Monteput: The construction cost of the second section of the highway is higher due to current market conditions and the scope of work

The construction cost of the second section of the Mateševo–Andrijevica highway has increased due to the difference between the initial estimate, based on the preliminary design prepared in 2019, and the offer of the selected consortium POWERCHINA Ltd. – STECOL – PCCD, which was formed in accordance with current market conditions, scope of work and risk allocation.

This was told to "Vijesti" in Monteput.

Two days ago, the state-owned company selected the Chinese consortium's offer as the most favorable for the construction of that section.

"The selected Chinese consortium offered 693.969.668,88 euros, while the preliminary design for the Mateševo–Andrijevica section from 2019 estimated costs of 638 million euros, which included 15 percent of unforeseen works. The project is being implemented on the basis of FIDIC contracting conditions, namely the Yellow Book (Design & Build), which implies that the contractor has included in the price all design and construction works necessary for the integrity of this section. Also, this method of contracting implies that the contractor assumes a certain part of the risk related to geological conditions," the company stated.

They emphasize that this is a very demanding section, with complex geological conditions. All facilities require the use of deep foundations along the entire route, as well as appropriate protection of the cutting slopes.

The offered price, as they explained, was not formed solely on the basis of the preliminary design, but also on the basis of the special conditions of the contract, the project task and the investor's requests, which included items that were not foreseen in the previously prepared project documentation and were not included in the preliminary design, and which are necessary to be carried out in order to obtain a high-quality and safe road after the implementation of this section.

"These items include the design and construction of lanes for slow vehicles on the downhill side, on slopes greater than four percent, which are important for traffic safety, as well as the design and construction of a fire station and a winter maintenance station at the portal of the Trešnjevik tunnel, necessary for timely response by fire departments and adequate winter maintenance at these altitudes, as well as the positions of landfills and borrow pits, which were given indicatively in the previous documentation, without a detailed cost estimate," Monteput pointed out.

As they added, in accordance with the above, the bidder reviewed the complete available documentation and, in accordance with the obligations defined by the contract, the project terms of reference and the investor's requirements, analyzing the current market situation and the availability of labor, formed its prices.

"The final price was additionally influenced by rising material and energy prices, labor shortages, and unfavorable conditions on the international market. The tender process resulted in a price that realistically reflects market value and conditions. Experience with the implementation of similar infrastructure projects in the region has shown that initial value estimates can be significantly changed during implementation, especially in conditions of rising prices and market disruptions," Monteput said.

As they pointed out, considering all the above circumstances, it is clear that the cost price of the second section of the Mateševo–Andrijevica highway cannot be viewed in isolation, but rather in the context of changes in the scope of the project, modern technical requirements, a contracting model that implies the assumption of part of the risk by the contractor, as well as current market conditions.

"Within this framework, the price defined through the tender procedure represents a realistic reflection of the complexity and demands of the project, with the aim of building a safe, functional and long-term sustainable transport infrastructure," Monteput concluded.

The Mateševo-Andrijevica section is financed by a loan from the European Bank for Reconstruction and Development (EBRD) in the amount of 200 million euros and a grant from the European Union in the amount of 150 million euros.