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£800m of Canal maintenance works out for tender.


Alan de Enfield

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Contractors wanted for £800m canal and river works framework | Construction News

Contractors wanted for £800m canal and river works framework

15 DEC 2020 BY MEGAN KELLY

 

The Canal and River Trust has launched an £800m package of works for the upkeep of more than 2,000 miles of national waterways in England and Wales.

The package, known as the Civil Engineering Construction Framework Contract, includes two national lots for more complex civil works, and six regional lots for non-complex works. Contractors will be involved in scheme design and development as well as the delivery of the works.

 

Firms that win a place on the frameworks will be contracted for an initial period of four years, with the option to extend by a further six years.

The two biggest lots within the package are for complex works in the North West, Yorkshire and the North East, worth £250m, and complex works in Wales, the South, London and the Midlands, worth £250m. These are set to involve major works to aqueducts, bridges, reservoirs and embankments, flood protection, tunnels and water management.

The regional framework lots will focus on smaller projects up to £1m in value, on works such as canal construction, footpath works, bridge renewals and grouting and masonry work.

 

The Trust will appoint up to 14 firms to the framework, which is due to begin in April 2022. Contractors have until 5 February 2021 to register their interest, with an invitation to tender expected by June next year.

The full list of lots available can be found below.

Lot Value
Complex North West, Yorkshire and North East £250m
Complex Wales, South West, London, South East, Midlands £250m
Non-complex North West £75m
Non-complex Yorkshire and North East £75m
Non-complex Wales and South West £37.5m
Non-complex London and South East £37.5m
Non-complex West Midlands £37.5m
Non-complex East Midlands £37.5m

 

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Three questions.

  1. Do CaRT actually have £800,000,000?
  2. Do you have to be a chum of a CaRT director to stand a hope of winning?
  3. Do you actually need to know anything about canal maintenance to win, or does it just depend on question 2?

 

Jen

Edited by Jen-in-Wellies
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10 minutes ago, Jen-in-Wellies said:

Three questions.

  1. Do CaRT actually have £800,000,000?
  2. Do you have to be a chum of a CaRT director to stand a hope of winning?
  3. Do you need to actually need to know anything about canal maintenance to win, or does it just depend on question 2?

 

Jen

4. Why don't they employ staff directly to do these jobs? Surely that would be more cost-effective. I'm surprised that no one has thought of it before....

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10 minutes ago, Jen-in-Wellies said:

Three questions.

  1. Do CaRT actually have £800,000,000?
  2. Do you have to be a chum of a CaRT director to stand a hope of winning?
  3. Do you need to actually need to know anything about canal maintenance to win, or does it just depend on question 2?

 

Jen

1) £200m per annum on a 4 year contract (C&RTs total income 2019-20 was £226m, 2018-19 was £203m - maybe they have found some down the back of the sofa)

2) Yes

3) No

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1 minute ago, Alan de Enfield said:

1) £200m per annum on a 4 year contract (C&RTs total income 2019-20 was £226m, 2018-19 was £203m - maybe they have found some down the back of the sofa)

So that only leaves between £3m and £26m to spend on silly signs, duck lanes, lock beam carving, directors bonuses, managers salaries and all the other vital work CaRT does.

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4 minutes ago, Jen-in-Wellies said:

So that only leaves between £3m and £26m to spend on silly signs, duck lanes, lock beam carving, directors bonuses, managers salaries and all the other vital work CaRT does.

Don't forget that C&RT lose their £50m income from DEFRA in a few years, and as yet show no signs of being able to replace it.

 

It also worth noting that their operating costs in 2019-20 were £38.7m

Edited by Alan de Enfield
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21 minutes ago, Athy said:

4. Why don't they employ staff directly to do these jobs? Surely that would be more cost-effective. I'm surprised that no one has thought of it before....

Not necessarily, employing people is expensive.  It not exactly unusual to use contractors, it is all about getting a good deal from that contract.

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The problem with employing your own staff is the seasonality of the work, and the skill spectrum.   If you have enough year-round work to keep your staff busy then ig is cheaper, because you don't have to pay for someone else's profit.

 

The non-complex stuff can probably be done by people who are bank staff and customer facing all summer.   Someone who does, say, bridge design or reservoir repair design probably does not want to be fixing dog poo bins when their design skills are not needed.  So CRT rent them when needed.

 

The really hard part, and the thing CRT are really, really poor at, is controlling  the contractors and their sub contractors so they do not manage to rip you off.

 

N

 

 

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17 minutes ago, john6767 said:

Not necessarily, employing people is expensive.  It not exactly unusual to use contractors, it is all about getting a good deal from that contract.

Contractors are convenient because you can turn the people tap on and off as required, but usually cost more per hour than direct employees because the contracting firm still has to pay them but also cover its own operating expenses and make a profit -- and this is of course their primary target, not necessarily to do a good job, so corner-cutting is a perennial problem. Tight control/oversight is needed to stop this, but as noted above CART don't seem to be very good at this ?

