THE BAMCO CONSORTIUM IS TRYING TO PUT ON PRESSURE BY THREATS

In a letter addressed to the DBR Metro Project Directorate the tunnel builder BAMCO Consortium declared that it would temporarily suspend all works until its claims for the reimbursement of excess costs are fulfilled by the Investor. Following its earlier practice, the DBR will also cover henceforth all the legitimate claims for excess works that became necessary for reasons not imputable to the Contractor, but DBR will only accept legitimate and justified claims despite the ultimata. The Contractor shall carry responsibility for all legal and material consequences of unjustified stand-down.

It is rather usual for contractors of major projects to carry on submitting claims for excess costs. The claims are reviewed by the Engineer; the Customer accepts the justified claims and rejects the unjustified ones in the discretionary manner. To date the BAMCO Consortium submitted approximately 150 claims for excess expenses whereas the total of claims of other, nearly 20 contractors come to the fraction of this sum. The employer has examined these claims of which around 25 amounting to approximately € 6.4 million proved realistic and legitimate. Whilst the payment of these claims is in progress, others are either being processed or rejected as entirely unrealistic.
Other three claims have been reviewed by the referee; the good-intentioned conciliatory is in progress. DBR has filed its offer, and is waiting for the Contractor’s response. Payment for unrealistic and unjustified claims from taxpayers’ money under duress may not be condoned.
In an effort to safeguard the interests of the State, the Metropolitan Municipality and indirectly the taxpayers, the DBR Metro Project Directorate shall only accept claims for realistic performance documented properly as proof of legitimacy. By entering into the contract the contractor’s interests will inevitably be in conflict with those of the employer; the contractor’s obvious objective is to earn as much as possible throughout the project. The DBR, however, is responsible for assuring the safety and cost-efficiency of works, and timeliness of completion of the metro project.
DBR Metro Project Directorate
BACKGROUND
As it is known from earlier news, the BAMCO Consortium responsible for the implementation of the tunnels, the TBM launching shaft at Etele Square and the St. Gellért Square metro station, failed to submit on time to the National Transport Authority the application for construction license for the crossover railway tunnel in front of the St. Gellért Square metro station. The Consortium had to stop the TBM reaching the site after the site inspection of the said authority. The reason was that the Consortium had been delayed with the completion of this crossover tunnel and suggested a new engineering solution: pass the TBMs at the location of the future engineering structure and enlarge the tunnel subsequently to the size of the final crossover tunnel. The Consortium regarded this solution a mere change in the order of works not subject to licensing. DBR deemed this solution a change in technology because instead of the initially planned mining technology the contractor intended to use a different method, which would have meant excess risk due to the lack of adequate corroboration even if the Consortium had had submitted the proper application for license. Later the Contractor arbitrarily restarted the TBM for one day then stopped it upon the repeated intervention of the National Transport Authority. In its decision the Authority stopped further works until such time when the license is granted and imposed a fine on the Contractor. The license is expected to be available by the end of September or beginning of October provided the documents are completed as required. Then the TBMs may be restarted, because the northern TBM is expected to reach the site by that time. This procedure is otherwise in the scope of competence of the National Transport Authority, and the entire matter will be resolved between NTA and BAMCO, therefore we would be reluctant to take up a position in this issue.
The DBR Metro Project Directorate shall only accept claims for realistic performance documented properly as proof of legitimacy; otherwise the interests of the State, the Metropolitan Municipality and indirectly the interests of taxpayers would be violated. All such payments form part of the total budget; funding is shared in approximately 79-21 % ratio between the Hungarian State and the Metropolitan Municipality. This assures safe coverage for all due payments. At the same time the Metropolitan Municipality expects to receive an EU grant amounting to HUF 220 billion for the first stage of HUF 353 billion total budget. Due to the application for the EU grant it is our prime interest to meet all the commitments undertaken and not to concede unrealistic claims and threats.