Source : The Strait Times, 27 August 07
New contractors called to finish 2 stations, a project secured initially by Swedish firm NCC
SWEDEN'S NCC International may become the first Circle Line MRT contractor to be replaced midway through a project, following disputes with the Land Transport Authority (LTA) and a concrete supplier.
The LTA has called for new contractors to finish the MacPherson and Tai Seng stations - two of five in Stage 2 of the 33km Circle Line.
In a tender which closed earlier this month, the LTA described the job as 'major outstanding works' at the two stations.
The project was initially secured by NCC and Singapore's Econ Corp in 2002 for more than $300 million. Econ dropped out in 2005 because of financial troubles.
The fresh tender for 'major outstanding works' attracted bids from three local companies: Chye Soon Construction, which made a bid of $17.48 million; Hock Lian Seng Infrastructure ($17.91 million); and KTC Civil Engineering and Construction ($20.97 million).
An LTA spokesman said the winner will be appointed next month.
She said NCC was informed late last year that it was 'not fulfilling'' its contractual obligations. LTA followed up with a formal letter early this year.
She did not elaborate on what NCC failed to do.
'LTA has a right to appoint another contractor to carry out part or whole of the work specified in the contract if the contractor fails to carry out the work within the terms of contract,'' she said.
But she added that NCC 'is expected to work with the new contractor to complete the remaining works for the two stations''.
NCC, a Swedish construction giant with sales of 56 billion Swedish kronor (S$12.4 billion), would not comment beyond saying it would see to the completion of the stations.
Asked why NCC would stay to work with the new party if it was found to be wanting, and how much NCC would be paid, the LTA spokesman would only say 'we are unable to disclose the details as the contract terms are privy to parties bound by the contract''.
Industry players said NCC, a relative newcomer to LTA work, may be the first casualty of cost overruns which have besieged Circle Line projects since the Nicoll Highway collapse in 2004.
The problem worsened when concrete prices nearly trebled to $200 per cubic metre after Indonesia imposed a ban on land sand exports and detained barges shipping granite to Singapore early this year.
Two months ago, NCC's lawsuit against concrete supplier Alliance Concrete Singapore came before the court. The judge asked the two parties to submit the case for arbitration instead.
NCC is not the only builder having difficulties with the Circle Line. Since the Nicoll Highway tragedy in 2004, construction and safety standards have become far more stringent, resulting in delays and higher costs.
Unexpected soil conditions in the western half of the line - which Japanese contractor Taisei noted had made work 'profoundly challenging'' - have aggravated the situation.
The Straits Times understands that Circle Line contractors are submitting several hundred million dollars worth of claims to the LTA.
One industry source said: 'Almost every contractor on the Circle Line is having a cash-flow problem. Cash flow is a contractor's lifeline.''
The LTA spokesman said all claims 'are being evaluated and considered under the provisions of the contract''.
She added that 'issues related to the cost of sand are being handled in accordance with the Government Compensation Framework''. The Government had said it would bear up to 75 per cent of construction cost increases arising from Indonesia's ban.
'The total impact of the cost increase is still being assessed,'' she said.
Despite all the problems, the LTA said 'our plans to open the Circle Line from 2010 have not changed''.
Underpass job also affected
THE Land Transport Authority will next look for contractors to build an underpass on Upper Paya Lebar Road - a project that was part of NCC International's Circle Line MRT contract.
The underpass will allow motorists in the Paya Lebar and Upper Paya Lebar areas to bypass traffic lights at the Bartley Road junction.
It is one of two traffic improvement schemes to alleviate jams in the area.
The other is a viaduct linking Bartley Road to Tampines Avenue 10, which was due for completion last year.
It was delayed when the previous contractor L&M Prestressing ran into financial difficulties.
A new contractor, Hock Lian Seng, is scheduled to complete the viaduct in 2009.
'We are making arrangements to appoint a contractor for the underpass,' an LTA spokesman said.
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