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13.08.15

Balfour Beatty dropped from north west electrification

Balfour Beatty and Network Rail have agreed that the company will not continue its work on the North West Electrification project, as part of a proposed alliance.

In Balfour Beatty’s half-yearly results announced yesterday, it said: “In the first half [of 2015], phase 2 of the North West electrification project reached practical completion. However following a review of future schemes in the North West, it was concluded that the proposed alliance was unlikely to meet its stated objectives of delivering the scope of the work on time and to budget. In July, it was agreed with Network Rail that Balfour Beatty would not continue with the alliance framework for phases 3-7.”

It originally won the phase 2 (Liverpool to Newton-le-Willows) contract in October 2012, having previously worked on phase 1 (Newton-le-Willows to Castlefield Junction).

According to previous reports, phase 3 is Preston to Blackpool North, phase 4 is Manchester to Preston, phase 5 is Manchester Victoria to Stalybridge and Ashburys West Junction to Philips Park West Junction / Baguley Fold Junction, as well as Guide Bridge to Stalybridge, and phase 6 is assumed to be Wigan to Bolton. These phasings were announced before the ‘pause’ of TransPennine electrification – as RTM reported earlier this week, all of Network Rail’s electrification programmes, including in the north west, are under review.

Balfour Beatty won the wider £75m, seven-year framework for the Central (LNW North) region of the National Electrification Programme, to design and install all electrification equipment for the Northern Hub project between Manchester-Preston-Blackpool, and Manchester-Stalybridge, in February 2014.

The company said then: “This long term commitment also allows continued investment needed to develop innovation and improvements in the reliability of electrification technology and in the training and development of the workforce, including supporting the proposed development of a Network Rail Electrification Academy.”

Elsewhere in its financial announcement yesterday, it said its rail revenue and order book declined “substantially”, as expected, after cutting back its non-UK rail work and selling its 50% stake in Signalling Solutions Ltd.

Losses for the rail section of the business in the first half of the year, to June 2015, were £4m, compared to £7m in 2014. Revenues for ‘Rail UK & International’ were £104m, down from £185m in the same period last year, while the order book stood at £0.2bn, down from £0.3bn.

Under its ‘Support Services – Transportation’ division, Balfour Beatty noted: “The rail business remained stable in the period as rail renewal work for London Underground largely offset the loss of revenue from the Network Rail contract which completed in 2014.”

The company as a whole made 400 staff redundant during the six months to June, according to chief executive Leo Quinn, as part of long-term cost reduction strategy. These have focused on its back-office functions.

A spokesperson for Network Rail said: “Network Rail is committed to delivering the benefits of the North West Electrification which will provide space for hundreds more trains each day and room for millions more passengers.  

“Network Rail has carried out a review to ensure we have the most efficient deployment of resources to deliver the next phases of this key improvement. By mutual agreement Balfour Beatty will be leaving the partnership delivery of North West Electrification. This is the appropriate time following the completion of phase 2 between Manchester, Liverpool and Wigan.

“We will be retaining Balfour Beatty’s design services, and a new contractor will be appointed shortly. A full transition plan is in place to ensure that this work continues.”

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