Recommendation to change contracting model from risk-averse deals

To reduce costs on Phase 2b, Oakervee recommends that HS2 should “thoroughly examine what gold-plating of standards can be removed on Phase 2b to reduce costs, including alignment redesign if considered appropriate”.

On Phase 1, the Government should “ensure that HS2 Ltd achieves a satisfactory position with each of the Main Works

Civils contractors in order to obtain acceptable Stage 2 prices and a reasonable level of value engineering. If HS2 Ltd cannot achieve a satisfactory position with the Main Works Civils contractors, then HS2 Ltd, subject to further discussions with the DfT and HM Treasury, may have to consider re-procuring some or all of these contracts.”

For future contracts, Oakervee says revised procurement and contracting models should be considered, with HS2 evaluating how it can ensure an optimised approach to risk allocation is used, that there is robust management of interfaces on the project, and that efficient designs are developed.

In the review’s analysis, it says of Phase 1 main works civils contracts: “The contracting model used to engage design consultants on the Phase 1 Main Works Civils contracts, with designers working for the construction contractors as opposed to working for HS2

Ltd, has potentially resulted in risk-averse designs that are not cost-effective.”

The Oakervee Review says that cancelling HS2 would incur direct costs of up to £3.6 billion, with a significant impact on the wider supply chain.

“There would be serious consequences for the supply chain, the fragile UK construction industry and confidence in UK infrastructure planning if HS2 were cancelled at this late stage. Cancellation of HS2 could also hinder attempts to create an economic transformation across the UK,” it says.