HS2 must start by March to avoid serious cost rises

Aaron Morby 1 month ago
Share

The Government’s spending watchdog has warned that any further delays in taking a decision on HS2 will dramatically impact on forecast construction costs.

Contractrors must start main works before the end of March to avoid further significant delays and cost rises
Contractrors must start main works before the end of March to avoid further significant delays and cost rises

An investigation into the HS2 project by the National Audit Office said the £30bn cost envelope for phase one is now more bolted down, but raised concern that costs for phase two were more uncertain.

Since April 2017, the forecast cost of phase one main civils has jumped 85% to £10.7bn.

Auditors have warned that any delays beyond March will dramatically increase costs on the project’s second phase.

If work does not begin by this date, the schedule may be delayed or compressed further because some of the construction work can only be done at certain times of the year.

Delays would also compress later parts of the programme, such as integrating the signalling and control systems, which are complex and risky parts of delivering the project on time and budget.

Auditors revealed that shifting the risks on targeted construction costs has saved £1bn through contractors reducing prices in response to the reduced risks.

The report says that HS2 revisions to its commercial approach were sensible but carried risks that it must manage.

Under new arrangements, contractors will no longer be liable for cost increases above a fixed target price.

Instead, HS2 has developed an estimated cost for the works with its contractors that will leave HS2  responsible for funding increases above the estimated cost, while contractors would lose a proportion of their fee for building the railway if they fail to meet cost and schedule milestones.

The NAO said that HS2 must now develop its capability to manage the programme to avoid further cost rises.

The report said: “We welcome the increased realism on the estimated cost and schedule for the programme. However, significant risks remain.

“While the estimated cost and schedule for Phase One are now on a stronger footing, the challenge of getting Phase One into construction, and of monitoring and managing the programme as it progresses, is considerable.”

Phase Two is at a far earlier stage of development with many important decisions to be made before HS2 Ltd and the Department can improve cost and schedule estimates.

HS2 has purchased 66% of the land required to build Phase One and has spent £7.4bn in preparations to start.

The full project cost now sits between £65bn and £88bn (2015 prices), between 17% and 58% more than the available funding of £56bn agreed.

Welcoming the report, HS2 said: “As the NAO recognises, our work – along with a greater understanding of the ground conditions and build requirements – means Ministers have robust cost estimates for Phase One of the HS2 project.”

The High Speed Rail Group made up of contractors and suppliers, said:  “If the Government want to fulfil their promise of an infrastructure revolution, HS2 must be completed in full, without further dither and delay.

“The alternatives spoken of are many years behind HS2 in terms of readiness to begin work and some, like Northern Powerhouse Rail, require HS2 to be delivered to realise their full benefits.”

Robert Nisbet, director of nations and regions at the Rail Delivery Group, which represents train operators and Network Rail said: “It’s time to inject some realism into the debate about HS2.

“There are no shovel ready alternatives. To cancel it would be to worsen punctuality and overcrowding on the railway for years to come, throttling future economic growth and damaging the environment by encouraging car travel.”

Latest news

Health chiefs issue details of £73m Multiplex hospital claim

Eleven technical problems highlighted at Glasgow’s Queen Elizabeth University campus
10 hours ago

GMI nets £95m haul of orders in first two months

Six projects secured in the North and Midlands, total close to 1m sq ft
11 hours ago

Construction firms OK with price-fixing and bid rigging

Competition and Markets Authority survey shows problems ingrained in industry
18 hours ago

Winners unveiled for £400m Essex framework

Council boosts numbers to minimise impact of possible contractor failures
15 hours ago

Unite reveals £20m cost of replacing HPL cladding

High pressure laminate cladding found on 16 buildings after ACM cladding refit completed
18 hours ago

Balfour Beatty wins £10m radium clear-up job

Radium from scrapped second world war aircraft being washed up at Dalgety Bay
14 hours ago

£1bn London Bankside Yards phase 2 approved

Major second phase of five buildings clears planning
18 hours ago

Graham to start £40m new M11 Harlow junction

Work to start on delayed 7a junction this spring
18 hours ago

Steel and cladding packages awarded at Paddington Square

Wins for William Hare and Focchi as Mace agrees £350m price to complete project
1 day ago

Willmott Dixon on call for £21m fire station

Planning to go in this spring for new training complex in West Sussex
2 days ago

Costain to offer clients low-carbon option in bids

Decarbonising option to be pitched to all clients from 2023
2 days ago

Derwent advances zero carbon building target by 20 years

New business model will involve turning brown buildings green
2 days ago

New watchdog to clamp down on shoddy building work

Independent Ombudsman given wide-ranging powers to protect homebuyers
2 days ago

Insurer warns hot work fire claims have spiked

Call for thermal imaging cameras to be used on site to combat rise in hot work fires
2 days ago

Construction nearly double size of official figures

Industry's real vital statistics put it above manufacturing
3 days ago

Spie fined after child killed by overhead power pole

Court hears how pole rolled down embankment and crushed 12-year-old
2 days ago

Eye-catching Newcastle office plan

Ribbon-like office scheme will be built near the Gateshead Millennium Bridge
3 days ago

Gilbert-Ash wins £26m Brunel Uni job

New teaching block to be built at Uxbridge campus
3 days ago

Boost your online presence – join the Enquirer Directory

Site for suppliers and buyers showcases products, services and latest stories
2 years ago

Contractor rethink on delayed smart motorway jobs

Fears grow Costain and Galliford Try's north west smart motorway projects will be rebid
3 days ago

Harry Fairclough Construction ceases trading after 120 years

150 staff made redundant at Warrington contractor
6 days ago

L&Q names new line-up of facade specialists

Bid races start for mechanical and electrical specialists
3 days ago

Sisk wins £21.5m deal to upgrade Leeds Corn Exchange area

Work to start in June on improving transport routes
3 days ago

Strucktor lands M&E package at £460m Raffles hotel

Specialist bags major win from Ardmore on Whitehall conversion job
5 days ago
STRUCKTOR UK

Construction work stops on another Elliot Group tower

Work suspended on £70m The Residence in Salford
7 days ago

Costain Welsh road job £100m over budget and two years late

Row simmers with Welsh Government about liabilities for cost overruns
7 days ago

London super sewer passes halfway point

Two further TBMs to be launched this year for east part of 25km drive
6 days ago

Entire facade of wind damaged tower to be strengthened

Major remedial programme planned after three cladding panels blown-off
6 days ago

BAM trading steady after second half uplift

Rise in profit at BAM Construction offsets fall at BAM Nuttall civils arm
6 days ago

Plan in for £30m East London ice rink

Twin pad ice skating centre will be biggest in southern England
6 days ago

Contractor services