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DISCUSSION FORUM

Tunnel contracting in the UK 20 Jul 2017

Shani Wallis, TunnelTalk

Procurement of construction for recent major tunnelling projects in the UK bears some interesting review and comparison, particularly at this time when the UK is negotiating its exit from the European Union. On all projects, EU contractors and consulting engineers are important contributors to the works and to their progress and success. The same is not the case for UK companies on major tunnelling works in other EU countries.

The review begins with awards this week of the estimated £6.6 billion construction contracts for Phase 1 of the multi-billion HS2 high speed railway project linking London with Birmingham.

Table 1. Award of construction contracts for HS2 Phase 1
S1 and S2: Euston Tunnels and Approaches and Northolt Tunnels
SCS JV - Skanska Construction UK Ltd, Costain Ltd, Strabag AG
C1: Chiltern Tunnels and Colne Valley Viaduct
Align JV - Bouygues Travaux Publics, VolkerFitzpatrick, Sir Robert McAlpine
C2 and C3: North Portal Chiltern Tunnels to Brackley and Brackley to South Portal of Long Itchington Wood Green Tunnel
CEK JV - Carillion Construction Ltd, Eiffage Genie Civil SA, Kier Infrastructure and Overseas Ltd
N1 and N2: Long Itchington Wood Green Tunnel to Delta Junction and Birmingham Spur and Delta Junction to WCML Tie-In
BBV JV - Balfour Beatty Group Ltd, VINCI Construction Grands Projets, VINCI Construction UK Ltd, VINCI Construction Terrassement
Unsuccessful bidders
Fusion JV - Morgan Sindall, BAM Nuttall, Ferrovial Agroman
LFM JV - Laing O’Rourke, FCC Construction, J. Murphy and Sons
Momentum JV - Dragados, Hochtief, GallifordTry Infrastructure
ASL JV - Acciona, Sisk, Lagan Construction
Bechtel
Table 2. Crossrail construction contract awards
C300 and C410 and C435: The Western Running Tunnels - Royal Oak to Farringdon and sprayed concrete lining works for Bond Street, Tottenham Court Road and Farringdon Stations tunnels
BFK JV - BAM Nuttall Ltd, Ferrovial Agroman (UK) Ltd, Kier Construction Ltd.
Paddington Station
JV - Costain/ Skanska
C305: The Eastern Running Tunnels - Limmo Peninsula to Farringdon; Limmo Peninsula to Victoria Dock; Stepney Green to Pudding Mill Lane Dragados S.A., John Sisk & Son (Holdings) Ltd.
C510: Sprayed concrete lining works for Whitechapel and Liverpool Street Stations tunnels
JV - Alpine BeMo Tunnelling GmbH, Balfour Beatty Civil Engineering Ltd, Morgan Sindall (Infrastructure) plc, Vinci Construction Grands Projects
C310: River Thames tunnel crossing
JV - Hochtief-Murphy
Table 3. Thames Tideway CSO and storage tunnel contracts
Tideway West: 6.95km tunnel between Acton and the Carnwath shaft
BMB JV - Bam Nuttall/Morgan Sindall/Balfour Beatty - £416 million
Tideway Central: 12.7km central tunnel between the Carnwath Road and Chambers Wharf
FLO JV - Ferrovial Agroman/Laing O’Rourke - £746 million
Tideway East: 5.53km tunnel from Chambers Wharf to Abbey Mills Pumping Station
CVB JV - Costain/Vinci/Bachy Solentache - £605 million
Lee Tunnel: 6.4km from Abbey Mills Pumping Station to Beckton sewage treatment plant
MVB JV - Morgan Sindall, Vinci/ Bachy Soletanche - £422 million
Table 4. Northern Line Underground Extension
3.2km extension of the Northern Line from Kennington to Battersea
JV - Ferrovial Agroman/Laing O’Rourke
Rival proposals from:
Bam Nuttall/Balfour Beatty
Bechtel/Strabag JV
Costain/Dragados/McAlpine JV
Table 5. Bank Station upgrade
