Tag Archives: AMEC

UK – Amec appeal refused over £94m costs on submarine job

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Amec’s legal battle to reduce the amount it must pay of a £93.6m cost overrun on a nuclear submarine jetty contract at Faslane has failed.

Now Amec and partners Morgan Sindall face a huge bill as they hammer out with the Ministry of Defence what proportion of cost overruns were properly incurred on the troubled project.

A costly legal battle has been running as both firms struggled to finish the Faslane SSN Berthing Project, first revealed in the Enquirer, more than four years late and at an expected final cost of £235.7m.

When the project was first awarded Amec was sole contractor for the jetty. But after Morgan Sindall acquired Amec’s construction arm for £26m back in 2007, the job became a 50:50 joint venture between the two firms.

Under the terms of the contract, the contractors are liable to pay the first £50m of overruns on the agreed maximum target price for the job, which has itself already risen from £89m to £142m.

This element was not challenged in the latest legal contest, but Amec held that the remaining £43.6m cost overrun should be split between client and contractor, with Amec due any costs howsoever incurred.

An arbitration panel rejected this saying the only costs payable were the actual costs reasonably and properly incurred within the contract.

A High Court judge has now refused Amec’s attempt to appeal this decision in a written ruling this week upholding the arbitration decision.

Source – Construction Enquirer

UK – Ruling on submarine facility costs

Faslane Naval Base (Scotland)

The cost of creating a nuclear submarine support facility at a Royal Navy base could be £145 million more than the initial estimate, a High Court judge has said.

Experts originally quoted an £89 million target figure for the facility at the Faslane base in Argyll and Bute, said Mr Justice Coulson.

The current “agreed maximum price” was around £140 million, said the judge. But engineers thought that the “ultimate cost” could be as much as £235.7 million.

Details emerged after lawyers debated terms of a contract, drawn up when the Ministry of Defence (MoD) engaged engineering firm Amec in 2000, at the High Court in London.

Mr Justice Coulson said the MoD and Amec could not agree on who should foot the “extensive overrun” bill.

The judge said a difficulty had arisen out of “badly worded” contract provisions.

He decided that the MoD should pay a “reasonable” amount but not costs incurred as a consequence of Amec’s contract breaches.

His ruling did not specify exactly how much of the overspend would be footed by the MoD and how much by Amec.

He had heard legal argument at a hearing in December and published a written judgment.

Source – Paisley Daily Express