London roads upkeep JV loses court battle with TfL

Aaron Morby 6 years ago
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A joint venture working on road maintenance in central London has lost a High Court battle with Transport for London over work rates.

Colas, VolkerHighways and AECOM got involved in a rates row arguing that strict working time constraints placed on it by TfL delayed and prolonged work requiring extra shifts and added costs.

The CVU joint venture believed there would be a window for night-time noisy works of 4.5 hours between 7.30pm and midnight. In practice this was severely curtailed by permit conditions.

CVU argued it was therefore entitled to claim for the cost impacts of the restriction with revised rates and prices. But TfL maintained that agreed rates and uplifts in the existing agreements covered all limitations or restrictions on working conditions.

CVU announced that it was planning to quit its framework agreement in February, which was due to run to March 2021, but said this was due to removal of Government operating subsidies for road maintenance and not as a result of the rates dispute.

Ringway Jacobs has since taken on work and staff in the central London area where CVU was operating.

Now a High Court judge has ruled that TfL was right to argue that previously agreed rates applied under the London Highways Alliance Contract framework.

Justice O’Farrell said: “CVU makes a valid point that the framework agreement does not contain definitive hours and other conditions in which the works under task orders must be carried out.

“That introduces uncertainty as to the duration, scope and cost of work required. Any requirement by CVU to price such uncertainties would result in uncommercial high rates.

“There is a risk that contractors could include a premium for the risk of uncertain restrictions on working if forced to price them at the outset.”

The judge added: “However, that is balanced by the competitive tendering that applied for the framework agreement, and the volume and spread of works, from those at high risk of imposed restrictions to those at low risk of imposed restrictions. The inbuilt uncertainty introduced risk for both parties that could be assessed and evaluated.

“The purpose for which the schedule of rates was required was to provide consistency and certainty in the pricing of the works. The use of a schedule of rates enabled TfL to evaluate the tenders on a fair and equal basis. The fixing of rates and prices for the framework agreement provides opportunity and risk for both parties.

“If CVU undertakes the work instructed in a shorter duration or at lower cost than anticipated, it will receive a ‘windfall’ and TfL will have ‘overpaid’. If CVU incurs greater costs than anticipated, it will have to bear the loss and TfL will have made a saving.

“It was a matter for each party to assess the risks associated with permits issued and to price those risks accordingly.”

A spokeswoman for CVU said: “CVU would like to reiterate that they are in discussions with TfL to consider stepping down from core work in the central London area.  This action was agreed prior to the result of the recent court case being announced, and is in response to the removal of the government operating subsidy.”

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