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HS2 delivery given ‘unrealistic timetable’ says National Audit Office

28 June 2016  •  Author: Katie Sadler, Digital Content Producer, European Railway Review

A report published by the National Audit Office (NAO) suggests the schedule for delivering HS2 is an ‘unrealistic timetable’ and warned the 2026 target opening date for phase 1 was at risk.

HS2 EXTERIOR_DESIGN

The programme for High Speed 2 (HS2) is facing cost and schedule pressures warned the NAO in a new report issued today. It also revealed the opening date for phase 1 may be extended and reassured that steps were being taken to bring cost estimates within available funding.

“The unrealistic timetable set for HS2 Ltd by the Department means they are not as ready to deliver as they hoped to be at this point” – Amyas Morse, NAO

Commenting on the report, Amyas Morse, head of the National Audit Office, said:  “HS2 is a large, complex and ambitious programme which is facing cost and time pressures. The unrealistic timetable set for HS2 Ltd by the Department means they are not as ready to deliver as they hoped to be at this point. The Department now needs to get the project working to a timescale that is achievable.” 

Steps being taken to bring cost estimates within available funding

The NAO warned that the 2026 target opening date for phase 1 was at risk despite good progress with some major procurements. In addition, The Department for Transport (DfT) has asked project leaders to revisit the programme schedule in order to increase confidence for delivery from 60 % to 80%, without increasing costs. It has also asked HS2 Ltd to assess the impact of extending the timetable for opening Phase 1 by up to 12 months.

Timetable for Phase 1 opening may be extended by 12 months

The NAO report alongside the Committee of Public Accounts report issued in 2013 both believe the schedule for achieving delivery readiness was too ambitious. However, it points out that HS2 Ltd has made significant progress in preparing to deliver the programme. According to the NAO, it has issued tender documents for major civil engineering contracts on phase 1, and plans to announce the preferred route for phase 2b later in 2016.

The report also highlights that the DfT and HS2 Ltd delayed the first of three formal review points – which tested HS2 Ltd’s readiness to deliver – by ten months because HS2 Ltd would not reach the required level of capability in time. By May 2016, HS2 Ltd had the capability it had planned to reach in July 2015, but did not pass review point 1 owing to concerns about cost and schedule.

HS2 Phase 1 is currently forecast to cost £27,384 million

Phase 1 is currently forecast to cost £27,384 million, exceeding available funding by £204 million. There is less contingency to deliver phase 1 than the Department and HS2 Ltd were aiming for at this stage, and this forecast assumes that planned efficiencies totalling £1.47 billion will be realised. Cost estimates for Phase 2 announced in the 2015 Spending Review were expected to exceed available funding by £7 billion. However, since then, further work has identified possible saving of £9 billion, £2 billion of which has been secured.

‘Effective integration of HS2 with the wider UK rail system is challenging and poses risks to value for money’

In conclusion the NAO report states that ‘effective integration of HS2 with the wider UK rail system is challenging and poses risks to value for money. The Department will need to address a number of issues including how the project services will complement or compete with other rail services, and how HS2 will interact with proposed improvements in the North.’ It warns that failure to understand these interactions will make delivering the programme more challenging.

The report “recognises the real progress we have made in taking the concept of HS2 and moving it nearer reality” –  Simon Kirby, High Speed 2 Ltd.

Reacting to the NAO report, chief executive of High Speed 2, Simon Kirby, said: “The role of the NAO is to challenge projects such as HS2 and through that challenge improve the way they deliver for the taxpayer. This report does this and we accept that challenge.

“It also, however, recognises the real progress we have made in taking the concept of HS2 and moving it nearer reality.

“As the report says, HS2 remains a highly ambitious project, but as it also demonstrates there are real and substantial grounds why the public, government and parliament should have increased confidence in our ability to deliver the project. Our job is to keep earning that confidence going forward.”

Commenting on the report, James MacColl, Head of Campaigns at Campaign for Better Transport said: “The Government clearly needs to keep a close eye on progress with HS2. With future Government finances now under even more uncertainty, the emphasis must be on getting the most from our investment. To do this, it must urgently work closely with local transport authorities to ensure HS2 joins up properly with the existing rail network and other public transport. Without this, the benefits of the scheme could be badly compromised.”

Sarah Hayward, Leader of Camden Council, said: “HS2 is already causing blight in Camden and anxiety for our residents. More uncertainty about HS2’s ability to deliver on time and on budget only increases those worries. I’d urge the Secretary of State to act swiftly to get the big issues facing the project at Euston right – community engagement, maximising the transportation of materials by rail to get lorries off the road, and bringing forward the funding to ensure that plans for the Network Rail station are properly integrated with those for HS2 and Crossrail2.”

The National Audit Office report can be read in full here.

2026
Target for opening date for phase 1

60%
The Department and HS2 Ltd’s level of confidence that phase 1 of the programme will be delivered by 2026. HS2 Ltd are reviewing the schedule with the aim of increasing this to 80%

£55.7bn
Agreed funding for the High Speed 2 programme (including infrastructure and rolling stock) in 2015 prices

£417 million
Estimated additional funding requirement, including contingency, for work to enable over-site development at Euston station

2033
Target opening date for the full railway

2,600
Petitions processed during the passage of the hybrid bill for phase 1

£7 billion
Savings required to bring the costs of phase 2 within the agreed funding at the time of the 2015 Spending Review

£9 billion
Potential phase 2 savings identified by the Department, HS2 Ltd and a Cabinet Office led review since the 2015 Spending Review. The Department has asked HS2 LTD to incorporate the efficiencies and cost savings in its next cost estimate

32%
Of planning and development milestone delivered late on the programme so far

1.8:1
Current benefit cost ratio for the full programme excluding wider economic impacts

2.2:1
Current benefit cost ratio for the full programme including economic impacts

Source: National Audit Office

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