ISSUE No.74 SEPTEMBER 2015 neccontract.com NEWSLETTER New infrastructure provider to let £2 billion NEC contracts for Thames Tideway tunnel SIMON FULLALOVE EDITOR CONTENTS NEC: delivering collaboration and best 2 Thames Water’s new ‘infrastructure provider’, Simms. Chief executive officer is Andy Mitchell, value on infrastructure megaprojects Bazalgette Tunnel Limited, is set to let around £2 former programme director of the £14.8 billion billion of NEC contracts to deliver the 25 km long NEC-procured Crossrail project. NEC Australasia Users’ Group builds 2 momentum Thames Tideway tunnel in London. Work on the eight-year project will start next year. Eight-year programme Hong Kong government produces 3 The ‘super sewer’ is the biggest tunnelling Due for completion in 2023, the Thames tunnel NEC practice notes project ever undertaken by the UK water will be built from 24 construction sites across Crossrail completes ECC tunnelling contracts 3 industry. It was tendered as three similar-sized London. The project will employ 4000 people main contracts: west, central and east. The total directly and create another 5000 jobs indirectly. TSC road form updated 3 estimated value of the three contracts is between The work involves building a 7.2 m diameter Meridian uses multiple NEC3 contracts to 4 £1.4 billion and £2.25 billion (see issue 64). sewer up to 65 m under the River Thames between deliver major hydro refurbishment in All three contracts are being let under the NEC3 storm tanks in Acton, west London to Abbey Mills New Zealand Engineering and Construction Contract option C pumping station in the east. It will pick up 34 ECC used for civil and electrical works at 4 (target contract with activity schedule) with 50/50 combined sewer overflows along the way and have pain/gain share arrangements. a storage capacity of 1.6 million m3. Wellington wind farm Most of the 39 Mt annual storm discharges from Cooperation, collaboration and how 5 Joint ventures the overflows − which currently go straight into NEC provides a framework for both the river − will be transferred from Abbey Mills The three winning NEC contractors are all The obligation to instruct and timely notices 6 joint ventures of major international construction to Beckton sewage works via the £635 million Lee companies. tunnel, which is also being built using ECC option FAQs 6 The west section has been won by BMB, a C by a joint venture of Morgan Sindall, Vinci and ICE Register of Accredited NEC3 8 joint venture of BAM Nuttall, Morgan Sindall and Bachy Soletanche (see issue 59). ECC Project Managers Balfour Beatty; the central section will be built CH2M Hilll was appointed programme manager by FLO, a joint venture of Ferrovial Agroman and for both tunnel projects in 2008. ● Diary 8 Laing O’Rourke; and the east section has gone to Model view of the completed foreshore works at Victoria Embankment for the NEC-procured Thames CVB, a joint venture of Costain, Vinci and Bachy Tideway tunnel in London Soletanche. Other organisations shortlisted for the contracts included Bouygues and joint ventures of Dragados and Samsung; Skanska, Bilfinger and Razel Bec; Bechtel and Strabag; and Hochtief and Murphy. Amey will provide systems integration across all contracts under a £10–15 million ECC option E (cost reimbursable contract). Infrastructure provider The employer is Bazalgette Tunnel Limited, a specially created independent infrastructure provider that successfully bid to finance and deliver the project for Thames Water. It is a consortium of investors comprising funds managed by Allianz, Amber Infrastructure Group, Dalmore Capital Limited and DIF. Bazalgette, which now has its own licence from water industry economic regulator Ofwat, is chaired by former Carillion chairman Sir Neville CONTRACTS • BOOKS AND GUIDES • TRAINING • USERS’ GROUP • PROJECT SUPPORT SERVICES • EVENTS • WEBINARS • SOFTWARE 2 NEC USERS’ GROUP NEWSLETTER•No.74•SEPTEMBER 2015 TELEPHONE: +44 20 7665 2446 EMAIL: [email protected] WEB: neccontract.com NEC: delivering collaboration and best value on infrastructure megaprojects STEVE ROWSELL NEC USERS’ GROUP CHAIRMAN At the highly successful NEC Users’ Group annual Construction Contract requires parties merely conference in the UK in April this year, we heard to work together in a spirit of mutual trust and first-hand accounts of the application of NEC3 cooperation. contracts as part of collaborative approaches to The spirit of cooperation is of course project delivery. supported by contract procedures that require Since then a general election has taken the parties physically to work together on place and the UK has a new government. Like aspects such as early warnings, risk mitigation, many other EU governments, it has set out programme and compensation events. plans for austerity to reduce the national deficit In my view the combination of the and indicated a continuing commitment to requirement for a spirit of mutual trust Thames Tideway tunnel is one of over