Cambridgeshire County Council has recently published a report produced by EC Harris into lessons learnt from the Cambridgeshire Guided Busway, procured under the NEC Contract. The Cambridgeshire Guided Busway is an example of a NEC3 project designed to provide high class public transport and reduce reliance on the car. In that respect the Busway is a success. Unfortunately within the technical press and the local community it is known as a project that was delivered late and well over budget.
The parties to the construction contract, Cambridgeshire County Council and BAM Nuttall had significant disputes on the cost of the works and the time for completion which ultimately ended up in court. This report makes no observations on the rights or wrongs of the litigation, undoubtedly a significant amount of money has been spent by both parties. A dispute over the cost of building the Cambridgeshire Guided Busway was settled with contractor BAM Nuttall. The settlement means the Council paid BAM Nuttall £84.7 million to build the Busway. The original price was £83.9 million. BAM were two years late in handing over the project and claimed the Council owed them around £70 million more than the price they had originally quoted, leading to a protracted legal dispute.
The key areas that the report reviewed are summarised below:-
- the process by which the chosen form of contract was selected;
- the appropriateness of the chosen form of contract in this instance;
- whether appropriate mechanisms were set up between the client, contractor and project manager to manage and oversee the contract;
- the risk transfer by the Council and whether this was reasonable;
- identify what other public sector organisations have used this form of contract and if they have experienced similar outcomes;
- did the form of contract used create incentives for the contractor to increase spend and delay and if so, how could this have been addressed;
- what alternative form of contracts were available and what protection they would have afforded the Council;
- whether an alternative form of contract, available at the time would have been more appropriate;
- what the Council and other public sector organisations should consider when undertaking procurement of similar major projects;
- are there any lessons to be learnt in procurement, that with the benefit of hindsight could have alerted us to the difficulties we eventually faced;
- whether there are any further modifications to the form of contract available or contracting procedures that would be more effective in managing risk.
The report provides a number of recommendations for NEC3 users and construction professionals that can be applied to future NEC projects. A copy of the report can be download here.