As of this time, the above public work (AWPR/B-T) is the largest construction project in Scotland involving the creation of some 58km (36 miles) of new dual-carriageway around the city of Aberdeen. It is not a by-pass, as such, as some 80% of the traffic that comes to the city, stays in the city and, accordingly, the new dual-carriageway system will do little to reduce congestion on the city’s inner roads and “pinch-points”. Rather, this public work is a major piece in the north-east of Scotland’s transportation system jig-saw which, along with other public works, will act as a catalyst for the future economic development of the region.
The AWPR/B-T project can rightly be described as a saga with a “by-bass” of Aberdeen having been considered since the 1950s, although it was only in 2005 that Scottish Government decided on the route of the project. A draft CPO was issued by Transport Scotland in September 2007 to which over 8,000 objections were lodged which, inevitably, resulted in a PLI in 2009. Whilst The Scottish Ministers confirmed the draft CPO (with little modification) in early-2010, there then followed a legal challenge and two appeals thereto with the matter finally finishing up at the Supreme Court in London who, in late-2012 dismissed the challenge/appeals and which resulted in the relevant lands being compulsorily acquired in early-2013.
The procurement/tendering process commenced in early-2013 and in late-2104 a developer, Aberdeen Roads Limited (ARL) comprising a three party joint venture, was appointed under Scottish Government’s NPDO regime- which is similar to a PFI arrangement as, whilst ARL was given a specimen design by Transport Scotland, it became fully responsible for the funding, construction and delivery of the project and indeed, once completed, a 30-year operational and maintenance contract will come into play; during this period, there will be an annual “pay-back” by Scottish Government to ARL. In early-2015, ARL entered into a construction contract with the AWPR Construction Joint Venture (AWPR CJV) and works commenced with up to 1,200 workers involved.
It was originally anticipated that the construction phase would take about three years and the current official position is that the whole scheme will be operational in late spring/early summer 2018, some three months behind schedule. However, one of the three joint venture partners was Carillion and that Company went spectacularly into liquidation in mid-January 2018 with massive liabilities. Carillion would have, presumably, been supplying one-third of the workforce aa well as one-third of the funding and, whilst it would appear that a number of these workers have been retained or have been taken on by the other two joint venture partners, a question mark must arise regarding ARL’s ability to complete the project within the official timescale. Further, Galliford Try, one of the other joint venture partners, recently announced a huge £150m rights issue and, assuming that the capital is raised, then some of this money will, no doubt, be targeted towards the completion the AWPR/B-T scheme. Thus, hopefully, the AWPR/B-T project will become operational in the near future and will then act as a catalyst for future development projects in the region.
The demise of Carillion brings into sharp focus the relationship between the 21st century style of delivery of large-scale public infrastructure projects and the involvement of the private sector developers thereof. There are benefits in PFI/NDPO arrangements for both the UK public (who ultimately pay for all of these schemes via taxation) and private sector organisations (who make, or attempt to make, profit out of such schemes). We have an ever-increasing need to either improve our (in many cases somewhat fragile) existing infrastructure or create new infrastructure whether that be roads, schools or hospitals. However, Government, in all guises, either does not have the necessary capital to undertake these large-scale schemes on its own or is not prepared to commit itself to such large expenditures. Thus, Government has come to ever-increasingly rely on the private sector to secure the necessary funding to construct and deliver these projects in the short-term and, by way of long-term pay-back periods, the costs are spread over a generation- in return for the private sector companies making a profit in the process. However, there are a number of risks to Government and taxpayers alike associated with such an approach- as has been clearly demonstrated by the collapse of Carillion. Thus, we appear to have reached a time where we have a very difficult squaring of a circle to contend with- which can only be resolved by appropriate and decisive policy-making.
Keith Petrie FRICS
Vice-Chair, Scottish Branch of the Compulsory Purchase Association
Consultant, FG Burnett Ltd, Aberdeen.