The cost of HS2.
Better co-ordination, more stability and a greater sense of continuity are essential as the massive project attracts fresh concerns about costs, argues CHRISTIAN WOLMAR
I am writing a book on the story of Crossrail. My interviews with senior managers, as well as with the planners who worked on the earlier version of the scheme, offer a lot of lessons for HS2, but I have concerns that they will not be learned.
Not much has been heard about Crossrail over the past year or so, and that is something which does not disappoint its managers - no news on big projects is basically good news. Inside the headquarters in Canary Wharf, there is confidence that the tunnels under London will open on time in December, and that the whole line will be operating fully by December 2019, having been completed to its budget of £14.8 billion (sort of - expect a few extra bills for various bits and pieces).
Of course, there is still time for mishaps, but there is no doubt that the achievements so far have been impressive. The 42km (26 miles) of tunnel under London were completed on time, despite (almost inevitably) some unexpected ground conditions causing the planned schedule for the tunnel boring machines to be changed.
A transformer which blew up when the system went live in the autumn caused delay, and there are possible problems with the signalling in the Heathrow tunnels, but the way that such a massive project has been managed is undoubtedly impressive.
One of the keys to this has been the idea of ensuring that all the staff form a single team, even though they work for a vast array of different companies. As Chairman Sir Terry Morgan told me: “I have no idea who many of these people are actually employed by. But to me, they all work for Crossrail and that is what is important.”
There is also a strong contingent working directly for Crossrail, people who have been with the project right from the beginning of construction eight years ago.
This is in sharp contrast with HS2 where, I gather, there are numerous contractors and consultants but very little co-ordination. Worse, there is no concept of creating a single organisation to run the project.
The senior Crossrail team spent their first year creating an organisation that they felt had sufficient authority and capability to manage the huge contracts that they were letting. They call this the ‘enterprise system’, which is (in effect) a coherent business with a clear plan of how to see this enormous project through to fruition. It was created right at the beginning, and without it there would have been muddle and overspending.
But my inside sources in HS2 suggest that this has not happened yet, even though upwards of £1bn has been spent. Crossrail did go through a couple of chief executives early on, but Andrew Wolstenholme (the present CEO) has been in charge since 2011 and chairman Sir Terry Morgan has been in post since 2009.
I see no signs of such stability at HS2, where there have been three chief executives in the space of four years, and where the reputation of the organisation was sullied by a scandal about excessive redundancy payments which seemed to have been agreed at the highest level.
The lack of financial discipline at HS2 is reflected in the Government’s failure to come clean over the true costs of the project. This really is a scandal, but one of the underlying
problems with HS2 is that no major political party opposes it. Therefore it is left to a few stalwarts and recidivists to question what is going on.
One of those is Lord Berkeley, until recently chairman of the Rail Freight Group. Despite being broadly supportive of the concept, he has grave doubts about its cost and, in particular, about its plans for Euston.
I wrote about this in RAIL 829, when I expressed surprise that (as Lord Berkeley pointed out at the time) the last detailed estimate of the line up to Birmingham was 18 months old. Yet a further ten months on, there is still no update.
Now the good Lord is on the warpath again. He has written to Secretary of State for Transport Chris Grayling pointing out that HS2 has not challenged the much higher figure calculated by Michael Byng, an expert at assessing projects, using the very methodology which Network Rail has developed. There has been no answer, with HS2 merely producing a single sheet of paper in response to a range of concerns.
In his letter, Berkeley points out that there have been a series of changes in scope which must have increased the cost of the project. He lists several, such as extra work required on the motorways around Birmingham, a bigger footprint for work needed at Euston, and “major engineering structure west of the proposed Old Oak Common to facilitate trains to crossover”. All these have been accepted as changes by HS2, and yet there has been no change to the estimate of £24bn.
Berkeley has already previously pointed out that a third of this sum will be taken up by Euston, and therefore it seems unrealistic that the rest of the line can be built for £16bn. Indeed, Byng’s original estimate was that Phase 1 of the scheme (to Birmingham) would cost precisely double - £48bn.
This, by the way, is not ‘back of a fag packet’ stuff. Quite the opposite. Byng and Berkeley have created a massive document on the estimated costs of the scheme, stretching to 4,500 pages, and in his letter Berkeley pleads with his tongue somewhat in his cheek with Grayling that “this detailed elemental estimate of approximately 4,500 pages is offered to you, but owing to its size, please could I be contacted about arrangements for getting this large package to you safely”’. One hopes that HS2 can stretch to the postage, too...
This is part of a wider issue around HS2 - the fact that the organisation does not really want to engage with the public except to fend off any criticism. It is still far too bound up with government.
Again, there are lessons from Crossrail. Its stakeholder engagement, to use the modern term, has pretty much been exemplary - as witnessed by the lack of bad publicity.
Wolstenholme, who left the company at Easter, job done, is particularly pleased that “there has not been a single legal challenge to what we’ve done, despite the challenging nature of the task in areas such as central London’”. HS2, by contrast, seems always to send out very junior staff, ill-equipped to answer questions, when it is trying to allay opposition to the scheme.
Berkeley’s efforts need to be backed by other politicians. This is a project that is by far the biggest in Europe, with enormous implications for the future of the railways and, indeed, of the whole transport system. Yet it is being accorded barely any scrutiny because of the political alliance supporting it. Even its supporters should surely be asking questions about its cost. Anyone out there?
“This is part of a wider issue around HS2 - the fact that the organisation does not really want to engage with the public except to fend off any criticism.”