BAM Construct UK is part of the joint venture team building the controversial Nato headquarters building in Belgium, which has run into serious financial difficulties last month and was alleged to be on the brink of insolvency.
Construction of the giant steel and glass building in the Brussels suburb of Evere is being carried out by the BAM Alliance, a consortium of three Royal BAM Group operating companies in Belgium: Interbuild, CEI-De Meyer and Galère.
Although not physically on site, BAM Construct UK is providing expertise and experience to the project along with BAM Contractors in Ireland, BAM Utiliteitsbouw in the Netherlands, and BAM Deutschland in Germany.
The HQ building is being built for the Western Alliance and is the brainchild of outgoing Nato chief Anders Fogh Rasmussen. But a eport in the German news magazine Der Spiegel last month claimed to have seen documents relating to the project revealing that the HQ’s construction team had run into “serious financial difficulties”.
Reports in the press suggest the Nato headquarters building is in “serious financial difficulties”
The magazine claimed Rasmussen’s staff told Nato’s Deputies Committee, which comprises representatives of all 28 Nato member states, that BAM Alliance was in serious financial trouble “resulting from miscalculation and high claims from subcontractors”.
Rasmussen’s staff told the Committee that the project would not be able to stick to the budgeted upper limit of €1.05bn and without a fresh injection of capital, construction would come to a halt, Der Spiegel claimed. BAM Alliance’s original contract, awarded in 2010, was for €456m, which the German magazine says was €210m below Nato’s own budgeted costs.
It also says that on January 10, Nato project manager Tony Carruth – formerly with MOD Defence Estates – told delegates on the committee that the BAM Alliance consortium wanted €210m in additional funding and that completion would probably be delayed for nine and a half months.
“We would like to emphasise strongly that all incurred and anticipated costs associated with this project have been incorporated accurately in the financial statements and that there are no circumstances in which BAM cannot meet its financial obligations.”
Royal BAM Group
In a statement, Royal BAM Group said: “Several unforeseen circumstances, including significantly higher security requirements following heightened international terrorism risks, have resulted in the construction value of the Nato headquarters exceeding the original contract sum. When publishing Royal BAM Group’s half year results in August 2013, we indicated this project is currently loss-making for us for these reasons and we submitted a claim to the client at the end of 2013. BAM is working hard to deliver the project successfully by mid-2016; our work will not cease and the continuity of all related activity is not in jeopardy.”
Responding to fears over the project’s future, the Netherlands-based contracting group added: “We would like to emphasise strongly that all incurred and anticipated costs associated with this project have been incorporated accurately in the financial statements and that there are no circumstances in which BAM cannot meet its financial obligations. During the earlier discussions with our client, we had to point to the possibility that the project could be delayed if we could not resolve the issues mentioned above through constructive dialogue. We emphasise that currently this is not the case and that our discussions with the client are progressing in a positive way.”
The Nato headquarters is intended to replace the existing HQ, located close by in Brussels, which was considered too costly and labour-intensive to maintain. Due for completion in 2016, it will provide space for 28 embassies from Nato nations, 1,550 Nato nation delegates, 1,700 Nato international staff and 800 staff from Nato agencies.
The state-of-the-art building is comb-shaped in plan and curved in profile and designed to achieve smarter and more effective ways of working, whilst improving physical protection for the building and its occupants. It has been designed by SOM/ASSAR.
According to a Nato fact sheet, the current total budget is €1bn, including design fees, security systems and fit-out.
