THE BAMCO CONSORTIUM STILL CARRIES ON WORKING AT ALL CONSTRUCTION SITES

This morning BAMCO Consortium resumed works, but they failed to answer to the deadline the proposal regarding the settlement of the issue of excess costs made earlier by the DBR Metro Project Directorate. BAMCO announced instead that they would stop operations at all sites effective from Monday.

The parties failed to amicably settle the dispute referred to the board of referees earlier therefore the DBR considers submitting the case to the arbitration court. In our view, however, BAMCO’s intention to stop the works undertaken in the contract rather than settle the dispute in the legal manner may qualify as the breach of contract. The DBR regrets that BAMCO has chosen this action since there is still the chance to amicably settle the dispute of the parties at the arbitration court.
In the recent letter addressed acknowledgedly to the DBR Metro Project Directorate, the BAMCO Consortium building the tunnels, the Gellért Square metro station, the TBM launching structure at Etele Square and the ventilation tunnels announced the temporary suspension of works carried out until the Employer satisfies the claim regarding the reimbursement of excess costs submitted earlier. In the past eighteen months the BAMCO Consortium submitted approximately 150 claims for the reimbursement of excess expenses amounting to roughly HUF 37 billion, whereas the 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 HUF 1.6 billion proved realistic and legitimate. Whilst the payment of these claims is in progress, others are either being processed or rejected as unrealistic. Otherwise the total worth of the contract of the Consortium including all works is HUF 44 billion.
It is not unusual for the contractors of major projects to endlessly claim the reimbursement of excess expenses. Such claims are reviewed by the Engineer and considered by the Employer. Legitimate claims are accepted and the unfounded ones are rejected. Disputes are referred to the board of referees for recommendation to be negotiated subsequently by the parties; if no agreement is achieved, any party may refer the case to the arbitration court. As before, the DBR is willing to reimburse all the legitimate excess expenses incurred for reasons not imputable to the contractor, whilst remains uncompromising in rejecting all illegitimate claims even under the duress of ultimata. The DBR has recently accepted the legitimacy of three additional claims for excess works, but the amounts are still disputed. No answer from the Consortium to the Employer’s proposal has been received to date (the deadline); therefore the DBR is contemplating the referral of the disputed case to the arbitration court.
According to the earlier information, BAMCO was forced in August to stop the southern TBM (and the few days later the northern one as well) in front of St. Gellért Square due to the lack of the requisite license; in contradiction to the today’s media hearsay, however, this does not mean the stopping of the construction of the 4th line of the metro, because the contractors are on schedule in each phase of works. The TBMs were stopped due to the lack of license rather than as the consequence of the recent legal dispute. Should BAMCO elect to suspend works at all other sites, in DBR’s view such the measure would qualify as entirely unjustified and the Consortium shall carry all legal and financial responsibility for the eventual serious breach of the contract.
In order 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 work completed documented properly for the 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. The DBR, however, is responsible for assuring safe, cost-efficient and timely completion of the metro project.
DBR Metro Project Directorate