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International construction firms dominate HS2 contracts bidding war

International construction firms dominate HS2 contracts bidding war

🕔14.Oct 2014

Global construction companies are competing for the right to build Britain’s £42.6 billion high speed railway from London to Birmingham, Manchester and Leeds.

More than 1,000 firms from across the world are attending two conferences organised by HS2, the company established by the Government to deliver the UK’s biggest and most expensive railway scheme for 100 years.

The conferences will give an opportunity to the construction industry to seek further information about the release of an initial £10 billion of tenders for preparatory work.

The most important of these is a £60 million contract to assess the condition of land between Birmingham and London where the first phase of HS2 will run.

The presence of the largest international companies is bound to raise question s about the Government’s insistence that HS2 will be a lifeline for Britain’s depressed construction industry.

Although much of the work is likely to be sub-contracted to British firms, ownership rights and a share of future profits will rest overseas if large foreign firms succeed in securing the largest high speed rail tenders.

According to a report in the Financial Times, the conferences are sold out and the attendance list reads like a “who’s who of the construction and engineering industry”, including ArcelorMittal, Siemens, Bechtel and Mace.

HS2 contracts due to be released during the next few months include one worth £2.9 billion for early stage tunnelling work; £2.7 billion for the surface route; £2.6 billion for stations; £600 million for enabling works; £1.5 billion for railway systems; and £350 million for design services.

The competitive tendering process is going ahead even though the high speed rail project is yet to receive formal approval. MPs won’t vote on a Bill to go ahead with HS2 until after next year’s General Election, although with the three main parties on board it is almost certain now that HS2 will go ahead as planned.

In the meantime, a House of Commons committee is considering almost 2,000 objections to the HS2 bill, many from landowners along the route and a House of Lords Committee is looking at the Economic case for HS2.

Construction work is set to begin on the first phase in 2017, with completion likely in 2026. The second Y-shaped section, from Birmingham to Manchester and Leeds, is due to be completed by 2033.

The promise of an HS2 terminus in Birmingham city centre will prove a major boost to regeneration and lead to the creation of 19,000 jobs in the Curzon Street area, according to city council forecasts.

The Financial Times reports that the biggest international construction and transport companies already battling for work on HS2. East Japan Railway, a Japanese rail network operator, has opened an office in London, while Hitachi, a Japanese rail company, has moved the headquarters of its rail business to Britain in what is seen as a pre-emptive move to win the contract to build 180mph trains for the line.

The Government has announced details of two new funds to support communities and local economies situated close to the route of HS2 Phase One.

Junior transport Minister Robert Goodwill said the Community and Environment Fund and the Business and Local Economy Fund would help people living close to the route between London and the West Midlands.

The Community and Environment Fund will support local projects that bring community and environmental benefits to areas affected by HS2. Examples of projects that could be supported include refurbishment of local community centres or sports grounds and environmental conservation and enhancement.

The Business and Local Economy Fund will support local economies and employment, for example, by supporting activities that increase footfall in areas affected by HS2 construction.

HS2 Ltd will be working with the not for profit charity New Philanthropy Capital, which has extensive experience of similar grant schemes, to ensure the funds are delivered in the most effective way possible.   They will also advise HS2 Ltd on eligibility and application criteria informed by engagement with local authorities and local enterprise partnerships.

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