Sunday, 8 September 2013

BAM Nuttall's decision to settle out of court

Hugh Taylor has emailed me the following, which is about why BAM Nuttall decided to settle out of court with Cambridgeshire County Council:

Tantalisingly, the New Civil Engineer website posted a news story on 
Wednesday, with this beneath the headline:

"Bam Nuttall has explained its decision to settle in its dispute with 
Cambridgeshire County Council over costs to build its guided busway."

Given that Bam Nuttall has consistently refused to comment on the 
settlement, this was an intriguing prospect. Unfortunately, only NCE 
subscribers are permitted access to the details - and the story doesn't 
even turn up in the daily package fed to content aggregators such as 
Factiva or ABI/INFORM.

What does turn up in the package for 5 September, though, is a story 
about both the Cambridge and Luton busways. Much of the Cambridge 
section of this is a reworking of the County Council's press release, 
but there are a few points which are of interest, given that they come 
from an unbiased source, and one with a considerable reputation in the 
engineering world.

First, there's confirmation of the figures: "... Bam Nuttall last year 
issued a £43M counterclaim - so the settlement represents a £76M 
climbdown from the contractor's original position." This is the sum the 
County Council would have had to pay if it hadn't challenged the 
contractor's bill.

Then there's a clear explanation of just how little the "extra" work 
cost the Council: "It also means construction of the busway, which the 
council says was handed over two years late, cost the local authority 
£84.7M - just £800,000 more than the original price."

And finally this: "Bam Nuttall parent Royal Bam Group said the 
settlement had already been incorporated in its figures for the half 
year to 31 June 2013 and so would have no impact on profit forecast for 
the full year." I take this to mean that Bam Nuttall had anticipated 
this settlement some months ago - in other words, they had effectively 
given up the fight before the summer.

For anyone new to this saga, the NCE story provides a handy summary:

"The busway missed its original opening date in 2009, and the council 
charged Bam Nuttall a daily £14,000 fee for late delivery... After a 
number of attempts, the scheme was finally handed over in May 2011. Bam 
Nuttall then filed its counterclaim, citing mismanagement by the 
council's project manager Atkins as the cause of the delay. The council 
brought in Jackson Civil Engineering to complete additional work on the 
busway before it was finally commissioned in August 2011."

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