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 line could be changed.
However, Quinn today told financial publication City AM that he was less than enamoured with the idea.
When asked whether the contracts should be amended, Quinn told the paper: “No, not really, the contracts for the time they were written were appropriate.
“There’s 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.”
He said that if liabilities for the cost overruns suffered by the project so far had fallen onto the scheme’s contractors, “you wouldn’t have a construction industry in the UK”.
His comments seem to contradict Foster’s testimony to Parliament’s Public Accounts Committee (PAC), where he said: “I’ve personally spoken to all of the CEOs of the parent companies.
“We’ve got 14 significant entities that sit above the JVs [joint ventures], and all have expressed a willingness to discuss and work through a renegotiation.”
The original HS2 contracts were awarded in July 2017 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).
Initially valued at £6.6bn, the contracts were renegotiated in 2020 to take into account project-wide cost inflation.
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.
In 2023, HS2 Ltd reported that the contract values had risen by £6bn (in 2019 prices) since renegotiation.
In February, a PAC report said HS2’s construction contracts were “extremely poor value for money” and that the committee was “unconvinced” that they could be renegotiated to achieve significant savings.
The report described HS2 as a “cycle of repeated failure” and “a casebook example of how not to run a major project”.
The committee found HS2 Ltd and the Department for Transport had “failed to work together effectively” and lacked the necessary skills to deliver the programme, adding that early plans for Euston “carry huge risks”.
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’s management.
“There have also been significant delivery issues, including cost underestimation with large increases in design costs and lower-than-planned productivity,” she said.
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Colin Marrs