Balfour and Kier count cost of Hong Kong rail link

Aaron Morby 9 years ago
Share

Balfour Beatty and Kier are suffering major cost overruns and project delays on different contracts on an ambitious rail scheme to link Hong Kong to the Chinese mainland.

The extent of the problems on the £5.4bn Guangzhou-Shenzhen-Hong Kong Express Rail Link were revealed ahead of coming under close scrutiny today by the Hong Kong legislative council.

Two of the three major problem contracts contain UK joint ventures involving the two contractors, which are understood to be putting a cash drain on the firms.

The region is also suffering soaring labour costs, which have doubled for most trades, since contracts were awarded back in 2010.

A report released by mass transit operator MTR ahead of the crucial finance meeting today reveals the overall 23km project is now nearly a third over budget at £7bn and is expected to be delivered in the third quarter of 2018, nearly three years late.

With costs running out of control, the operator and project manager MTR is calling for more cash from the Government.

Australia’s Leighton and local contractor Gammon – which Balfour holds a 50% stake -took the contract to deliver the complex West Kowloon Terminus Station North, singled out as one of the trio of problem jobs.

West Kowloon station

West Kowloon Station

This £720m station job (above), known as contract 810A, is by far the biggest in the entire programme.

MTR’s report warns “over the last 12 months, new construction challenges have arisen, the greatest of which is the complexity in the fabrication of the WKT SEB (Contract 810A).”

This has now become the key issue on the critical path to the scheme’s completion pushing the whole project into 2018.

The JV contractors hit early problems keeping up with the concrete programme and now the complex station design is causing steelwork problems, which has in turn thrown back glazing schedules.

Kier’s £120m contract with joint venture partners Kaden and OSSA for 2.6km-long drill and blast twin-track single-bore rock tunnel was also singled out as a problem contract.

The Ngau Tam Mei to Tai Kong Po Tunnels know as contract 824 achieved break-through in April.

Kier Hong Kong Transit tunnel

The contractors are now struggling to fit tunnel lining (above) to programme, due to the complex logistics, unexpectedly high water and labour shortages.

Overall, the tunnel lining works are running 7 months late, consuming all the float for the critical activity, states the report.

Latest news

McLaren gets green light for 45-storey Leeds tower

Landmark Wellington Square scheme will see 464 flats built with 360,000 sq ft of offices
1 day ago

Heavy rain causes 1.9% construction output fall

Hopes remain undampened of a resi-led recovery this summer
1 day ago

Taziker restruture to return to profitability after £1.2m loss

Founders bought the business back from private equity after last year's loss
1 day ago

£220m London wharf homes scheme approved

285 homes to be built beside protected Albert and Swedish Wharves in Wandsworth
1 day ago

Major project veteran named civils director for Sizewell C

David Speight previously worked on Hinkley, Heathrow and HS2 client teams
1 day ago

Morgan Sindall lands £19m Milton Keynes hospital job

Crane lifts to be carefully co-ordinated to ensure air ambulance remains active
2 days ago

Clancy bolsters civils leadership team

Daniel Tonkin and Simon Hyams join as operation directors of water and infrastructure
2 days ago

Balfour names new project boss for HS2’s super-hub station

Steve O’Sullivan replaces Nigel Russell who was promoted to CEO of Balfour's HS2 ops
2 days ago

Buckingham Group supply chain hit doubles to £256m

Total owed to unsecured creditors soars as surety providers finalise claims
2 days ago

Builders demand an end to police plant bans

Call to suspend all embargoes on moving mobile cranes and large site kit
2 days ago

Green light for £65m Blackpool multiversity campus

Education campus of 350,000 sq ft will be delivered in phases
2 days ago

Vinci signs £138m Sheffield steel forge expansion deal

Sheffield Forgemasters signs landmark contract after two years of pre-construction works
3 days ago

McAlpine hires HS2 programme boss to head defence arm

Armed forces logistics expert Mike Hickson takes role as MD of defence
3 days ago

£200m carbon capture plan for Deeside site

Energy from waste operator enfinium looking to invest in North Wales plant
2 days ago

McAleer & Rushe promotes five staff to contracts directors

Design and build contractor targets £500m revenue next year
3 days ago

Consultant quartet win Government estate upgrade deal

Government Property Agency selects Arcadis, Tetra Tech, AtkinsRéalis and McBains
3 days ago

Resi towers pioneer to transform Liverpool site

Beetham founder Hugh Frost to help develop 1,200 new homes
4 days ago

Construction Manager of the Year crowned

Galliford Try's Barry Kingscote wins coveted prize: Full list of winners
3 days ago

Landsec £250m London terraced office job approved

Skanska tipped for 20-storey Hill House scheme near Fleet Street
3 days ago

Lendlease tops March contracts league

BAM and ISG rank third with big contract wins
3 days ago

Vistry strikes deal with Homes England for 1,000 units

Firm's timber frames factory will supply most of the Midlands houses
3 days ago

Morgan Sindall go-ahead to build 23-storey Salford resi job

Funding deal with CBRE allows latest project on bank of River Irwell to proceed
4 days ago

Unite Students gains planning for London and Bristol schemes

RG Group will build landmark Stratford tower and Freestone Island projects
4 days ago

Rolls-Royce gets go-ahead for 1.1m sq ft expansion in Derby

Major expansion of Raynesway campus planned to met submarine fleet orders
4 days ago

GMI Construction edges back into profit

A year of controlled consolidation helped generate £0.9m profit but cash at bank dropped to £10m
4 days ago

Balfour gets final sign-off for HMP Highland at £209m

Deal struck for delayed Inverness prison after costs rocket
5 days ago

Renew buys bridge maintenance business

Contractor boosts highways division with £5m acquisition
4 days ago

HS2 tests market for £150m mass transit job

2.4km long elevated Automated People Mover to go out to tender in 2026
4 days ago

Cardo completes fourth acquisition in a year

Expanding Welsh building maintenance specialist reaches £170m turnover
5 days ago

Watchdog clears Heidelberg takeover of Mick George

Four quarries and five ready-mix operations to be sold to meet competition concerns
5 days ago

Contractor services