Those responsible for busway overspend should be brought to account
On August 30, we learned that the busway financial battle had finally been settled at a cost in excess of £30million to the county’s Council Tax payers. This despite being told all along by the county council that it had a very good case and that there would be no additional cost burden.
The county council is now having to eat those words but at the same time trying to absolve itself by saying that the robust contract that was used prevented the situation from being any worse. This statement has an element of truth but is really a cover up for the fact that the county’s taxpayers could have been much better protected.
The question that should be asked of the county council is why did it put itself and its Council Tax payers at far greater risk by using option ‘C’ of the NEC form of contract rather then option ‘A’? Option ‘C’ is used when the extent of the works to be done cannot be fully defined and/or anticipated risks are greater. The contractor submits target prices for the work activities based on estimated costs plus a percentage for overheads and profit. During the course of the works, the contractor is paid by instalments of his actual costs plus the percentage for overheads and profit and on completion there is an adjustment to be made in accordance with an agreed formula of the difference. This can result in a final payment going either way. In the case of the guided busway this difference was an over payment to the contractor in excess of £60m that Cambridgeshire County Council considered was due to be paid back completely but BAM Nuttall had a different interpretation.
There would have been far less of a risk to the Council Tax payers of Cambridgeshire if the council had spent more time in getting the extent of the works better defined so that NEC Option ‘A’ could have been used wherein the contractor has to submit firm prices for the work activities. BAM Nuttall would then have been paid by instalments at the prices that they had quoted and by the time that the works were completed would have been paid nothing in excess. It may possibly have meant that BAM Nuttall would have submitted a higher price initially but at least the council would have known of this prior to placing its order and if the additional money could not be found had the opportunity of not proceeding.
In the years leading up to the award of the contract, there appeared to be few local people who were in favour of the busway, most wanted to see the reinstatement of the railway between St Ives and Cambridge and yet there were certain people within the council who were very much voicing their opinion in favour. The rush to get the project started may well have been to stamp out any opposition.
If the council and its consultants had spent a bit more time in getter the details better defined then option ‘A’ could have been used. Even if this had taken another year to achieve, it most probably would not have put the completion back any further and may very well helped to have improved upon it. More importantly it would have been BAM Nuttall that would have had to raise any additional financing that was required and it would have been them fighting to claim back any additional monies that they considered they were due. It is common knowledge that in any dispute involving money, the party that at the time is holding the money is always in the driving seat.
Someone, or some persons, in Cambridgeshire County Council made an erroneous decision regarding the setting up of the contract and should be brought to account. Hopefully the council has insurance in place to cover for such an occurrence.