2.28 Laser's contract with JLC Ltd linked payment to the progress of construction work on each phase, rather than to the delivery of the Department's specification. This arrangement meant that, provided construction work was complete, JLC Ltd would be paid most of the contractually set price for a phase, even though it did not meet the specification and required significant remedial work.
2.29 As a result, by September 2001, Laser had already paid JLC Ltd £76 million out of the £82 million fixed price set in the contract, even though at this point only 9 of the 16 modules had been certified complete. Consequently, when John Laing plc was negotiating its exit from the project and estimated that the cost to complete the new facilities would be about £45 million, it knew that the maximum it would receive in return would be only £6 million.