BUDAPEST MUNICIPALITY AND SIEMENS SIGN AGREEMENT

The amendment of the Siemens contract was concluded in the presence of István Tarlós and Dr. Jürgen Brandes. Closing several years of negotiations between Budapest Municipality and Siemens Zrt, the document was signed by BKV CEO Tibor Bolla and Dale A. Martin, the President and CEO of Siemens Hungary.

As reported earlier, Budapest Municipality signed a preliminary agreement with Siemens in the matter of damage and liquidated damages claims arising due to the delay of the trains for Metro Line 4 in September 2012. In the course of the negotiations, the 70-million euro claim of Siemens was reduced to 30 million, and the parties also agreed the programme and laid down the final deadline for delivery. The former Municipal leadership had let the project out in 15 contracts with major sums to construction and system provider companies; as a result of this arrangement, all interface risks burden BKV and thereby the municipal local government.

In all construction projects, the delay of one contractor influences the work performance of all the follow-on contractors. If one partial task is delayed, the tasks built on it will necessarily also be delayed. This is precisely what happened in this case. Siemens’ performance was obstructed by the delays resulting from the stoppage of the tunnelling contractor and the late delivery of the trains. “In this situation the best we could achieve was to salvage what could be salvaged, because, under the contract, Siemens is entitled to the money,” stated István Tarlós. He added that this is a lot of money, but less than half as much as we were to have paid. The Mayor highlighted special thanks were due to the Hungarian government and the Prime Minister Viktor Orbán for providing all assistance to ensure that the deadline for the handover of Metro Line 4 is kept.

Siemens CEO Dr. Jürgen Brandes saluted the efforts of the Mayor to bring about the agreement. Brandes stated that the construction of Metro Line 4 is an integrated project, and energy saving was an important factor for the company, and they are proud to have been able to fulfil the aims.

Capping the time-based claims of Siemens, the amendment of the contract was discussed and accepted by the Board of Directors of BKV on 30 October 2012 and the Municipal Assembly a day later. The National Development Agency (NFÜ) drafted the government proposal in March this year. The government resolution was gazetted on 19 April 2013, which opened the way before finalizing the long-drawn procedure.

The Mayor’s Office of the Municipality of Budapest

Photos by: Mihály Majtényi (budapest.hu)