Case Studies > National Heavy Rail Link (High Speed)

Germany

A new 200km heavy rail link between two major cities consisting of trackwork, switchgear, signaling, overhead power distribution, tunneling, control systems, telecommunications, stations, various facilities and substantial building and civil works. The Project was divided into several geographic areas and systems with each package being put out to tender by the local government public body ("the Employer") responsible for all areas of the entire Project. Our client was one of the contractors ("the Contractor"), awarded the contract for all project locations specific to their scope of works.

KEY FEATURES
As a state organization for railways, the Employer procured the Works under their own form of design and build contract, and awarded our client the Contract
Scope of Works on a fixed price, lump sum design & build basis. The scope of works relative to the overhead power system, trackside signaling, telecommunications and power distribution systems.

During the construction phase of the contract, a number of serious delays occurred primarily resultant from client induced major design changes, contract
variation orders and the complex series of interfaces with other executing contractors. In recognition of these causal events, the Employer awarded several extensions of time, numerous additional variation orders as well as a number of substantial financial claims for compensation of additional costs and loss and expense suffered by the Contractor. However, since that initial award, further substantial design changes occasioned by the Employer arose causing
yet further delay to the Contract Completion Date. The Contractor subsequently sought a further extension of time and reimbursement of prolongation and various other additional costs.

CONSULTANCY SERVICES-
Project Profit Optimization - Investigations and Recommendations

Lancaster House International Consulting were requested to attend a meeting at the client's project office in conjunction with our alliance partner, Roland Berger Strategy Consultants. We were immediately requested to recommend a strategy for a rapid and effective recovery for time and costs. Roland Berger were given the specific remit to identify possible causes of losses attributable to reasons other than those which could be identified with and recovered through the contract provisions.

In collaboration, we deployed our consultants with rail industry experience and undertook a thorough review and analysis of the contract documentation and subsequently, we conducted an appraisal of our client's draft claims (in German). Our appraisal was formulated in a manner which readily established the optimal overall recovery levels vis-a-vis alternative strategies.

Lancaster House International Consulting worked in close liaison with our client's project management group ascertaining the detailed history and background of the project. Following submission of our analysis and recommendations for a claims turnaround and increased recovery strategy, additional recommendations were submitted for the installation of a Proactive Management System for Risk Identification and Minimization allied to a means of improving financial recovery of additional costs, loss and expense items during the remaining contract period. Our recommendations were duly adopted by our client which led eventually to a turnaround in their commercial and contractual position vis-a-vis the Employer and an ultimately successful commercial outcome.