December 8 2013 Latest news:
Friday, August 30, 2013
THE long-running dispute about who should pay the multi-million overspend on the guided busway looks to have finally been settled.
Cambridgeshire County Council today (Friday) announced that its contractors for the busway, BAM Nuttall, had agreed to pay £33million of the overspend.
The money will be repaid in addition to the funds the council withheld under the terms of the contract. However, because of the legal wrangle, CCC will still have overspent on the scheme by nearly £26m.
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.
“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.”
Construction of the busway was originally to have cost about £117m, with £126m set aside for the entire project, including the purchase of land.
CCC said the settlement means it will have paid BAM Nuttall £84.7m to build the busway against its original price was £83.9m – other money for the construction came from grants, etc.
But BAM claimed the construction of the busway had cost it £152.5m and that the Council should pay them an extra £43m on top of the £117.7m already paid.
Under the terms of the construction contract, the county had to pay for the work and then claim back the overspend and it looked as if that claim was going to be heard in High Court.
CCC had to borrow £64.2m to cover the cost and was paying more than £2m a year in interest on the loan. But it was always adamant that it would reclaim the money, stating that the busway project contract limited its share of any overspend to no more than £5m.
BAM Nuttall was also confident of its position and lodged a multi-million counterclaim, blaming consultant Atkin’s, the council’s project manager, for delays in completing the scheme.
However, following the threat of legal action and a mediation process, BAM agreed to pay £33m to the council.
But CCC – and taxpayers – will still be out of pocket.
Due to the legal process and the time taken to reach a settlement, the overall cost of the scheme (rather than the construction cost alone) has risen from £126m to £152m.
CCC said this was mainly due to legal fees built up fighting the case. This has left CCC having fund the gap. It said it had already paid £17.8m and had £8m to find – a payment that will be spread over 25 years.
Away from the legal arguments, services on the 25km-long busway, which runs between St Ives and Cambridge, have proved to be popular with the public since it opened on August 7, 2011.
In its second year of operation it achieved more than three million passenger journeys, narrowly missing out on its third year operating target of 3.15m passengers.
During its first 12 months the busway recorded 2,509,534 passenger journeys, beating its target by more than half a million.