Balfour Beatty to bid for stalled Midland Met

3 January 2019 | By Neil Gerrard

Balfour Beatty is to bid for a contract to complete construction of the Midland Met hospital in Smethwick, which ground to a halt following the collapse of Carillion a year ago.

However, the firm has indicated to the NHS Trust that runs the hospital that it wants its bid costs, expected to be around £1m, to be underwritten in the event that it is not successful.

Balfour has already won a deal to undertake the interim construction contract on the hospital, which involves weatherproofing the building and developing the design ahead of the appointment of a final construction contract, for which procurement began in November. All priority works are expected to be completed before May 2019.

It has also removed all Carillion branding from the site and replaced it with Balfour Beatty signage, although a tower crane still remains because it is “cost prohibitive” to remove, according to documents released by the Sandwell and West Birmingham Hospitals NHS Trust ahead of a board meeting today (3 January).

The documents also revealed that Balfour, Kier, Sir Robert McAlpine, Laing O’Rourke and Graham Construction all attended a bidders' day as part of the process to find a replacement construction contractor.

Offering its feedback, Balfour Beatty indicated that it would bid for the construction of the hospital on the basis that it was a NEC4 target cost option but that it wanted its bid costs underwritten.

Bid cost concern

Kier has not officially provided feedback but was “positive on the day” according to the report, and has submitted papers to its board for consideration of a “bid, no bid” decision. The firm also raised the issue of bid costs and underwriting should it not be successful. The report also noted: “They [Kier] do not have significant large acute healthcare experience and there is a risk they could fail the selection questionnaire stage. They deliver a significant amount of work for the NHS through Procure 22. It is expected that Kier will try and join up with NG Bailey."

Meanwhile, Graham Construction was “quiet” at the bidders’ day and provided no feedback and is not expected to bid, according to the report.

Skanska, which had originally been rumoured to take over from Carillion, did not attend. “The bid investment already made and lost is expected to preclude them from further participation,” the report said.

There was no mention of feedback from Laing O’Rourke or Sir Robert McAlpine.

Meanwhile, the contractors present at the bidders’ day discussed the risks involved with the mechanical, electrical and plumbing (MEP) and fit-out work at the hospital. They “raised concerns regarding interfaces, specifically energy performance, the retention of existing major plant, the time needed to get comfortable with it, and the value for money implications should it end up being replaced,” the report said.

All contractors were said to be comfortable with the NEC4 form of contract, with both Option A (fixed price lump sum) and Option C (target cost) discussed.

The hospital is expected to cost another £400m to complete, with a targeted completion of 2022. The Trust aims to ask bidders to complete a selection questionnaire, before whittling them down to a shortlist of three who will enter a competitive dialogue for four to six months.

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