A perfect example of that is HS2 (or any railway project for that matter), which is taking far longer to build and costing far more than was ever envisaged for it.
The Guardian reports that the boss of the high-speed rail project has told MPs that HS2 construction contracts priced at £19.5bn have already cost £26bn despite being “just over halfway done”.
The paper adds that the transport select committee heard that the civil engineering to build tunnels and cuttings for the 100-mile line should be almost finished but is closer to 60% complete, while only a third of the wider project – including laying tracks and wiring – is done:
Mark Wild, chief executive of HS2 Ltd, told the committee that the rush to start work in 2020 without balancing the risks in the contracts was the major reason for costs spiralling upwards.
Contracts were signed off in April 2020 and construction formally began five months later, before designs were finalised and local planning consents were in place, he said.
Wild, who started work last December, is currently engaged in a “reset” of construction, which he said would include reshaping his direct staff at HS2 Ltd, coming up with a credible schedule and budget, and renegotiating contracts in the autumn.
He said: “The bottom line is that, at the notice to proceed, the contractors could not price the risk. What we’re seeing is the crystallisation of risk: they should have cost £19.5bn, and we’ve already spent £26bn and we’re just over halfway done … Between 50% and 100% is the likely overspend.”
The line between London and Birmingham – initially designated phase one, but now the entirety of HS2 – was originally planned to open in 2026.
The schedule was subsequently postponed to between 2029 and 2033. But on Wild’s advice, Heidi Alexander, the transport secretary, told parliament last month that there was “no route” to full HS2 services until after 2033.
Wild said Covid and inflation caused by Russia’s invasion of Ukraine had both had a significant impact on time and costs, but that HS2 had failed to manage costs.
He said the company was “unbalanced” and had “a significant gap” in its frontline workforce managing contractors, as well as having “too many consultants who’ve been there for too long”.
“We’ve ended up … locked in our own bureaucracy,” he added.
I'm almost sure that Joseph Chamberelain didn't come across any of these obstacles when he performed a civil engineering feat like no other and transformed public health in Birmingham.
Something that has always puzzled me is the seemingly open ended price of public infrastructure projects. I, perhaps naively, have always thought that when you signed a contract to build something for £x, you had to build it for £x and that as the contractor you had built in expected cost rises. Certainly, in the private sector that appears to be the case. I expect Joe Chamberlain would have pinned contractors to the wall if they asked for more. But with Calmac ferries, HS2 and many more, the contractor seems to have carte blanche to jack up prices willy nilly and the government rolls over and pays. OK, there may be a clause in a contract stating that in the event of wholly unexpected difficulties leading to large cost rises there may be a possibility of renegotiating, but surely any contractor who hasn't done the homework on the job should stand the cost of their own incompetence? It seems that public sector contracts have a get out of jail free card, as far as the contractor is concerned, after all, it's only the poor old taxpayer that gets fleeced.
ReplyDeleteSurely we can do better than this? Is it too much to ask for clear, watertight contracts with penalties for not delivering on an agreed timescale? Private businesses would collapse if that wasn't the case for them. Why should the public sector be any different?