The estimated construction cost per km of the Welsh Government’s recent A465 dualling contract is more than double that of other comparable current schemes in the UK.
The Government says the high cost is down to site conditions rather than its use of the Mutual Investment Model (MIM), a new form of Public Private Partnership.
For dualling schemes on the A30 Chiverton-Carland Cross in Cornwall, the A6 Dungiven-Drumahoe in Northern Ireland and the A9 Luncarty-Pass of Birnam in Scotland, cost per km ranges from £8.6m to £21.6m. Their average cost per km is £12.8m.
The A465 Dowlais-Hirwaun contract, awarded last autumn, has an estimated construction cost of £33.3m per km, 160% higher than the average for the schemes in England, Northern Ireland and Scotland.
The cost of the A465 Gilwern-Brynmawr dualling, where completion has been delayed by topographical and other complications, is even higher, at £41.5m per km.
The Dowlais-Hirwaun construction consortium will cover the scheme’s estimated £590m cost. After completion in 2025, it will operate the road for 30 years and receive annual service payments from the Government totalling £1.14bn, excluding VAT and inflation.
Asked whether the MIM had resulted in bidders including large risk allowances in cost estimates, a government spokesman said risk apportionment had formed a large part of discussions with bidders during procurement.
‘We are satisfied that using the MIM we have achieved optimum risk distribution and placed risk with the party best placed to manage it. The scope of site investigations undertaken was developed in conjunction with bidders, and findings were made available to them in developing their tenders.’
Asked what benchmarking was undertaken, he said: ‘Simple cost-per-kilometre comparisons between different schemes do not take into account the differences between the scope of each scheme and site conditions.’
Both of the current A465 dualling schemes were ‘significantly challenging and complex projects,' he added.
