Late running £510m tunnel job adds to sale target Mowlem’s woes

Contractor Mowlem, which this week admitted it had received an approach from an unnamed buyer, is facing troubles with a tunnel scheme in Ireland.

The firm is in a consortium called Nishimatsu Mowlem Irishenco that is trying to complete the £510m Dublin Port Tunnel. The scheme was originally due for completion early this year but the latest estimate given by the government last week was it would not be ready for use until next May.

The delay is expected to result in a claim from the consortium that could add up to £200m to the project cost, according to reports in Ireland. Client the Dublin City Council is expected to dispute the claim.

The spat is likely to be handled by a dispute resolution board (DRB), which comprises three construction experts that oversee any disputes or claims during the duration of a project.

The DRB for the port tunnel has already handled a dispute surrounding the collapse of an offshoot tunnel earlier on in the project, which is understood to have been resolved amicably.

The consortium originally signed a £353m deal, which was a modified ICE form of contract, to build the 5.6km long project, 4.5km of which is in a tunnel, in October 2000.

The cost overruns are understood to relate to restrictions on the number of hours the tunnelling machine on the scheme could work. The council restricted these hours to appease residents in the local area who had complained of vibration and damage to their homes.

Problems with the tunnel have led to the Irish Government announcing plans to force contractors and consultants to submit fixed-price lump sum bids for future public work. Contractors have reacted angrily to the move claiming it would delay planned public spending.

Meanwhile Mowlem announced to the Stock Exchange on Monday that it had received an offer from a mystery bidder to buy the firm following speculation about its future. The statement said: “The board wishes to stress that discussions are at a very early stage and there can be no certainty that this approach will lead to an offer for Mowlem.” Mowlem has experienced contractual problems with projects such as Bath Spa and a PFI scheme in Exeter.