ABERDEEN BYPASS LIFETIME COSTS DOWN BY ALMOST £220 MILLION
The contract to construct, maintain, finance and operate the new roads, which is the largest contract to be awarded as part of the Scottish Government’s Non-Profit Distributing (NPD) model, has officially been awarded to Aberdeen Roads limited, formerly known as Connect Roads.
Cabinet Secretary Minister Keith Brown, said:
“I’m delighted the deal to deliver the Aberdeen bypass construction is now sealed. While the overall estimated scheme costs remain at £745 million, the contract value, which is around £550 million in net present value terms, is almost £220 million less than the pre-tender estimate and amounts to a reduction in payments over the life of the contract of approximately £26.5 million per year. The capital cost of construction also came in under the £472 million estimate, (cost at 2012), by £11 million on a like for like basis.
“Our robust procurement approach has been successful in driving efficiencies in both the long term maintenance operations and the funding of the project.
“Following the procurement process – the shortest ever for a project of this size and complexity - we are also bringing forward the scheduled completion dates for the Craibstone and Dyce Junctions by autumn 2016 and the Balmedie to Tipperty section by spring 2017, following requests from our stakeholders and subsequent discussions with the contractor.
“I’m sure this news will be widely welcomed by local communities, road users and businesses in the north east and from across Scotland, as this will allow early benefits from the project to be realised in these areas.
“The Aberdeen bypass is now well and truly on its way.”
The contractor is planning to deliver a more durable ‘long-life’ road, which will reduce the future maintenance requirements by providing a more cost effective long term solution, as well as minimising disruption to road users. Over 30 years, on a 58km road, these savings are significant. The shortened construction schedule announced previously, with project completion now due in winter 2017, has also helped to keep construction costs to a minimum.
Councillor Jenny Laing, Leader of Aberdeen City Council, said:
“Aberdeen City Council has committed up to £75m to this project so I am certain that the public will be relieved and pleased to learn that we have reached financial close and that work to build the road can now begin.”
Leader of Aberdeenshire Council Cllr Jim Gifford added:
“This project will bring substantial benefits to communities, businesses and individuals across the whole of the north-east and, quite rightly, there have been important, detailed processes to follow to allow us to get to this stage.
“What today means is that work on the route can now get underway and once it is completed we will see reduced congestion and reduced journey times to, from and across the north-east, along with the long term economic benefits it will deliver.
“This is the biggest civil engineering project this area has ever seen and I am proud of what we have achieved so far in partnership with our colleagues in Aberdeen City Council and Scottish Government.”
Matt Corbin, Head of Aker Solution’s Subsea business in the UK said:
“Our new headquarters in Aberdeen represents a significant, long-term investment for Aker Solutions. The completion of the AWPR and the airport link road are critical not only for our business locally, but for the future of the region as a whole. Improving local transport links and international connectivity are vital components in ensuring that the city fulfils its potential as a location of choice for the global energy industry.”
Funding for the project is coming from the European Investment Bank (EIB), a bank-term loan and a group of investors managed by Allianz Global Investors, one of the world’s leading integrated financial services providers, following a significant level of international investor interest.
Jonathan Taylor, European Investment Bank Vice President, said:
“Once complete the Aberdeen Western Peripheral Route will significantly improve journey times in the North-East of Scotland. This will cut the cost off lost time for local companies and also reduce pollution by taking slow moving traffic of the streets of Aberdeen. The European Investment Bank is committed to supporting long-term investment in Scotland that benefits businesses, creates jobs and improves lives. Support by Europe’s long-term lending institution for nearly half of its cost follows recent EIB backing for completion of the M8 M73 M74 Motorway Improvements Project.”
Adrian Jones, Director of Infrastructure Debt at Allianz Global Investors, said:
"The AWPR perfectly fits the project profile we look for when making investments on behalf of our clients - an essential highly rated asset created through a transparent, rigorous and socially responsible non-profit distributing procurement model.
"We are particularly pleased to be funding part of this important Scottish infrastructure project through our recently established UK Infrastructure Debt Fund. The fund allows smaller pension fund investors, including both private and public sector UK pension schemes, to participate in UK infrastructure alongside the larger international investors on our infrastructure debt platform. High-quality projects such as AWPR are the best advert for the opportunities open to UK pension funds to source stable long-term cashflows for their members while promoting growth in the real economy."
Alan Gibson, Bid Director for Aberdeen Roads:
“Aberdeen Roads looks forward to working closely with Transport Scotland in partnership with Aberdeen City and Aberdeenshire Councils to deliver this significant project, which will transform the North-east’s transportation system. Construction work will begin immediately as we work towards delivering the project ahead of schedule in winter 2017.”
Barry White, chief executive of the Scottish Futures Trust, stated: “We are delighted that this vital road, funded through the SFT-led NPD programme, has got fully underway.
“When complete it will be a massive boost to the north east of Scotland. Already we are witnessing businesses moving near the route the AWPR / B-T will take, recognising the huge opportunities this new road will deliver in terms of being better connected.”
- Under the Non Profit Distributing (NPD) form of procurement, the contract is awarded to a company which has been established for the particular purpose of delivering that contract. When establishing this company, Connect Roads has elected to adopt a name which includes a reference to the project’s location, Aberdeen Roads Limited.
- The Scottish Government's NPD is a model contract for public infrastructure projects which seeks to cap the returns made by the private sector when delivering public assets. This contract model is being used for projects in a £3.5 billion programme of investment by the Scottish Government (the NPD pipeline).
- Aberdeen Roads Limited’s construction contractor - a joint venture of Balfour Beatty, Carillion and Galliford Try (trading as Morrison Construction) - will be responsible for constructing the new road.
- The net present value (NPV) is defined as the total construction and operation contract value at 2014 prices. The NPV comprises the costs to construct the project including operational and maintenance costs thereafter over the contract period. The total scheme cost estimate remains at £745 million in line with previous estimates. This estimate includes public sector costs such as preparation costs, surveys, land and advance works.
- The out-turn construction cost is the total construction contract value, including inflation, at the time of construction.The new dual carriageway will have two lanes in each direction, with the exception of the section between North Kingswells Junction and Craibstone Junction where three lanes will operate in each direction.
- The existing trunk road south of Charleston Junction will also be widened to a three lane dual carriageway for a short section between Charleston and the next junction to the south of Findon.
- The Scottish Government remains committed to improving transport infrastructure in the north east with £1 billion ear-marked for the development of the Haudagain Roundabout, a new Inveramsay Bridge and a longer term commitment to dual the A96 between Aberdeen and Inverness. Work is also progressing on improving the Aberdeen to Inverness railway line.
- The new road, which is currently the longest new road project under construction in the UK, is pivotal to Scotland’s sustainable economic growth, generating over £6 billion for the local economy, as well as creating over 1,000 jobs during construction and 14,000 new jobs over the first 30 years after the scheme opening. It will also help to cut congestion in and around Aberdeen, provide better journey time reliability, improve connectivity and enhance road safety.