Balfour and Kier count cost of Hong Kong rail link

Aaron Morby 9 years ago

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.

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