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Old June 13th, 2011, 08:00 PM   #6221
toonczyk
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So, official news about A2: GDDKiA rejected COVECs recession of contract and at the same time terminated the contract themselves. This will take effect on June 27th. Now two things can happen:
1) COVEC will withdraw their claims and get back to work before June 27th (very unlikely),
2) GDDKiA will find someone else to finish the motorway and COVEC will pay contractual fines.

While there is still some (very little) hope that COVEC will get back to work, I think the second option is almost certain. The question is how are they going to do it, because our prime minister has been assuring the journalists that the construction works will resume in late July with 100% certainty.
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Old June 13th, 2011, 08:02 PM   #6222
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What's the chances GDDKiA can collect that 700 million something PLN fine from COVEC?
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Old June 13th, 2011, 08:07 PM   #6223
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What's the chances GDDKiA can collect that 700 million something PLN fine from COVEC?
I'd say the chances are slim. But I think GDDKiA will easily collect more than COVEC has been already paid for the contract (I think it was less than 200 million PLN) and we got a lot already done, so I think GDDKiA will have earned something on this contract
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Old June 13th, 2011, 08:12 PM   #6224
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Do you think it's possibly to only construct the roadway sections of COVEC segments A & C to have a continuous, but incomplete motorway from Stryków to Konotopa? They could build the remaining interchanges, bridges over the motorway, etc later. I wonder if this is possible to open a basic motorway without any interchanges to have it ready before Euro 2012, obviously without degrading the structural integrity of the motorway itself (i.e. you don't want to rebuild the whole thing in 2015 just because the foundation was done too hastily).
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Old June 13th, 2011, 08:16 PM   #6225
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Well, it's not a problem to finish roadworks before Euro 2012, the problem lies in bridges and there are quite a few large concrete objects on A2, including bridges crossing rivers. If they resumed works today or even in late July I think it's going to be possible for A2 to be "drivable" in June 2012, but if they start any later I just don't see it. Unless we get no winter this year. Still, it's just me guessing, we'll really just have to wait and see.
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Old June 14th, 2011, 08:17 PM   #6226
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S7 - Southern Bypass of Gdańsk

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Old June 15th, 2011, 01:20 AM   #6227
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Originally Posted by toonczyk View Post
So, official news about A2: GDDKiA rejected COVECs recession of contract and at the same time terminated the contract themselves. This will take effect on June 27th.
Most of you will probably disagree, but I'd personally rather wait another 6-12 months if it means the money stays in european pockets.
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Old June 15th, 2011, 05:42 AM   #6228
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Most of you will probably disagree, but I'd personally rather wait another 6-12 months if it means the money stays in european pockets.
Your sentiment is based on a false premise. Money is exchanged for goods and services. I think what you really want are more goods and services in Europe. Buying goods and services from China generally results in more goods and services ending up in Europe than would have been the case had the money been spent in Europe. What are the Chinese getting out of the deal? Mainly a huge collection of US Treasury Bills that are now rapidly becoming worthless due to the new US policy of Quantitative Easing.

In the past, when money was based on gold, you would have had a good point. Now money is just accounting. The roads being built have real value. Get the best roads at the best price. The Chinese can either sit on the money (which is excellent for Europe) or they can spend the money (which is ok for Europe). International trade has no net downside.
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Old June 15th, 2011, 09:24 AM   #6229
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Your sentiment is based on a false premise.
Good old liberalism, that's the way to go.

Money is the ultimate value of products, not "social justice". A few jobs lost in manual work will translate into a few much, much better jobs in mechanical engineering, because the Chinese aren't going to build their own excavators or tractors. Instead, they are going to buy them in Germany (or at least from Bumar in Poland).
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Old June 15th, 2011, 01:06 PM   #6230
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A2 Świecko - Nowy Tomyśl section 5.0

Upgrading national road 2 to highway standards from km 0+000 to km 1+100





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Old June 15th, 2011, 07:04 PM   #6231
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This Chinese company even does not know how to estimate for the breakdown of this highway construction project .

They just dumped the price for the bid and wanted to have the title of the winner but failed to act in the end.


Quote:
http://www.ft.com/cms/s/0/d17dda5a-9...#ixzz1PMRm81h5


A high-profile attempt by China to break into the European transport infrastructure market has turned into a fiasco after Poland cancelled a controversial highway contract with a Chinese company midway through construction.

China Overseas Engineering Group (Covec) was awarded the contract to build a 50km stretch of the crucial highway between Warsaw and the German border in 2009, after presenting a bid so low that rivals took allegations of price dumping to Warsaw and Brussels.

It was the first Chinese company to win such a large European highway contract and had hoped to use the project as a calling card to gain other business in the region.

However, the company – a subsidiary of China Railway Group, one of Asia's largest construction and engineering companies – quickly ran into financial difficulties once construction got under way and halted work in May. Poland’s road building authority cancelled the contract on Monday.

The collapse of the contract is an embarrassment for Donald Tusk, Polish prime minister. Mr Tusk had pledged to complete the highway before next summer’s European soccer championships, which Poland is co-hosting with Ukraine.

Opposition parties have seized the opportunity to attack the prime minister with relish, hoping to dent his popularity before this autumn's parliamentary elections.

Covec won the contract after presenting an extremely low bid, coming in at less than 50 per cent of the 2.8bn zlotys ($1bn) budgeted by the government. The bid prompted complaints from rivals, who said the Chinese were price dumping because it was impossible to build so cheaply.

