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Wembley bill soars due to steel delays
10:44 02 Jun 2005
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Multiplex could claw back millions of pounds from Dutch steel contractor Hollandia after the Australian firm blamed cost increases of £45m and a three-month delay on poor productivity of the steel element on the £757m Wembley project.
Following an internal ‘peer review’ after Multiplex revealed in February that it was likely to only break even on the contract, it discovered that steel levels provided by Hollandia had been well below the anticipated targets.
In January last year, Multiplex had estimated that to meet its accelerated December 2005 completion date for the project around 1,600t per month must be used on the site.
However, the figure has been nearer 1,400t per month, resulting in Multiplex having to accept a later completion date of March 2006. It will lose its £5m early completion bonus and is now expected to pay high penalty points to the client – Wembley National Stadium Limited.
Multiplex has rebudgeted the project to include: a further £14m to account for the reduced productivity of the steel erection; an additional £9m in site overheads; £9m to cover extra craneage and shift work; and £8m for other cost provisions, such as the penalties for overrunning, being added to the bill (see box).
If all now runs smoothly Multiplex will start a “progressive handover” of the project by 31 January 2006, with the full handover of the 90,000-seater stadium not expected until March 2006.
A Multiplex spokesman told CJ: “The productivity of the steel works, which is the main element of the contract still to complete, has been the real cause of the costs and delays. The recently reported concrete issue has been minor and no more than you would expect on a construction project.
“One of the issues on the steel contract has been that the agreement was not based on a fixed price basis and steel prices have gone through the roof.”
The spokesman was unwilling to comment on any future litigation against Hollandia or whether it had been penalised for the problems.
Multiplex was unable to rule out further cost overruns or delays on the project as it was now working to a timetable based on the current level of steel productivity being provided by Hollandia.
“This position assumes no change in the level of claims recoveries previously advised,” said a Multiplex statement. “The major risks to these include the ability to recover claims against third parties and the ability to meet the project’s programme.”
The problem with Hollandia follows a number of rows with the steel subcontractor it replaced, Cleveland Bridge, to which Multi-plex has had to pay millions of pounds in adjudications.
CJ tried to contact Hollandia for a comment without success.
Following an internal ‘peer review’ after Multiplex revealed in February that it was likely to only break even on the contract, it discovered that steel levels provided by Hollandia had been well below the anticipated targets.
In January last year, Multiplex had estimated that to meet its accelerated December 2005 completion date for the project around 1,600t per month must be used on the site.
However, the figure has been nearer 1,400t per month, resulting in Multiplex having to accept a later completion date of March 2006. It will lose its £5m early completion bonus and is now expected to pay high penalty points to the client – Wembley National Stadium Limited.
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Multiplex has rebudgeted the project to include: a further £14m to account for the reduced productivity of the steel erection; an additional £9m in site overheads; £9m to cover extra craneage and shift work; and £8m for other cost provisions, such as the penalties for overrunning, being added to the bill (see box).
If all now runs smoothly Multiplex will start a “progressive handover” of the project by 31 January 2006, with the full handover of the 90,000-seater stadium not expected until March 2006.
A Multiplex spokesman told CJ: “The productivity of the steel works, which is the main element of the contract still to complete, has been the real cause of the costs and delays. The recently reported concrete issue has been minor and no more than you would expect on a construction project.
“One of the issues on the steel contract has been that the agreement was not based on a fixed price basis and steel prices have gone through the roof.”
The spokesman was unwilling to comment on any future litigation against Hollandia or whether it had been penalised for the problems.
Multiplex was unable to rule out further cost overruns or delays on the project as it was now working to a timetable based on the current level of steel productivity being provided by Hollandia.
“This position assumes no change in the level of claims recoveries previously advised,” said a Multiplex statement. “The major risks to these include the ability to recover claims against third parties and the ability to meet the project’s programme.”
The problem with Hollandia follows a number of rows with the steel subcontractor it replaced, Cleveland Bridge, to which Multi-plex has had to pay millions of pounds in adjudications.
CJ tried to contact Hollandia for a comment without success.
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