><\/p>\n

In December, transport secretary Heidi Alexander said cost increases had been driven by factors including Covid and high inflation. But she also criticised elements of the project\u2019s management.\u00a0<\/span><\/p>\n

\u201cThere have also been significant delivery issues, including cost underestimation with large increases in design costs and lower-than-planned productivity,\u201d she said.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Balfour Beatty boss Leo Quinn has pushed back against suggestions by HS2 bosses that construction contracts on the London to Birmingham rail scheme could be renegotiated. In December, Construction News reported comments made to MPs by HS2 chief financial officer Alan Foster, saying that contractors accepted that the legal agreements in place to build the …<\/p>\n","protected":false},"author":129711,"featured_media":464445,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false},"categories":[527,558,39314],"tags":[],"yoast_head":"\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\t\n\t\n\t\n