High Speed 2 to incentivise contractors with ‘programme gain pool’

HS2 is to follow Highways England’s lead by adopting a ‘programme gain pool’ for its civils work in a bid to drive costs down and encourage collaboration.

Under the terms of the £12bn-worth of tunnelling and enabling contracts, firms that bring projects in ahead of time and under budget will benefit from a programme-wide ‘bonus pot’.

HS2’s commercial director Beth West explains  that this would help contractors focus on the overall programme rather than just their own part of it.

“It is looking at incentives so that if contractors are bringing the overall cost of the programme down, [it] can be shared with all of them,” she said.

HS2 hopes this will encourage contractors to “go above and beyond” in supporting each other’s work on the project.

In July, Highways England adopted the programme gain pool system for its smart motorways schemes, worth £1.5bn.

While all civils contractors would benefit from the gain pool, Ms West stressed that penalties for work that runs late or over budget would be applied at a project-level and only affect those firms directly involved.

With the PQQ deadline for civils work set for 18 November, Ms West has also outlined her team’s priorities when assessing bids.

The level and type of collaboration between joint venture partners will be one of the main issues her procurement team considers, though it will also look at capacity and capability.

Decisions on contracts will be based 70 per cent on their technical content, with the remaining 30 per cent based on cost.

“Cheapest doesn’t necessarily mean the best,” Ms West said. “It is very much about the quality and experience the JVs have in similar activities.”

Having previously said she was sceptical about working with joint ventures, Ms West admitted she had come round to the idea but insisted that they must be proven partnerships.

“The big thing for me with regards to JVs is we don’t want to be the test case for them, so as soon as they win the bid they are going to work out how they work together.”

Ms West also revealed that 80 per cent of the PQQ process would be identical for every package, with only 20 per cent of the bid being project-specific.

She said that seven packages with seven specific bidding requirements could put contractors off from bidding for certain lots due to resource and time restraints.

HS2’s proposals would, she said, encourage contractors to bid for all packages and increase competition in the tendering process.

At the PQQ stage the JVs will be able to initially bid for all seven packages.

If accepted, they will then be invited to tender for a maximum of four packages and only be able to win two.

At the invitation to tender stage, contractors will then go through behavioural assessments and be asked to design a small piece of the package they are bidding for.

Ms West said: “We are doing this because there is no point getting contractors to do the whole design when they are going to spend a year designing and working with other contractors to think of the best solution.”


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