Heads of the Valleys dualling scheme to cost over £100m a mile

17/11/2020 | RHODRI CLARK

The Welsh Government has denied understating the construction cost of the final A465 dualling scheme as details of the future cost to taxpayers over three decades have belatedly emerged.

Last week, when announcing the Design, Build, Finance and Operate contract award for the 11-mile Dowlais-Hirwaun part of the Heads of the Valleys road, the Welsh Government omitted cost figures, although it later told Highways that the estimated construction cost was more than £550m.

It also stated that Annual Service Payments (ASPs) to the contractor, which cover the cost of construction, maintenance and financing the project, were commercially confidential.

Now it has disclosed that the ASPs will be about £38m, also excluding VAT and inflation. Over the 30-year operational contract period, the ASPs total £1.14bn in current prices.

Based on a previous scheme, Highways has calculated that non-recoverable VAT could add £152m.

The Welsh Government has also clarified that the £550m for construction excludes VAT and inflation. For the road’s public inquiry in 2018, the construction cost was estimated at £309m excluding VAT. The latest figure is 78% higher, and 25% above last December’s estimate of £440m.

Although the Welsh Government does not directly pay the cost of construction, the structure of its Mutual Investment Model means that a higher construction cost results in higher ASPs.

A government spokesman denied that an unrealistic estimate had been used for appraisal and the public inquiry. ‘The estimates were prepared based on the best information at that time and have evolved as more information becomes available and the conditions under which the contract is let are better understood,’ he said.

The cost increase is partly due to more expenditure than expected being required on existing highway structures and utility diversions and as a result of additional ground investigations.

There is further allowance for Brexit’s anticipated impacts on the labour market, and a further allowance for inflation after construction was delayed by an ‘extended procurement process’ and COVID-19 impacts.

It also appears that the demise of Carillion and other construction firms such as Swansea-based Dawnus had a bearing. The spokesman said there had been an ‘increase in the fee allowance to cover overhead and profit to tie more in line with current market conditions, in light of recent high profile collapses of UK-based construction companies’.

Highways InProfile

latest magazine issue
Highways jobs

Senior bridge Engineer - WMF2212e

£47,181 - £48,226
You will be the key responsible engineer for this area and will also provide technical advice and guidance to our team Cumbria / Various
Recruiter: Westmorland and Furness Council

Streetcare Operative / LGV Driver - WMF2214e

£28,598 - £29,540
Westmorland and Furness Council is seeking to employ an enthusiastic and motivated LGV Driver / Street Care Driver Ulverston, Cumbria
Recruiter: Westmorland and Furness Council

Civil Enforcement Officer - WMF2221e

£28,598 - £29,540
Are you seeking an active and challenging role, part of a friendly and welcoming team? Kendal, Cumbria
Recruiter: Westmorland and Furness Council

Bridge Engineer - WMF2219e

£42,839 - £44,075
We are currently seeking to recruit an experienced and enthusiastic Bridge Engineer Kendal, Cumbria
Recruiter: Westmorland and Furness Council

Senior Public Transport Officer

£42,839 - £46,142
We are looking for an experienced public transport professional to become our Senior Public Transport Officer. Northamptonshire
Recruiter: North Northamptonshire Council

Principal Transport Planner (Strategy) (Fixed-Term)

£48,226-£51,356
We are looking for an experienced professional to join as a Principal Transport Planner (Strategy) Northampton, Northamptonshire
Recruiter: North Northamptonshire Council

Mobile Street Scene Operative

£24,796 to £25,989 per annum
The Waste and Street Scene department requires enthusiastic and committed mobile street cleansing operative. Northallerton, North Yorkshire
Recruiter: North Yorkshire Council

Senior Technician - Highways Design (2 Posts)

Grade 10 £35,422 - 38,730 per annum
An exciting opportunity has arisen within the Professional Services Section Derbyshire
Recruiter: Derbyshire County Council

Project Engineer External Contracts

Grade 11 £39,865 - 43,270 per annum
You will lead a team of Clerks of Works Derbyshire
Recruiter: Derbyshire County Council

Senior Technician - Clerk of Works

Grade 9 £32,347 - 34,317 per annum
You will supervise works on site and liaise with developers, contractors and internal teams Derbyshire
Recruiter: Derbyshire County Council

Hire Desk Operative

Grade 8 £29,719 - £31,691 per annum
Well-developed IT skills and an excellent working knowledge of the Microsoft Suite are required. Derbyshire
Recruiter: Derbyshire County Council

Streetcare Operative / LGV Driver - WMF2214e

£28,598 - £29,540
Applicants must hold a current full LGV Class C driving licence Cumbria
Recruiter: Westmorland and Furness Council

Roadworker Trainee LGV Driver (2 Posts)

Grade 6 £25,989 - £26,458 per annum
We’re looking for Roadworker/trainee LGV drivers Derbyshire
Recruiter: Derbyshire County Council

Roadworker/Driver (3 Posts)

Grade 7 £27,088 - £29,062 per annum
We’re looking for roadworker/drivers to be part of our team undertaking major highway, bridge Derbyshire
Recruiter: Derbyshire County Council

Senior Engineer - Public Realm

£28,624 - £36,124
We are looking for a Senior Engineer to support the development Huddersfield, West Yorkshire
Recruiter: Kirklees Metropolitan Council

Mobile Cleansing Operative

£24,796 to £25,989 per annum
We’re seeking a permanent Mobile Street Cleansing Operative to join our dedicated team serving a variety of urban and rural locations Harrogate, North Yorkshire
Recruiter: North Yorkshire Council

Roadworker/Driver

Grade 7 £27,088 - £29,062 per annum
We’re looking for experienced Roadworker/LGV Drivers High Peak, Derbyshire
Recruiter: Derbyshire County Council

Engineer - Hosting and Security

£35,412 to £39,152 p.a. (Grade 9)
A vacancy has arisen within our Hosting and Security Team for an experienced, enthusiastic, and flexible Engineer, with the aim of helping to ensure t Durham
Recruiter: Durham County Council

Senior Engineer - Highways Safety

£28,624 - £36,124
Senior Engineer - Highways Safety Huddersfield, West Yorkshire
Recruiter: Kirklees Metropolitan Council

Head of Parking

£86,274 - £89,667
Our borough is beginning a huge transformation. Redbridge, London (Greater)
Recruiter: Redbridge London Borough Council
SUBSCRIBE NOW

Latest Video

Subscribe to Highways today to ensure you keep your finger on the pulse of everything happening in the UK road network throughout the year.

SUBSCRIBE NOW