TRANSPORT - RAIL | INTERNATIONAL
of 2029-2033.” The months needed now for extra data gathering, for sharper analysis, pale in comparison to those years still to go before trains run. Blame for the schedule delay was put down to two
problems: first, civils slippage in the past (estimated one-third complete versus two-thirds planned (according to the last usable baseline schedule, B 7.1); second, too little time was allowed for the extensive and expensive non-civils works and equipment to fit-out the line and have the fleet of rolling stock. This is all with respect to tunnel works outside
central London. Within the centre there is the last leg of the line, to link to Euston with its new terminus station. Works are underway on this portion but the commentary on schedule was related to the section outside London, to be initially opened, in the plans. What is the impact on costs? The last baseline (B.7.1)
put the cost at £42.9 bn (Q3, 2019 prices), excluding the cost of Euston station (£44.6bn, when included). In the years since the costs have “regularly” increased, but weren’t firmed and still aren’t; there isn’t certainty “that all cost pressures have been identified.’ Stabilization of costs needs, first, a firmer foundation of the schedule, from a “full program reset”, the letter says. Digging deeper, three “primary issues” were noted for
the time and cost problems, and all of them were macro choices, made early on: in planning and procurement; and, in program management. On planning and procurement, the conclusion is the
build started too soon, without enough design done; over optimistic cost and schedule estimates, and not enough provision for risk; efficiencies metrics were not up to the task; the contracting model did not drive
performance, and focused on early wins rather than optimizing whole-life, or overall, cost; and, doing so on civils packages that were too big. On program management, it says the client was “not
set up to actively manage delivery”, and that despite a large headcount in HS2 Ltd there is a relative imbalance on its project delivery team’s size versus that of its corporate team - which “has grown excessively”. The project team’s commercial and technical capacities need boosted. Bureaucracy is criticized, and internal culture - and
that a focus on its de facto core mission appears amiss, in that it does not act “like an expert builder of a railway”, or operator, but rather is construction -focused. It appears insufficient as an owner-operator of a transport system with a focus on serving passengers, long-term, and well. For ambitions now and ahead, HS2 Ltd is to change,
being strengthened and reshaped to focus on delivery as an service provider, not a builder. Wild’s letter talks of “systemic failure” emerging from
pile-ups of “vulnerabilities”, compounding over time; although “there is no single root cause” it acknowledges difficulties due to Covid, Brexit and geopolitics affecting inflation, all worsening matters. The project has been underway in not the easiest of
times, and no review is needed to know that to those externalities can be added further woes, causes by political headwinds, tailwinds, and repeated reversals and twisters. Chaos at the top of politics affects large projects, in their governance, schedules and costs. The plan, now, is proposals by year end, a new
schedule by April 2026, and then to better track progress and performance.
STEWART REVIEW MAKES ITS RECOMMENDATIONS
The Government has accepted all recommendations made by James Stewart following his independent review of the governance and assurance of major transport projects, principally focused on HS2, as performed by DfT, the civil service and politicians with responsibilities in the past. Soon after winning the General Election, the Labour Government commissioned Stewart, in October 2024, to get to work. His report was released publicly in June, along with the Government’s response. Principal findings of the Stewart Review tell of historic mishandling of the huge project, lack of ministerial oversight and scrutiny, and inadequate control by the project’s client - the owner-operator company, HS2 Ltd. Also, effective incentives with supply chain were lacking, resulting in, the Government saying, a position that “will collectively cost the taxpayer billions more than planned.” The Stewart Review gave five key recommendations, which are to: bring back the HS2 taskforce for oversight; negotiate incentives to get cost savings for taxpayers; reform but boost the project client; make a decision on the Euston terminus station; and, ensure other DfT projects benefit.
On negotiating incentives, the new client leadership will
be “renegotiating HS2’s large construction contracts” as well as overhauling the “skills and structure” of the entire organization. The Review says that both HS2 Ltd and DfT, as project Sponsor, were both “underpowered” to handle HS2’s needs.
The blame, in part, is laid on choosing a ‘lean’ client model
for HS2 Ltd. This “proved to be wrong” and was not changed as problems arose, the Review says. It adds that both HS2 Ltd and DfT lacked sufficient resources, and also skills, with sufficient experience of commercial and delivery activities. Interestingly, it is recommended that, in the reset, the new HS2 Program be given a 5-year funding control period, with flexibility to move budget between years. Stewart says the project “is in a state of flux and uncertainty,” and a “fundamental reset” is needed to get it finished and trains running. Two positives are noted, though: the scope was tightened previously, after Phase 2 and HS2 East were dropped; and, the engagement of Mark Wild as chief executive.
Winter 2025
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