Extra design work digs £200m deeper into HS2 contingency

Aaron Morby 1 month ago

The cost of extra design work on the HS2 main work contracts has eaten £200m into contingency funding for the project in the last six months.

Already HS2 is supporting nearly 30,000 construction jobs as it approaches peak construction next year
Already HS2 is supporting nearly 30,000 construction jobs as it approaches peak construction next year

The latest progress report on the mega project reveals that HS2 has had to dig deeper into its £5bn contingency funds.

Significant amounts of the original design work on HS2’s Euston station have been ditched after the decision was taken for the station to be scaled back from 11 to 10 platforms.

HS2 chiefs are now projecting around £1.9bn of net additional cost pressures on phase 1, an increase of about £200m since March and £700m more than a year ago.

So far the mega project has drawn £1.5bn or 28% of its £5.6bn contingency for phase 1, leaving about £4bn in the pot to complete phase one of the project within the 2029 to 2033 time frame.

The latest project spend figures are based on 2019 prices and do not take into account industry-wide construction materials inflation which hit 18% according to official Government figures in the year to August.

HS2 is now ramping up to hit peak construction next year and is now supporting 29,000 construction jobs, with nearly 2,600 firms to date working on the project.

Transport secretary Mark Harper in a six-month HS2 monitoring report to Parliament said:  “While inflation is not affecting the overall affordability of HS2 in real terms because the total budgets and cost estimates for each phase are set in 2019 prices, it is creating pressures against its existing annual funding settlements, which have been set in cash.

“I am clear that HS2 Ltd and its supply chain must do all that they can to mitigate inflationary pressures.”

He said that HS2 was tasked in September to develop and implement actions to bring projected costs back in line with the target cost.

It has since identified an estimated £800m of net savings and efficiencies within phase 1.

These principally consist of savings across the main works civils portfolio and savings in the acquisition and resale of land and property.

These have partly offset gross cost pressures resulting in the latest published net figure.

Harper reported that HS2 phase 1 was still on track to be delivered within its maximum targeted cost including contingency of £45bn.

The phase 2a budget remains unchanged, with a cost range of £5.2bn to £7.2bn.

Government intends to set a target cost alongside the publication of the full business case shortly.

On phase 2b Western Leg, the overall cost range has fallen by around £3bn after removing the Golborne Link.


Latest news

Eric Wright wins tricky £52m Liverpool transformation

Contractor working with engineers at Ridge and Partners on "challenging" Stanley Lock Flight site
1 day ago

Investment giant buys Bristol M&E contractor

RDCP Infrastructure acquires Avon Combined Electrical Services
1 day ago

Demolition start for £50m Farnworth town centre rebuild

Caddick Construction is tipped for main works due to start in the spring
1 day ago

L&G Modular strikes deal to build 1,000 affordable homes

Modular homes business teams up with Hampshire's Vivid housing association
1 day ago

Former Erith operations director joins John F Hunt

Scott Exell named new operations director at demolition specialist John F Hunt
2 days ago

Green light for £135m Leeds twin tower resi scheme

Construction to start in New Year on 500 build-to-rent apartments
2 days ago

Mace hits 1m tonnes carbon saving target for clients

Present work pipeline betters 2026 carbon emission saving target
2 days ago

Plans in for £40m surf park at former Kent colliery

Seahive surf lagoon and health resort will be built near Deal
2 days ago

Crushed demolition worker vows to return to industry

Shannon Brasier hoping to return to construction following horror accident
2 days ago

Mount Anvil to start 900-home North London estate rebuild

Planning approval paves way for Barnsbury Estate rebuild in Islington
2 days ago

Green light for major laboratory campus in Cambridge

Developer BioMed to tender first building on 600,000 sq ft lab complex in the New Year
3 days ago

Belfast firm signs the biggest work deal yet under Project Gigabit

Fibrus to hook-up rural Cumbria to lightning-fast broadband under £108m deal
2 days ago

McLaren wins Leeds logistics park contract

Work to start imminently on warehouse complex for Firethorn Trust
3 days ago

Work restarts on £683m waste power plant after site death

Construction suspended for a week of investigations following fatality
3 days ago

Demolition starts on £135m Wigan Galleries scheme

Contractor BCEGI starts work on project to redevelop Wigan town centre
4 days ago

Amey CEO to step down following private equity buyout

Amanda Fisher to leave once business is transferred to new owners
3 days ago

New body set up to vet plant operator card schemes

Contractor trades bodies unite to tackle competency concerns over plant operator skills cards
3 days ago

Kier leads switch to hybrid battery generators

Battery units work alongside smaller generators cutting run times by nearly 60%
3 days ago

Plans in for first Leeds co-living scheme

Watkin Jones submits plan to convert old Direct Line HQ into 230 studio flats
4 days ago

Demolition worker crushed by excavator

Court hears 20-year-old woman was left with "life changing injuries"
4 days ago

Government pays £700m for 50% stake in Sizewell C

New body, Great British Nuclear, will be set up to develop pipeline of nuclear projects
4 days ago

Costain wins Heathrow Airport asset renewal deal

Firm takes early contractor involvement role in Terminal 2 baggage handling upgrade
4 days ago

Worker killed on £683m waste power plant site

Fatal collision involving heavy goods vehicle on giant north London site
5 days ago

HS2 JV shifts four Wembley Stadiums of earth in record time

EKFB team digs and hauls 15 million cu m of muck in 20 months
4 days ago

Milestone wins £300m Wiltshire highways upkeep

Ringway will hand over to Milestone in March next year
4 days ago

Low-risk business model helps Renew post record results

Renew reveals latest acquisition with £15.6m purchase of water specialist Enisca
4 days ago

London Albert Embankment hotel towers approved

Two separate hotels rising to 26 and 29 storeys approved
4 days ago

Keltbray names new director of strategic engineering

Tim Lohmann takes up newly-formed role to drive innovative engineering solutions
4 days ago

Go-ahead for £200m lithium refinery on Teesside

Work to start next year on Europe's first lithium hydroxide processing plant
5 days ago

HS2 agency workers paid the wrong wages

Payroll software problems leave workers out of pocket
5 days ago

Contractor services