National Grid looks to ditch contractor alliances

Aaron Morby 11 years ago
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National Grid Electricity Transmission is considering a major shake-up of procurement for its massive overhead powerline construction programme.

The power supply company is considering dropping its massive alliance arrangements with contractors and return to individual design and build contracts.

National Grid hopes the shift back to traditional engineer, procure and construct deals with contractors will deliver big savings as competition hots up and big international firms are lured in.

The firm stressed it would keep its options open until existing alliance agreements with its 15 contractors are due to be renewed in 2017.

But procurement bosses have also gone ahead with the plan and invited contractors to prequalify for a new £2.5bn framework to deliver EPC contracts.

It aims to select around six consortia to bid for individual contracts over a four year period.

The aim is to run this tandem with the existing alliances, with over-head powerline work carved up between both procurement routes.

A source told the Enquirer: “The move has surprised many. But with big cost efficiencies expected over the next control period, National Grid are looking at what savings can be made through a more traditional route.”

“The hope is major international companies will be drawn in by the promise of big contracts and deliver greater value for money.”

The move will be greeted with concern among the major contractors who are counting on large steady stream of work from NGET.

One contractors said: “The whole move seems to fly in the face of conventional wisdom. It feels like we are going back to the future.”

Earlier this year Balfour Beatty signed a five-year contact extension worth around £750m under the Electricity Alliance East partnership.

While joint venture partners Amec and Babcock took a £650m deal for the Electricity Alliance West framework.

Other major partners include a Morgan Sindall and Vinci Energies joint venture and Carillion.

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