Germany’s Committee on Eastern European Economic Relations, an industry body, had alleged last year that state-owned Chinese companies were securing contracts in the region “via price-dumping, aggressive financing and generous risk-guarantees”.

Warsaw and Brussels rejected the highway objections. However, in the event Covec quickly ran into financial difficulties, delaying payments to subcontractors and claiming the road building authority was itself late paying. The agency denies the claim.

Covec recently tried to renegotiate the contract, saying raw materials were unexpectedly expensive and that it had been unfairly treated. But the government rejected the move, saying it could open the way for similar negotiations from companies building hundreds of kilometres of roads around the country.

Covec on Monday issued a statement saying it was ready to resume work, but at a cost. However, speaking on local television, Andrzej Majewski, deputy director of the General Directorate for National Roads and Motorways, said: “One has to finish the contract which was agreed, for the price that was agreed, with the conditions that have been described.”

The agency is demanding 741m zlotys in damages from Covec, and is in talks with 16 companies with a view to restarting construction by the end of July.

The government is now aiming for the road to be “drivable” rather than complete in time for the soccer tournament’s opening match in Warsaw in June 2012. “Drivable means safe,” said Cezary Grabarczyk, the embattled infrastructure minister. “Work will be continuing on embankments.”

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Old June 15th, 2011, 08:26 PM   #6232
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Hello, I would like to know when the last sections of A1 are tendered?
The same question regards S69 and S7 section towards Rabka.
Thanks
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Old June 15th, 2011, 08:35 PM   #6233
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@ Cancun
There is a reason behind that. As I remember price makes up of around 95% of winning bid. There is no much of other criterias taken into the consideration during selection time. So what to expect? we have and we will have that sort of situations in the future untill our law won't be changed the way that experience of competing companies counts, not only how cheap they can go.
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Old June 15th, 2011, 09:39 PM   #6234
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Originally Posted by eucitizen View Post
Hello, I would like to know when the last sections of A1 are tendered?
The same question regards S69 and S7 section towards Rabka.
Thanks
Difficult to say. Currently the only thing we know for sure is that none of them will be built before 2013. There are some talks about A1 between Tuszyn and Pyrzowice being built in PPP (second try...), but one way or another I'd say the earliest we can expect it to be ready is 2015. Bypass of Węgierska Górka (S69) and S7 Lubień-Rabka are rather far on the list of priorities, I would be surprised to see them U/C before 2018
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Old June 15th, 2011, 09:41 PM   #6235
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There is a reason behind that. As I remember price makes up of around 95% of winning bid. There is no much of other criterias taken into the consideration during selection time. So what to expect? we have and we will have that sort of situations in the future untill our law won't be changed the way that experience of competing companies counts, not only how cheap they can go.
I don't think the law needs to be changed. It's enough to be tough with the underbidders exactly as the Polish government is now. When potential underbidders see that the consequences are consistently as they are with Covec, then no one will want to underbid in Poland. Adding more laws every time a problem arises quickly leads to drowning in laws.
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Old June 15th, 2011, 09:43 PM   #6236
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Yeah, I even think the Chinese now lost every chance of getting foot on the European motorway construction market. This issue is widely known, even outside Poland.
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Old June 15th, 2011, 09:49 PM   #6237
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I even think the Chinese now lost every chance of getting foot on the European motorway construction market. This issue is widely known, even outside Poland.
As pointed out above, in some countries tenders must be awarded to the lowest bidder. There is EU law on public procurement and member states must comply. Hopefully the Chinese have learned or will soon learn that radical underbidding is not the way to get their foot in the door.
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Old June 15th, 2011, 09:54 PM   #6238
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I don't think the law needs to be changed. It's enough to be tough with the underbidders exactly as the Polish government is now. When potential underbidders see that the consequences are consistently as they are with Covec, then no one will want to underbid in Poland. Adding more laws every time a problem arises quickly leads to drowning in laws.
That is only a theory. There is so many companies from China or other countries that will be keep trying and trying. And by doing nothing we will be repeating the same mistake and the same once again..... and time goes by...
...waste of time...

Last edited by rakcancer; June 15th, 2011 at 10:01 PM.
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Old June 15th, 2011, 10:00 PM   #6239
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As pointed out above, in some countries tenders must be awarded to the lowest bidder.
I doubt if something like that exists. Of course there are guidelines, usually including a phrase like the price weighs for 80 or 90% in judging the offers. But I don't think they MUST award it to the lowest bidder even if it is obviously ridiculous or unrealistic.
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Old June 15th, 2011, 10:04 PM   #6240
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That is only a theory. There is so many companies from China or other countries that will be keep trying and trying. And by doing nothing we will be repainting the same mistake and the same once again..... and time goes by...
...waste of time...
Gravity is also only a theory.

Covec is getting a huge fine (which may be difficult to collect) on top of huge operational losses on the deal. The Chinese learn quickly on things like this. You're right that other countries may not learn so quickly, but there are not so many players in the worldwide market of motorway construction, so it is not expensive for either the buyers or the sellers of motorway construction services to learn the reputation of the others. If Poland has a consistent reputation for not giving in to demands for more money, then companies will not screw around like Covec seems to have. No one bids on 9 or 10 figure contracts without doing a serious risk analysis that includes the reputation of the counter-party.
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