TfL slammed for £900m Tube upgrade cost overrun

Aaron Morby 1 year ago
Share

The London Assembly has blamed Transport for London for gross mismanagement of a signalling contract with Bombardier setting the Tube modernisation programme back five years.

Old London Underground signalling box

An investigation into the failed signalling contract said a catalogue of management failings and errors left the District, Circle, Metropolitan, Hammersmith & City line upgrade nearly £900m over budget.

TfL ultimately paid £85m to cancel the contract with Bombardier Transport in 2013, two years after appointment. The report estimates that £67m of the settlement was wasted expenditure.

A culmination of nearly three years’ work scrutinising TfL’s sub-surface upgrade programme, the budget and performance committee report highlights how poor commercial expertise and a lack of IT procurement skills left TfL ill-prepared to appoint a suitable contractor, and vulnerable enough to be duped into a contract which Bombardier was never able to deliver.

The critical report highlights a culture where TfL management was only interested in presenting good news and was in denial about the progress and effectiveness of the programme, allowing it to continue for much longer than it should have.

The committee concluded that neither TfL nor Bombardier’s management teams were up to the task of managing the programme.

John Biggs AM, Chairman of the Budget and Performance Committee, said: “What is most remarkable about this affair is that no-one in TfL has been held to account, and the Mayor, who chairs its board, serenely and indifferently acts as if a £900m increase to the budget isn’t an issue.

“In government, heads – political or official – would roll after such financial mismanagement.  At TfL the key players have been promoted and nobody was to blame. It is a scandal.”

Transport for London’s Signal Failure report

KPMG audit – Lessons learned

TfL’s procurement process was not well thought out. Most significantly, its scoring system for evaluating bids was flawed. This meant that by significantly underbidding its competition on price, Bombardier was almost certain to be taken forward, regardless of how it scored in the technical areas of the evaluation.

Furthermore, TfL seemed to change its procurement process as it went along. If TfL had followed the process as outlined in the tender notice, then neither Bombardier nor the firm that finished second would have made the cut. By the time the field had been narrowed to two bidders, Bombardier was offering a lot more and for a lot less. If Bombardier could deliver what it was offering, then the case for appointing Bombardier was compelling.

Unfortunately, as KPMG noted “the capability of the supplier to deliver these benefits had not been adequately demonstrated or interrogated”. TfL has openly admitted it agreed a “bad contract”. The payment and penalty regimes within the contract were aligned to spend, rather than progress. This meant that in ending the contract, TfL was required to pay Bombardier a sum based on how much it had spent on the programme and not on the value of the work it had produced.

Latest news

Mayor of London pulls plug on Garden Bridge

Sadiq Khan withdraws backing amid fears of funding gap and rising construction costs
12 hours ago

Specialist sites to get £15bn funding boost

Building boom to continue in sectors like student accommodation and PRS
15 hours ago

Manchester’s Harbur Construction goes under

More than 20 jobs axed at social housing specialist
1 day ago

Hill on track for £850m turnover target

Rapid growth ranks south firm as country's third largest private house builder
14 hours ago

Scape starts race for £1.4bn Midlands framework

Procurement specialist aims to pick firms for 10 lots in Midlands and East of England
14 hours ago

Reading FC’s £500m Royal Elm Park scheme approved

Work to start early next year on convention centre and housing next to club’s Madejski Stadium
1 day ago

Construction firms: Show staff and suppliers you care

Entry deadline approaching for a chance to be recognised among the best in the business at the Enquirer awards
15 hours ago

Betting Spy: Chelsea title tip paying off

Nearly time to collect on our pre-season punt while Stoke, Spurs and Palace can land a treble
24 hours ago

Taylor Wimpey chief takes reins at Countryside house building

Countryside unveils leadership shake-up at house building and partnerships operations
2 days ago

New home registrations soar to 10-year high

NHBC registrations jump 17% in first three months of 2017
1 day ago

AstraZeneca HQ project costs skyrocket

Cambridge HQ project running over two years late and to cost £170m more than expected
2 days ago

HSE inspector numbers fall by 25%

Spending cuts bite at HSE raising union concerns about lack of enforcement
2 days ago

Taylor Wimpey sets aside £130m to settle lease rows

Housebuilder acts to help homeowners hit by ground rents which double every ten years
2 days ago

Styles & Wood targets schools and Government hub refit

Fit-out specialist targets public sector refurb work as profit jumps 26%
2 days ago

Forrest lands twin towers resi deal in Manchester

Contractor lands significant deal as it shifts from traditional maintenance market
3 days ago

CSCS backs “try before you buy” apprentices

Skills body supports on-the -job training with funding for contractors
2 days ago

Heathrow plans offsite revolution for infrastructure construction

Four new logistics hubs to be dotted around country to pre-assemble components for £16bn airport expansion
2 days ago

Interserve and Kier walk away from £100m water deal

Contractors unable to agree a price after six months with Severn Trent Water
3 days ago

Irish duo scoops £85m Cumbria pipeline job

Farrans and Roadbridge joint venture to deliver Thirlmere water mains project
3 days ago

Civils firms win £60m Welsh roads framework

Alun Griffiths, Dawnus, Jones Bros and JN Bentley snare Welsh roads spend
3 days ago

Grosvenor eyes mid-market housing as London chills

Plans for 1,500 homes to be submitted this year for five hectare Bermondsey site
3 days ago

CBI turns to “future leaders” to reform construction

Think tank set-up of rising stars under 35 to generate new ideas
3 days ago

Laing O’Rourke to get new Chairman

Anglo American chief Sir John Parker to join later this year
4 days ago

Talks start on independent appeals against FFI charges

Contractors to get fair hearings over £124-an-hour safety visit charges
3 days ago

Former Liverpool Chinatown contractor goes under

Bilt Group in creditors' voluntary liquidation
4 days ago

Staircase contractor fined £185k after death at O’Rourke site

CMF Ltd fined after worker crushed by falling concrete staircase
4 days ago

British Land submits latest Broadgate revamp plan

Developer to boost shopping space at 135 Broadgate bank building
4 days ago

Newly merged housing group to build 1,200 homes a year

Vivid plans to double new build housing output in Hampshire and Surrey
4 days ago

Willmott Dixon wins £24m Harwell testing lab

Builder returns to Harwell after completing project two years ago
4 days ago

Morgan Sindall wins £30m Soton student digs

Select Property Group has nine schemes in development around the country
4 days ago

Contractor services