Conflict could have major consequences for the Femern project
According to senior researcher Kim Haugbølle, the billion-euro claim from the contractor is not just a question of money - but of responsibility and principles.
The Femern project is in the midst of a huge conflict after the contractor Femern Link Contractors (FLC) has made a claim of 1.95 billion euros against Femern A/S. The claim, which amounts to around 14.5 billion kroner, concerns the contractor's access to the tunnel trench on the Fehmarn Belt and adds to a series of conflicts that increasingly characterise the project.
According to Kim Haugbølle, senior researcher at the Department of Construction, City and Environment at Aalborg University, it is important to understand how such a large claim comes about.
- Behind the claim are calculations on the rental of equipment, depreciation on the equipment one owns, and wages for employees. And it quickly adds up, but just because you make a claim for 14.5 billion kroner, it doesn't mean you get it.
The claim is an expression of growing tensions
The claim has been made in connection with the so-called VO-058 - an instruction that changes the conditions for work at sea and has triggered a prolonged disagreement between the contractor and the client. The dispute ultimately concerns whether the contractor has had the access to the tunnel trench that the contract presupposes.
The case comes on top of other disagreements about both finances and the schedule, and it shows that cooperation between the parties has become more difficult as construction progresses.
Arbitration may be the next step
If the conflict is not resolved, the case may end in arbitration, similar to a previous case about corona delays, where the contractor demanded 77 million euros. That case is now being handled by an international arbitration.
Senior researcher Kim Haugbølle
- If an agreement is not reached, it will probably end in arbitration. It is usually faster than a court case, but it still takes a long time and costs a lot of money.
Kim Haugbølle points out that arbitration in cases of this size is rarely a quick or uncomplicated process. There are large sums and many fundamental questions at stake, and both parties have strong interests in the outcome.
A battle over responsibility and rights
Even though the conflict involves many billions of kroner, according to Kim Haugbølle, it is also a matter of interpreting contracts and responsibility.
- The conflict is an expression of two parties fighting tooth and nail for what they believe is fair and reasonable during the construction. For both the client and the contractor, it is about determining when one is entitled to compensation.
The state has a special responsibility
The Femern project is state-funded, which means that Femern A/S cannot act as freely as a private client. The budget is 55.1 billion kroner, but that is in 2015 prices. So today it is adjusted to around 67 billion kroner.
Where a private entity can in some cases make a compromise to avoid prolonged conflicts, the state is bound by a different responsibility.
- The state cannot, as a rule, create solutions where you meet halfway. They must protect taxpayers' money and may need to take such cases further than what might make sense.
Risk of major consequences
If the conflict drags on, it can have major consequences for both the schedule and cooperation. The project already faces challenges on several fronts, and this increases the pressure further.
- Worst case is that you have to change the contractor on the construction, but it is very expensive and will cause further delays, says Kim Haugbølle.
