Skanska announced that it secured an additional order of GBP 24 million (approximately SEK 320 million) under an ongoing contract with National Highways (NH) for works on a new 16-kilometre dual carriageway on the A428 road in the East of England.
The contract augmentation primarily addresses escalated costs stemming from a legal challenge to the project. These costs are linked to a delay in the initiation of construction and the subsequent impact of heightened inflation on the project’s expenses.
A428 - The new 16-kilometer dual carriageway - About the Project
With the original contract awarded at circa GBP 507 Million in 2021, Skanska is responsible for delivering the new 16-kilometre dual carriageway under a design and construct contract, connecting the Black Cat roundabout at St Neots to Caxton Gibbet.
This project encompasses various enhancements, including a new three-tier junction at the Black Cat roundabout aimed at facilitating smoother traffic flow onto the A1 and the newly constructed carriageway. Furthermore, it will establish improved pathways for pedestrians, cyclists, and horse riders, enhancing connectivity to St Neots and its railway station. (further details can be seen in the video below)
Anticipated to bring substantial advantages to both commuters and the local community, this extensive initiative is expected to enhance travel between Milton Keynes, Bedford, and Cambridge. Additionally, it is poised to play a pivotal role in unlocking economic opportunities in this rapidly expanding region. The original contract allowed for traffic opening by 2025-2026.
A428 - The new 16-kilometer dual carriageway - The Contract Augmentation
According to Skanska, the amended contract value is circa GBP 679 million, and the additional cost will primarily cover escalated expenses resulting from a legal challenge against the scheme.
The Contractor sought compensation for the delay in commencing construction works and the consequential impact of heightened inflation rates, which reached 11.1% in the UK in March 2023, according to Statista website.
Skanska confirmed that it received a formal Notice to Proceed from NH, meaning that main construction can begin before the end of the year. According to the contractor, the new scheme will be open traffic by 2027.
Key Takeaways from ConstructionFront.com:
- Site Access delays can lead to significant cost and time compensation (Delay Damages and Extension of Time claims) to Contractors, and jeopardize project’s budget and program.
- Cost escalation is a significant risk for clients and contractors in a high-inflationary environment.
