Trust to split cost savings on Midland Met hospital job

Contractors considering completing Carillion’s stalled Midland Metropolitan Hospital have been told the project budget has been capped at £320m.

But The Sandwell and West Birmingham Hospitals NHS trust has pledged to share any cost-savings identified on the project once the preferred bidder is selected. Firms will have to accept full MEP design risk on the project.

Now firms have been formally invited to apply for shortlisting to complete the half-finished hospital project.

Three firms will be shortlisted to enter competitive dialogue for up to six months. Balfour Beatty, which has a £13m contract to safeguard the unfinished hospital, and a Kier/N G Bailey joint venture are expected to pitch for the job. Bailey was managing the design and installation of the full £80m MEP package for Carillion.

Sir Robert McAlpine, Laing O’Rourke and Graham also recently attended a bidders briefing day.

The winning contractor is expected to start in late October 2019 completing the project in 2021.

Trust preferred bidder procurement plan

During the preferred bidder stage the Trust will work with the chosen contractor to increase outcome-certainty on items on the contingency schedule to reduce cost exposure to the project.

As clarity is achieved, the revised costs for each item are expected to crystallise and be re-allocated into the price elements.

At the end of the preferred bidder stage, the balance of the contingency schedule will be liquidated, with any remaining items moved across to the price elements.

The Trust has warned that it would not accept the contractor price to increase during the preferred bidder stage with the contract mechanism only allowing for price reduction.

The fee or the risk management payment will similarly not be increased during the preferred bidder phase. Saving generated by any reduction will be shared on a 50:50 basis with the preferred bidder.

This gainshare, which is not capped, will be added to, and treated in the same manner as, the risk management payment.

from Construction Enquirer http://www.constructionenquirer.com/2019/01/09/trust-to-split-cost-savings-on-midland-met-hospital-job/

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