Guided Busway – settled out of court in the councils favour

For some time the Lib Dems, under the leadership of Kilian Bourke, had predicted the council having to pay tens of millions of pounds extra for the guided busway. As usual, they played the contractual difficulties for political gain without a thought for the people of Cambridgeshire. As usual, they were wrong.

In particular, the Lib Dems, used the guided busway as a center piece for attacking the Conservative led council. Almost daily Kilian would seek updates, massage the figures to make things appear as bad as possible and then run to the press.

The facts are now clear for everyone, as they were to me. BAM failed to deliver on a robust contract and then attempted to avoid their responsibilities. They were given comfort by the Lib Dems attacking the council which has cost everyone more than it needed to. See below for the update from the councils website.

“The guided busway legal dispute with contractor BAM Nuttall has been settled out of court by Cambridgeshire County Council.

A dispute over the cost of building the Cambridgeshire Guided Busway has been settled with contractor BAM Nuttall agreeing to pay the County Council £33 million – a move of £76 million in the Council’s favour.

The settlement means the Council will have paid BAM Nuttall £84.7 million to build the Busway. The original price was £83.9 million.

Cambridgeshire County Council’s Cabinet agreed to the offer from BAM to settle the dispute following discussions and agreement among all political groups.

BAM were two years late in handing over the project and claimed the Council owed them around £70 million more than the price they had originally quoted, leading to a protracted legal dispute. This necessitated the Council finding extra money to protect the interests of local taxpayers and to get back the tens of millions of pounds owed to the authority. This included paying for legal and staffing costs to bring BAM to a point where they accepted the Council’s arguments.

The Cabinet agreed to accept BAM’s offer to settle the dispute which will avoid incurring further legal costs in pursuing the case through the court process.

The Cabinet also wishes to conduct a review to see what lessons can be learned locally and nationally from our experiences.

The contract the Council had in place has meant that BAM Nuttall settled with the cost of construction coming in within the range originally set by the Council. This is despite BAM claiming the Busway had cost them £152.5 million to build and that the Council should pay them an extra £43 million on top of the £117.7 million the authority had already paid them.

However, following the threat of legal action and a mediation process, instead, the company has agreed to pay £33 million to the Council in addition to the Council retaining various monies that it had withheld under the terms of the contract.

Around £126 million had been budgeted to pay for the whole Busway scheme – including construction and other costs such as land acquisitions. Some £92.5 million of this money was provided by Government with another £26 million of section 106 monies from developers and the rest in transport grants and other income.

Due to the legal process and the time taken to reach a settlement with BAM Nuttall, the cost of the scheme has risen – mainly due to the level of legal fees the Council has had to incur in order to fight the case.

This means the total cost of the Busway, including land and staffing costs, as well as interest, is £152 million. Already the Council has found and paid £17.8 million of that gap with £8 million to find. This payment will be spread over 25 years through the capital budget.

Cambridgeshire County Council Leader Martin Curtis said: “I am pleased that this settlement has been agreed and that we can move on from what has been a difficult and time consuming dispute for us.

“It is clear that the Council was right to take the bold decision to provide better transport options for residents in one of the fastest growing parts of the country; and right that we signed a robust contract with BAM Nuttall.

“The Busway is a huge success and way ahead of passenger and business case forecasts. What is deeply disappointing and frustrating is that it has taken this long and cost us so much money to win our arguments and stop BAM Nuttall from trying to take tens of millions of pounds away from local taxpayers. BAM’s unwillingness, until now, to recognise their financial liability means they have tied up and cost Cambridgeshire taxpayers money which could have been better spent on our communities.

“We have always been very sure of our case and would have been willing to go to court to fight that case. However, following discussions with all group leaders, we felt that we would rather have certainty and settle the matter than risk mounting legal costs. It is clear from the analysis of our professional and legal teams that, were it not for the strong contract we had in place, BAM would never have settled. We are, therefore, now going to review and learn from our experience to see how we can help to stop this happening locally and nationally in the future.”

Since it opened in August 2011 the Busway has proven very popular with passengers, with 5.6 million journeys having been undertaken, well above expected levels, and has helped to reduce traffic levels on the parallel section of the A14.”

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