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Nuttall agrees to pay £33m to settle Cambridgeshire busway dispute

2 Sep 13 BAM Nuttall has settled its dispute with Cambridgeshire County Council over the guided busway project by paying back £33m.

More than five million journeys have been taken on the guided busway since it opened in 2011
More than five million journeys have been taken on the guided busway since it opened in 2011

The contractor and local authority had been embroiled in legal row about the cost of building the guided busway system that opened in August 2011. The council said that the settlement worked out to be £76m in its favour.

The settlement means the county will have paid BAM Nuttall £84.7m to build the busway, compared to an originally agreed price of £83.9m.

Cambridgeshire County Council’s Cabinet agreed to the offer from BAM Nuttall to settle the dispute following discussions and agreement among all political groups.

BAM Nuttall was two years late in handing over the project and claimed the council owed it around £70m more than the price it had originally quoted, leading to a  protracted legal dispute, incurring huge costs for both sides.

The council said that it decided to accept the contractor’s offer to settle to avoid any further legal costs.

BAM Nuttall told the council that the busway had cost £152.5m to build and sought an extra £43m on top of the £117.7m that it had already been paid.

However, following the threat of legal action and a mediation process, the company has instead agreed to pay £33m back to the council in addition to the council retaining various monies that it had withheld under the terms of the contract.

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Around £126m had been budgeted for the whole busway scheme – including land acquisitions as well as construction and other costs. Some £92.5m of this money was provided by central government with another £26m of section 106 deals with developers and the rest in transport grants and other income.

Mainly due to the level of legal fees, the cost of the scheme had risen to £152m, the council said.

Cambridgeshire County Council leader Martin Curtis said: “I am pleased that this settlement has been agreed and that we can move on from what has been a difficult and time consuming dispute for us.

“It is clear that the council was right to take the bold decision to provide better transport options for residents in one of the fastest growing parts of the country; and right that we signed a robust contract with BAM Nuttall.

“The busway is a huge success and way ahead of passenger and business case forecasts. What is deeply disappointing and frustrating is that it has taken this long and cost us so much money to win our arguments and stop BAM Nuttall from trying to take tens of millions of pounds away from local taxpayers. BAM’s unwillingness, until now, to recognise their financial liability means they have tied up and cost Cambridgeshire taxpayers money which could have been better spent on our communities.

“We have always been very sure of our case and would have been willing to go to court to fight that case. However, following discussions with all group leaders, we felt that we would rather have certainty and settle the matter than risk mounting legal costs. It is clear from the analysis of our professional and legal teams that, were it not for the strong contract we had in place, BAM would never have settled. We are, therefore, now going to review and learn from our experience to see how we can help to stop this happening locally and nationally in the future.”

BAM Nuttall’s Dutch parent company, Royal BAM Group, said that it had already incorporated the cost of the settlement into its half year figures, which were published on 22 August. “The repayment has therefore no impact on BAM's profit forecast for the year 2013,” it said.

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