European contractors win re-awarded A2 work

By Chris Sleight05 August 2011

Generalna Dyrekcja Dróg Krajowych i Autostrad (GDDiKA), the Polish national roads authority has re-awarded two contracts for construction of a 50 km stretch of the A2 Highway to European contracting consortiums, having terminated its original contract with Chinese contractor COVEC in June.

Section A, a 29,9 km stretch has been awarded to a consortium comprising Vinci's road building arm Eurovia and Polish contractor Warbud, in which Vinci owns a controlling stake. The consortium won the work with a PLZ 989 million (€ 245 million) bid. Completion is due in October 2012, but GDDiKA says the road will be 'trafficable' in May next year, in time for the European football championship that Poland is jointly hosting with the Ukraine.

Section C has been awarded to a consortium led by DSS, COVEC's original main sub-contractor, working with Boegl & Krysl, which is part-owned by German contractor max Boegl. The company bid PLZ 756 million (€ 188 million) to build the 20 km stretch of highway, and completion is due in October next year.

GDDKiA says it had 26 expressions of interest in the contracts, and that the final agreed prices are a total of more than PLZ 500 million (€ 125 million) less than COVEC was seeking through its original bid and subsequent change orders.

COVEC, a subsidiary of state-controlled China Railway Engineering Group won the contract in controversial circumstances in 2009, entering a bid that was just 45% of GDDKiA's target price. It claimed it could achieve these savings through a combination of cheaper labour, equipment and materials sourced in China and through using Chinese state funds as mobilisation capital. European contractors and their trade bodies protested this represented unfair competition and was in any case unrealistically cheap.

GDDKiA terminated the contract in June in the face of strikes from unpaid subcontractors and a series of expensive change orders and design changes from COVEC. However, the contractor claimed through Chinese state-owned media that it had walked away from the project due to financial losses. It has since said these losses could be as high as US$ 395 million (€ 280 million).

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