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HS2 price hike warning over rejection of risk allocation tool

Leading geotechnical engineers have said that the cost of delivering HS2 could rise sharply as a result of the use of target cost contracts without geotechnical baseline reports (GBRs).

One engineer, who has worked closely on the project, has suggested that the price rise resulting from the client effectively passing all risk to the contractor could be as much as 30%.

The engineer said they were “dismayed” that HS2 has chosen not to use GBRs, which have been widely used on other major UK projects (see box), and the concern over the issue is widespread among a number of other individuals that GE has spoken to.

Nonetheless, HS2 has dismissed these cost claims and said that it did not consider GBRs to be necessary at the design stage.

An HS2 spokesman said: “On phase one of HS2, GBRs have not been considered necessary due to the way our civil engineering contracts are structured. However, they have not been excluded from the project altogether. The first stage of our main works civils contract is focused on design development and the consideration of key engineering issues, including the detailed assessment of ground risk before moving to construction.”

Nonetheless, a number of engineers have told GE that GBRs were not possible due to the lack of detailed ground investigation data available in some areas.

“HS2 has not got enough data to be able to get the work to target cost,” one told GE. “When you look at the availability and quality of the ground investigation data, in some areas it is good but in other there is none and there is a risk associated with that. Contractors will price according to this risk and so the target cost will go up.

“I fear that the price hike could be as much as 30% which makes the project unaffordable and will result in delays.

“Some will say that the technical standards are too onerous but it is the risk allocation that is the problem. HS2 choosing not to use GBRs places all of the risk on the contractor and infrastructure owners should take some of the risk.”

He told GE that a number of consultants were asked to develop GBR 0 by HS2 ahead of the hybrid bill. “GBR 0 does not exist in any guidelines for use of GBRs and was a concept developed by HS2,” he said. “It is essentially a GBR nothing.”

He said that the GBR 0 was supposed to gather together available data and then be used to develop the GBR D used in design and GBR C for construction as ground investigation data became available but HS2 has not progressed the concept beyond GBR 0.

 

GBRs - the wider industry experience

Geotechnical Baseline Reports are a way of allocating and managing risks associated with subsurface construction. They are seen as a commercial document and not an interpretive report. They are designed to clearly define what is expected and what isn’t and allocate the financial risk compared to an interpretive report which can be ambiguous.

They have been widely used on recent major ground engineering and tunnelling schemes, including Crossrail and the Lee Tunnel and are currently being used on Tideway. Use of GBRs has recently been mandated by London Underground through its updated tunnelling standard.

“From my point of view the use of GBRs has become recognised as industry good practice for very good reason,” said Arup associate director Stuart Hardy. “In the bad old days all ground risk was perceived to be the contractors responsibility, but this inevitably lead to ‘unforeseen ground conditions’ claims that would drag on and on, with only the lawyers being certain winner.

“GBRs clearly define the assumptions that should be made with regards to ground risk. Anything within the parameters defined in the document is the contractors risk and should be costed, anything outside is the clients. It couldn’t be clearer.

“It is possible to write a bad GBR where either the parameter range is too tight and the client picks up more risk or too wide and the contractor’s price has to include for it. Overall GBRs are a massive step forward in managing and allocating ground risk.”

The use of GBRs is also widely supported by geotechnical contractors. One told GE: “I suppose the overall summary would be that used correctly and genuinely they are a useful tool but if they are used to try and rule out any possibility of the employer retaining risk then their value is very limited.

“On a significant tunnelling project a few years ago we were required to produce a GBR as part of our tender submission to sit alongside our technical and commercial information. Presumably this was so the employer could see clearly where the division of ground risk lay in our tender and could compare different tenderers’ interpretation of the factual information and their appetite for risk.”

 

 

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