Mr Kieran Donnelly, the Comptroller and Auditor General, issued a short report: `Department for Regional Development – Archaeological Claims Settlement’. This report examines how effectively the Department’s Roads Service dealt with a dispute with a contractor over ‘unforeseeable archaeology’ during a major road building scheme and how it managed the resolution of the dispute.
Roads Service and a Contractor entered into a £224.9 million Design, Build, Finance and Operate (DBFO) contract in November 2007 for 78 miles of motorway and trunk road (see Notes). Under the terms of this contract, the risk of archaeology was shared - the Client (Roads Service) carried the risk that additional costs could be incurred by the Contractor for certain stated ‘unforeseeable archaeology’ and the Contractor was liable for all costs related to ‘foreseeable archaeology’. In conventional contracts, the Client retains the risk of discovery of all archaeology.
Following the discovery of extensive archaeological features, the Contractor argued that all of these were ‘unforeseeable’ and in September 2010 submitted a claim for £33.7 million to cover the additional costs it would incur in dealing with the archaeological finds. The claim was contested by Roads Service.
In an effort to resolve the dispute, the Contractor suggested mediation which subsequently took place on 25 July 2011. Roads Service made an initial offer of £8.6 million to settle the dispute but following advice from the Mediator increased its offer to £16.25 million. Agreement with the Contractor was eventually reached on a settlement of £17.22 million. This represented an extra cost to the taxpayer.
Prior to the contract, the Department spent £2.6 million on advanced archaeological works to minimise the risk of unforeseeable archaeology being found. However, under the contract used, it is not possible to assess how much additional expenditure would have been required on advanced archaeological works to eliminate all archaeological risks and whether this would have been value for money. Given the inherent ‘unforeseeable’ nature of the risk, it is unlikely that risk could ever be easily or adequately evaluated and priced. As a result, our general conclusion is that Roads Service acted reasonably in retaining the risk of ‘unforeseeable archaeology’.
Lessons learned by Roads Service and the Northern Ireland Environment Agency (NIEA) The Agency responsible for issuing archaeological excavation licences and carrying out archaeological fieldwork, surveys and excavations. have been incorporated into more recent road schemes (A5 and A8). Here, advanced archaeological contracts have been used to deal with archaeology by ‘trial trenching’ which is deemed by the NIEA as clearing the site, effectively mitigating the risk of a similar set of circumstances arising during future work. In our view, this will provide greater protection to public resource
Background briefing can be obtained from the Audit Office by contacting Sean McKay (028 9025 1075) or Alan Orme (028 9025 1136).