Costain Welsh road job £100m over budget and two years late

Aaron Morby 1 month ago
Share

Costain’s Heads of the Valleys A465 road project in Wales is now expected to come in more than £100m over budget and more than two years late.

Costain contract involves seven bridges and 12.5km of retaining walls
Costain contract involves seven bridges and 12.5km of retaining walls

Latest Welsh Government estimates suggest improving an 8km stretch of the road between Gilwern and Brynmawr will cost £321m and now not be completed until next year.

These big cost overruns have tipped Costain and the Welsh Government into a simmering dispute about who is liable to pay certain costs.

A report issued today by the Auditor General for Wales, commissioned as a result of the dispute, shines a light on problems on the project.

Some of the £100m increase relates to design changes requested by the Welsh Government and extra measures to address environmental impacts, but the engineering and contractual challenges experienced on the project account for most of it, concludes the report.

Costain argues that the latest estimates of Welsh Government liabilities are understated, while the authorities argue the figures represent a reasonable allowance for its liabilities at this stage.

It also emerged that Costain refused twice in 2017 to sort issues out using adjudication, with the Welsh Government finally commencing adjudications in 2018 against Costain on three separate issues without its agreement.

Since then, the pair have been involved in separate adjudications and arbitrations on different project issues with varying success.

The project was progressed using early contractor involvement with Costain first signed up in 2011. By December 2014, at the start of the detailed design and construction contract, target costs stood at £223m.

The project involves building on a steep-sided valley – the Clydach Gorge – and passes through the Brecon Beacons National Park. It forms part of a larger scheme to improve 40km of the A465 between Hirwaun and Abergavenny which is now expected to cost around £1bn overall.

The final cost and timescale for Costain’s project remain uncertain. Work was due to finish in September 2018, but full completion is now expected to run to Spring 2021.

Auditor General for Wales, Adrian Crompton said today: “This is not the first time that the Welsh Government has faced difficulties with significant cost increases and delays on road projects and it is vital that lessons are learnt for future infrastructure schemes.

“Despite some wider benefits being delivered and expectations about the eventual impact of the road improvement, those living and working locally are paying a higher than expected price for the ongoing delays and disruption during construction.”

Six sections of the A465 with a range of procurement models


In 2000, the Welsh Government anticipated that all six sections could potentially be completed by 2009, for £268m

In the previous Auditor General’s January 2011 report, the Welsh Government expected the entire A465 scheme to be completed by 2020 for £763m.

But the timetable has slipped and the Welsh Government estimates the scheme will complete in 2025 at a total cost now of around £1bn.

A Welsh Government spokesperson said: “This project is widely recognised as one of the most complex road engineering projects in the UK at the moment, presenting significant construction challenges.

“We recognise the frustration caused by the issues highlighted in the report, and will, of course, consider its findings. Lessons from the project so far have already been incorporated into subsequent projects.

“We remain confident that this ambitious and complex scheme will be completed as intended and will bring significant benefits to the region.”

Latest news

Boris urged to save UK construction industry

Industry leaders demand tax breaks, retentions returned and quick payment from clients
9 hours ago

Laing O’Rourke cuts pay for 8,000 workers

Contractors confirms cuts of up to 30% as part of "war effort" during coronavirus crisis
8 hours ago

Free training cash offer extended to larger companies

CITB grants of up to £25,000 now available to bigger contractors
4 hours ago

Kier closes Reading office with over 40 job losses

Lack of pipeline work and cost-saving plan cited as reason for closure
14 hours ago

Amey pledges full pay for sick and self isolating workers

U-turn on statutory sick pay after claim workers faced wealth or health choice
14 hours ago

Taylor Wimpey cuts exec pay and bonuses

Board takes 30% pay cut and cancels today's 2% annual pay increase
13 hours ago

Secretary of State pays tribute to construction industry

Letter from Alok Sharma spells out current official government guidance on keeping sites open
1 day ago

Amey/McAlpine told to start M6 junction 19 job

Enabling works get underway on £50m Cheshire motorway junction
14 hours ago

Clugston and Covid 19 sink Leeds civils firm

Coronavirus contract termination with zero payment notice proves final straw for Oaklands
14 hours ago

Boost your online presence – join the Enquirer Directory

Site for suppliers and buyers showcases products, services and latest stories
2 years ago

Giant Battersea Power Station site shut until end of April

Client decides to extend work pause after discussions with Mace and McAlpine
14 hours ago

Coronavirus update for construction: Wednesday April 1

The latest advice and information from industry trade bodies
14 hours ago

Network Rail calls for fresh engineering ideas for tunnel upgrades

Hunt on for less disruptive solutions to upgrading ageing railway tunnels
14 hours ago

Police stops create more confusion for contractors

Sites can stay open but officers are trying to stop builders getting to work
2 days ago

William Hare chief executive dies after contracting coronavirus

David Hodgkiss was the grandson of steel company founder William Hare
2 days ago

Costain banks on critical projects to save 50% of revenue

Directors join ranks of firms taking 30% pay cut
2 days ago

Plans go in for £258m Birmingham resi tower

Moda submits 722 homes for rent plan as it looks beyond coronavirus epidemic
2 days ago

Coronavirus update for construction: Tuesday 31

The latest advice and information from industry trade bodies
2 days ago

BAM Construct restarts work on sites

Mace pauses all work for another week under "rolling suspension"
2 days ago

Hard hat cameras help sites keep working remotely

Technology helping contractors cope during coronavirus crisis
2 days ago

Laing O’Rourke top bosses take 30% pay cut

Around 90 senior directors will see salaries reduced
2 days ago

Kier cuts staff salaries by up to 20%

Salary cuts among 6,500 staff as core sites remain open, but Kier Living jobs closed
3 days ago

Police threaten to fine contractors on way to work

Willmott Dixon asks subcontractors and staff to carry letters to avoid fines
5 days ago

Taylor Woodrow return to profit lifts Vinci UK

Civils arm saw 13 of 17 projects it bid delayed or cancelled
2 days ago

JCB reopens factory to start building ventilators

Plant giant will fabricate steel control panel housings for Dyson designed ventilators
3 days ago

Steel and brickwork trade bodies take stand on Covid 19 safety

Trade bodies lead fight back against bullying main contractors and clients
3 days ago

£300m London new-build housing deal winners

Ardmore, Bouygues, Kier and Midgard win places for first time for £10m-plus schemes
3 days ago

Builders in cross-fire as some clients in Scotland fail to halt work

Contractors blame clients for not instructing work to stop
3 days ago

Unsafe cladding replacement work a priority to continue

Latest government coronavirus construction policy update
4 days ago

Live webinar for contractors interested in £600m power plant

Virtual procurement event for major north London project: Register now
3 days ago

Contractor services