 

So if you can keep a large workforce busy all the time direct employees are usually cheaper even with overheads, and also has the advantage that you can have an experienced workforce that actually knows what it's doing. You know, like the canals used to have ?

 

Contracting out is great for something you do only some of the time or in bursts and where the contractors might have more knowledge about it; this doesn't seem to be the case for the canals, and there's certainly enough work to keep an inhouse team busy more than 100% of the time...

Edited by IanD
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20 minutes ago, john6767 said:

Not necessarily, employing people is expensive.  It not exactly unusual to use contractors, it is all about getting a good deal from that contract.

But if they're you're employees you pay only them. If they're from a contractors you pay their wages but also the company's fees on top. So the latter is bound to be more expensive. The former only works, o course, if you can find work for employees all year round; but if there are hundreds of millions of pounds' worth of teasks to be undertaken, that shouldn't be difficult.

 

EDIT: crossed with Bengo's and Ian's posts, and broadly in agreement with both.

Edited by Athy
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27 minutes ago, Athy said:

But if they're you're employees you pay only them. If they're from a contractors you pay their wages but also the company's fees on top. So the latter is bound to be more expensive. The former only works, o course, if you can find work for employees all year round; but if there are hundreds of millions of pounds' worth of teasks to be undertaken, that shouldn't be difficult.

 

EDIT: crossed with Bengo's and Ian's posts, and broadly in agreement with both.

If you employ them you are paying them 365 days a year, if you use contractors you only pay when you need them.  Also you may be able to hedge against problems with a fixed price contract where the contract company would be the one taking the risks if the project overran.  
 

In the case sited, there is a fixed sum to spend, so what happens to those employees you have taken in when the fixed sum is spent, you have gone through all the overheads in employing and training then, just to lay them off.  It therefore probably makes sense to use contractors.

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2 hours ago, Manxcat said:

How about we set up Canalworld Maintenance Ltd and tender for it?

 

I've got a shovel and bucket...

There are multiple levels of contracts to be bid for there. There is the company bidding for the maintenance contract itself. It then subcontracts shovel supply to one company, bucket supply to another and navvy supply to a third. I'm going to supply navvies to CaRT. For heritage structures, which need to be maintained with both traditional materials and by traditional methods my staff will be able to meet their key performance indicators in drinking, swearing and fighting.

Jen

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1 hour ago, john6767 said:

If you employ them you are paying them 365 days a year, if you use contractors you only pay when you need them.  Also you may be able to hedge against problems with a fixed price contract where the contract company would be the one taking the risks if the project overran.  
 

In the case sited, there is a fixed sum to spend, so what happens to those employees you have taken in when the fixed sum is spent, you have gone through all the overheads in employing and training then, just to lay them off.  It therefore probably makes sense to use contractors.

Yes, that's approximately what I said.

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The big advantage of having staff is general maintenance i.e. fixing it before it's completely broken. That can also have a big cost advantage. Take Toddbrook as an example. How much did CaRT save by making the reservoir keeper redundant and selling the house as opposed to the cost they now face. Similar at Watford Locks spotting the problem and fixing it before it was completely broken would have enabled the navigation to remain open. Oh hang on that would have been to the advantage of boaters - a low priority with CaRT.

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These look like contracts to deliver minor and major infrastructure refurbishment and renewal works, which is not maintenance. The difference may seem subtle but I imagine it’s significant to CRT.

 

I doubt any asset management organisation delivers such work in house in totality, and I doubt they ever have.

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Has it been stated where this work will be done?

Is this, or does it reflect upon, the anticipated repair and maintenance cost ?

Are there any new schemes proposed?

As to restoration are such figures including schemes such as the Chesterfield and the Montgomery ?

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2 minutes ago, Heartland said:

Has it been stated where this work will be done?

Is this, or does it reflect upon, the anticipated repair and maintenance cost ?

Are there any new schemes proposed?

As to restoration are such figures including schemes such as the Chesterfield and the Montgomery ?

The suggestion is that it is a four year term contract. I think you might be surprised at just how much upkeep an asset portfolio like CRT’s requires. We tend to focus on lock gate replacements on the forum but CRT own significant volumes of major civil engineering works such as bridge structures, retaining walls, cuttings and embankments. I don’t think this is new work, it’s just a renewal of the mechanisms by which these assets are repaired and renewed, which is an ongoing necessity.

 

While I suspect there is no barrier to using the same contracts for restoration work it doesn’t appear to me that is part of the general purpose of the contracts.

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17 minutes ago, Heartland said:

Has it been stated where this work will be done?

Is this, or does it reflect upon, the anticipated repair and maintenance cost ?

Are there any new schemes proposed?

As to restoration are such figures including schemes such as the Chesterfield and the Montgomery ?

The two biggest lots within the package are for complex works in the North West, Yorkshire and the North East, worth £250m, and complex works in Wales, the South, London and the Midlands, worth £250m. These are set to involve major works to aqueducts, bridges, reservoirs and embankments, flood protection, tunnels and water management.

The regional framework lots will focus on smaller projects up to £1m in value, on works such as canal construction, footpath works, bridge renewals and grouting and masonry work.

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