Bridge that Gap: Great Central Railway News

Fixed price isn't necessarily as secure as you suggest.

 

As it happens, I do (it's my day job). I agree no price is ever fixed, but the more risk that is priced and fixed, the more certainty there is.

Yes, you need to pay more to get more fixity, but you can fix it a lot more than most HS2 contracts were.

 

I'd agree on HS2. I'd suggest that the fiasco of the Edinburgh trams shows how tricky it can be to cost those risks properly, and get the right result. I do also recognise that civils may well be more amenable to properly costed risks than my world (commercial IT).

 

AIUI, Edinburgh trams fiasco was caused by a total failure of the council to understand and manage their contract.

Civils are less susceptible than (AIUI) IT for eg version/technology change (nobody has updated soil to the best of my knowledge), and you have mucb less risk of "why don't we get it to do x"-itis. However the ground is fundamentally unknown until you dig it.

The critical point is to de-risk as far as possible, doing surveys/boreholes/trial piys etc. The advantage of telling the contractor they get no more money for ground is to make them much more incentivised to get it right first time. (Equally, you need them to have the time and the resource to do the investigations).

None of it's rocket science, but the rush to start and the short-term gains of risk-sharing seem to blind everyone to these facts every time.

 

I'm aware of a large civil engineering job that was 2/3 complete, at which point the principle contractor said, due to the rising cost of materials (as a result of Brexit and COVID) they could not complete the job as originally costed- but would finish the work on a cost+ percentage basis to mitigate the risk.

 

Precisely my points - and why I'm far from convinced that a fixed price is any more than part of the jigsaw when making sure that a contract will deliver to time and budget. I can well believe that civils are much less susceptible than IT, given my experience in the IT industry is that customers are a) commonly very unwilling to pay for discovery work and b) very poor at understanding the implications of late changes.

 

a) and (b) are pretty much universal... luckily enough civils clients are repeat buyers who invest in, and trust, their consultants.

Of course the contract isn't the whole picture, but it's amazing how often laying everyone's duties and liabilities out and having them sign them and not accepting "oh we'll just manage that" or "it'll never happen" flushes a lot out.

I have only once seen an NEC option C arrangement (a target cost-based contract with pain/gain shares) deliver real value was where the client invested in a pm team that was as big as the contractor's.

I'm sure the GC team have looked into all this, but in the same way that I don't specify materials, I hope they have had their contracts drawn up by an appropriate professional.

 

And if they'd be going cost+ from the outset, why would that be better?