Based on excavation of a new platform running tunnel of about 570m long, converting the existing platform tunnel into a concourse and throughway; constructing a new ticket hall at King William Street, and installation of additional passageways, stairway, escalators and lift to increase station ingress and egress
Awarded to: Dragados
Rival proposals from:
Costain/Vinci JV
BAM Nutall/Ferrovial/Kier
Morgan Sindall/Balfour Beatty/Alpine BeMo.
Table 6. Contracts awarded on the Paris Grand Express Metro Line 15 South project
Package 8 (July 2017):
Scope: Civil works for the Noisy-Champs underground interchange station that will connect Metro Lines 15, 16 and 11 and the city’s RER A regional express line. A 370m-long cut-and-cover tunnel in front of the station is included in the contract to accommodate local traffic.
Contractor: A joint venture led by Vinci Construction with Dodin Campenon Bernard, Spie Batignolles TPCI, Botte Fondations and Spie Fondations.
Award value: €156 million
Package 7 (June 2017):
Scope: Construction of two underground stations and a 4km bored tunnel between Isle-de-Monsieur and Fort d'Issy-Vanves-Clamart.
Contractor: A consortium led by Bouygues Travaux Publics with Soletanche Bachy France, Soletanche Bachy Tunnels, Bessac and Sade
Award value: €513 million
Package 6 (April 2017):
Scope: 7.2km of bored tunnel between Créteil l'Échat and Bry-Villiers-Champigny Stations using two TBMs launched from both ends of the section and included is construction of the Saint-Maur-Créteil, Champigny Center and Bry-Villiers-Champigny Stations.
Contractor: A JV of Eiffage Génie Civil (leader) and Razel-Bec
Award value: €795 million
Package 5 (February 2017):
Scope: An 8km-long x 8.7m diameter bored tunnel between Issy-Vanves-Clamart and Villejuif-Louis-Aragon Stations employing two TBMs. Also included is construction of five stations – Châtillon-Montrouge, Bagneux, Arcueil-Cachan, Villejuif Institut Gustave-Roussy and Villejuif Louis-Aragon – and a TBM launch shaft.
Contractor: A consortium of Vinci Construction Grands Projets (leader), Spie Batignolles TPCI, Dodin Campenon Bernard, Vinci Construction France, Spie Foundations and Botte Foundations
Award value: €926 million
Package 4 (February 2017):
Scope: A 6.6km x 8.7m diamter tunnel and a 1.1km x 6.7m diameter tunnel from Villejuif Louis-Aragon to Créteil I’Échat station including four stations and a launch shaft for two TBMs.
Contractor: A consortium comprising Bouygues Travaux Publics (leader), Soletanche Bachy France, Soletanche Bachy Tunnels, Bessac and Sade.
Award value: A €807 million
Package 3 (September 2016): Scope: A 4.7km-long bored tunnel between Noisy-Champs and Bry-Villiers-Champigny stations plus construction of two TBM access shafts and a 2.2km-long maintenance tunnel.
Contractor: A JV comprising Demathieu Bard Construction (leader), NGE Civil Engineering, GTS, Guintoli, Impresa Pizzarotti, Implénia, Franki Foundations Belgium and Atlas Foundations.
Award value: A €363 million
Package 2 (September 2016): Scope: Construction of the rear of Noisy-Champs Station including a crossover tunnel section to allow trains to reverse at the end of Line 15 South and construction of a TBM access shaft for Line 16.
Contractor: A consortium of Léon Grosse Travaux Publics (leader), Parenge and Dacquin.
Award value: €51 million Awarded to
Package 1 (March 2016): Scope: The Issy-Vanves-Clamart Fort Station Contractor: A consortium comprising Bouygues Travaux Publics (leader), Soletanche Bachy France, Soletanche Bachy Pieux and Soletanche Bachy Tunnels.
Award value: €66 million.