investment in major infrastructure projects to and cooperation supported by the contract £100 billion of major UK infrastructure support economic growth. procedures means NEC3 is not only an projects being procured under NEC − In such an economic climate it is more appropriate contract suite to support collaboration will play a key role in delivery important than ever that NEC users apply lessons collaborative delivery, it is also the best. learnt and best practice from previous projects The full benefits of collaboration do, however, the whole supply chain in project collaboration to ensure best value for money is delivered on rely on more than just the choice of contract. arrangements supported by the use of NEC3 future projects. As Nick Woodrow explains in more detail on subcontracts. There are currently plans for a wide range of page 5, NEC3 contracts play an important role in Secondly, we must ensure, as NEC users, that major infrastructure projects in Britain. These supporting a collaborative culture, in which the contracts are as close to the standard form as include Thames Tideway tunnel (see page 1), requirements of the contracts are delivered, and possible. Instead of simply criticising clients for Hinckley Point C, High Speed 2 and 3, Crossrail in providing a fair and equitable position, which using Z clauses we should make more effort 2, London Underground upgrades, Highways is required to facilitate collaboration. to help them understand the disadvantages England’s road programme and the Environment We are also seeing an increasing focus by of unnecessary Z clause in terms of cost, risk Agency’s Thames Estuary programme. Together infrastructure clients on application of BS11000 premiums and inefficiency. they are worth more than £100 billion. Collaborative Business Relationships to the Thirdly, we should support the early It is exciting to see that NEC3 is, or is highly delivery of major projects, though the principles engagement and involvement of the supply likely to be, the contract suite of choice for apply equally to projects of all sizes. chain in projects, both to maximise the value the delivery of all of these megaprojects and I believe collaboration across the industry they can add and to support the development of programmes. It is also highly probable that will be supported by more consistent and collaborative relationships. collaboration principles will be a key part of their standardised methods and procedures based on And last but not least, we need to support the delivery strategies. the NEC3 suite. use of supplier selection procedures aimed at identifying the best suppliers who demonstrate Supporting and enabling collaboration Doing more to deliver best value the right collaborative behaviours. This will help The importance of collaboration in project The discussions at the NEC annual conference us to deliver successful project outcomes as delivery was emphasised in all the case studies highlighted a number of lessons learnt where we efficiently as possible. ● presented at the NEC annual conference. NEC is can and should do more to support the delivery recognised as being a collaborative contract suite, of best value in the use of NEC3 contracts. For further information please email info@ albeit that clause 10.1 of the Engineering and First, we need to see a greater involvement of neccontract.com or visit neccontract.com. NEC Australasia Users’ Group builds momentum TIM WARREN NEC AUSTRALASIA USERS’ GROUP SECRETARY Following our recent re-launch in New Zealand One of the first tasks has been to appoint a Art Gallery (see issue 73). in May, the Australasia Users’ Group is continuing new chair and to start planning the Australasia There is also a more global view in the to gather momentum. We have strong interest Users’ Group conference, which is now region, with more international performance in our planned meetings this year and new confirmed for 5 November at the Commodore comparators being used for Australasian membership enquiries are coming in too. Airport Hotel in Christchurch. construction businesses. We will also start planning for events in 2016 Overseas interests and experience are New NEC steering group and initiate the launch of expert sector interest becoming more obvious, and we are also Looking forward, our next steps have included groups, such as for buildings and facilities are seeing Australasian businesses and staff setting up an Australasia Users’ Group steering management. collaborating more with those in the Asia-Pacific group. One of its key roles is to identify the wants region. and needs of Australasian construction markets Strong pick up for NEC As a final note it is also great to see some and how best to support the introduction and Locally the New Zealand construction market of our members taking advantage of the NEC implementation of NEC3 contracts throughout is continuing to grow, with spending look set on-line help desk form, with great response times the region.