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Thu May 19 2022

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SNC-Lavalin and Kier shortlisted for Birmingham Highways PFI

6 May The competition to land a £2.7bn contract to look after Birmingham’s roads for the next 12 years has been whittled down to just two: SNC-Lavalin and Kier Highways.

Amey walked away in 2019 after losing millions on the job
Amey walked away in 2019 after losing millions on the job

Birmingham Highways Ltd (BHL) has formally invited the two companies to tender for the restructured Birmingham Highways PFI contract.

Kier has been looking after Birmingham’s roads on an interim basis since Amey withdrew in 2019 after losing money on the job. It is now up against not another road builder but a professional services firm – Canadian consulting engineer SNC-Lavalin, parent company of Atkins.

The procurement process for the restructured contract, which covers capital works and maintenance of more than 2,500km of roadways and 5,000km of footways across England’s second city began with a five-week pre-qualification stage.

Briefing meetings will now take place with SNC and Kier this month following the invitation to participate in dialogue. The two competing firms will now be expected to prepare interim submissions and draft bids to help inform dialogue and progress negotiations. Final contract bids are expected for the end of the year and should be formally submitted in January 2023, with the new contract due to be awarded in April 2023.

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Birmingham City Council is the ultimate client, as the highway authority, but it has contracted out running the roads to Birmingham Highways Limited (BHL) under a private finance initiative. BHL is a special purpose vehicle (SPV) jointly owned by Equitix and PIP Infrastructure Investments.

The entire tender process for the Birmingham highways PFI contract has been structured to provide participants with the opportunity to actively participate in dialogue to ensure the contract provides value for money and a robust risk profile – avoiding what happened to Amey, which had to pay Birmingham City Council £215m in 2019 to get out of its long-term money-losing contract. [See also: Five ways Birmingham Highways PFI contract has changed.]

BHL chief executive Natasha Rouse said: “We are excited to progress to the next stage in the procurement process with two experienced, knowledgeable and competent contractors. We are confident that the collaborative approach to procurement, embedded in the competitive dialogue process, will lead to an optimal and sustainable solution”.

Kevin Hicks, assistant director for highways and infrastructure at Birmingham City Council, said “The city council has worked hard with BHL to restructure the contract and ensure that it remains an exciting opportunity to deliver quality services in Britain’s second city. We are looking forward to this next stage of dialogue with the bidders and developing how they propose to deliver highway services on our behalf through to 2035.”

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