The HS2 awards bring surprise on several levels. First is the grouping of the awards. In the procurement strategy set by HS2, JVs could bid up to four of the construction packages but could be awarded two as a maximum. Following this strategy through, nine bidders presented proposals for seven civil construction contract packages. Of these, four groups have been successful with three taking two construction packages each. The two south area packages at the London end have been awarded to the same JV as has the two north area packages at the Birmingham end and two of the three central area packages.

With each of the packages valued at close to £1 billion, that is about £2 billion in heavy civil tunnelling and construction work for each of three JVs. These are significant procurement responsibilities for the three JVs and will be the largest contract awards to single JVs on recent tunnelling project. The largest award to a single contractor on Crossrail was in the order of £1 billion maximum.

Grouping pairs of contracts in the alignment into single JV awards does eliminate three significant contract interfaces, reducing six separate contract interfaces to three. Reducing contract interfaces can be considered an procurement advantage objective as contract interfaces are often the source of project management difficulties, delays and cost increases.

The awards of the HS2 contracts to the four groups results in significant wins for French JV partners at the cost of the Spanish based JVs which have had significant success in previous UK tunnelling projects. Spanish based JVs failed to secure a single package on the HS2 projects (Table 1) where they were part of JVs that completed the largest of the underground civil works for the Crossrail project in London (Table 2). Spanish contractors have been successful on other major tunnelling projects in London including the Thames Tideway project (Table 3) and the Northern Line Extension (Table 4) and the Bank Station upgrade (Table 5) for the London Underground.

A review of the successful JVs also favours groups with large UK involvement. These include UK construction companies Carillion and Sir Robert McAlpine, which have be missing from recent major tunnelling projects. Re-entering the tunnelling business will require these companies to re-establish tunnelling expertise and teams. Tarmac, which became Carillion (along with Wimpey Construction, Cubitts and Mitchell Construction), and Sir Robert McAlpine last saw major tunnel construction work on the UK side of the Channel Tunnel in the late 1980s-early 1990s. They have been involved in civil building projects (hospitals, highrise buildings, stadia and concert halls) and house building in the meantime.

News just days before announcement of the HS2 contract awards, that Carillion is in financial difficultly, reporting a borrowing debt for the first half of 2017 of £695m, a dramatic fall in its FTSE share price and the resignation of its Chairman, did not deter follow through with award of the HS2 contracts. It maybe that the decision to award the contracts was decided and confirmed with HS2 before news of the Carillion financial difficulties and profit warning came to the attention of the London Stock Exchange and financial newspapers. Should the financial status of Carillion worsen during the HS2 contracts its French and UK JV partners Eiffage Genie Civil SA and Kier Infrastructure will have to step in an carry on.

In looking at the JVs, it is not know the percentage share of responsibility for each of the partners. It could be assumed that all are equal share partners in the different JVs but often the JV leader, with a majority share over other partners, is listed first, putting Carillion in the leading position. Another first named UK company in a JV is Balfour Beatty with different companies of the Vinci group of France. Balfour Beatty too has had financial difficulties and in 2014 had to sell its Parsons Brinckerhoff acquisition to raise much needed capital.

One suggested reflection on the result of the HS2 award is that Brixit may have influenced decision making, favouring those JVs with significant UK involvement over those bidders with minor UK partners. The Dragados Hochtief JV (both group companies of the Spanish giant construction conglomerate ACE) was heavily EU based. Other unsuccessful bidders on the HS2 list, together with Dragados and Hochtief, also set aside their major contributions to the Crossrail project.

A final note on the Brexit link is that while large EU companies are working on tunnelling projects in the UK, there is very little involvement of EU companies working on projects in other EU countries. For example, we reported last week on the major expansion investment of the Paris Metro in France but there is not one non-French company included in the civil tunnel construction contract awards list (Table 6). The same can be said for major tunnelling projects in Germany and Spain and Italy and Austria – only national construction companies involved.

One possible cause of the situation in the UK is what is described as the ‘saw tooth curve’ of investment in civil infrastructure to date with investment in tunnelling projects on a start and stop cycle. This is illustrated in history from the Channel Tunnel Project through to the present. After the Channel Tunnel, there was no major project until the Heathrow Piccadilly Line extension. When then ended, it was years again before start of the Heathrow Express Rail Line and the Underground Jubilee Line Extension. Another hiatus then (with the damaging knock on affects of the Heathrow Express tunnel project collapse), before start of the Channel Tunnel Rail Link project. After each project, with no immediate follow on tunnel project, the experienced teams dispersed with the recruiting process starting again from scratch for the next project.

As well as having lost much of its domestic tunnelling expertise, the UK tunnelling industry has also lost of its traditional training and recruiting ground - the long since closed down coal mining industry. The mining industry of yester year trained new underground labour recruits and provided employment for tunnelling workers when civil tunnelling was scarce. These are no longer available to the UK tunnelling industry, which is now relying on training academies to train new underground industry workers.

It has been the ability of EU educated engineers to move freely among EU member nations that has staffed consulting engineering firms and tunnel construction companies in the UK. Attending a BTS meeting at the Institution of Civil Engineers in London on a third Thursday of every month is a gauge on the number of young engineers working in the UK from EU and other foreign countries including India and countries of the Middle East.

How leaving the EU will impact on HS2 as the first major tunnelling project to straddle Brexit and the UK leaving of the EU in March 2019 is yet to be seen and will be the subject of a new Discussion Forum article.

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