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So HS2, what does 'cost pressure' mean?

Binyamin Ali

I’ll admit it: watching on as the reportedly outgoing Crossrail and HS2 chairman Sir Terry Morgan attempts to settle scores with his employers has been riveting.

For those unaware, HS2 chair Sir Terry Morgan has said he expects to be sacked from his role on the scheme, due to the delays and cost overruns on Crossrail.

The man who was knighted for services to infrastructure, skills and employment in 2016, is due to relinquish his chairmanship of Crossrail in March 2019.

Rather than leaving quietly, he seems intent on setting the record straight, or settling scores before being relieved of his duties.

Sir Terry said he personally told mayor of London Sadiq Khan about cost and time pressures on 26 July.

Mr Khan has admitted he knew work was under pressure, but stressed he only knew Crossrail would be delayed surely just before the setback was officially announced.

But Sir Terry has also suggested that, even if delivery of the physical asset had not been delayed, TfL would not have had the necessary rolling stock to open the line, as TfL was “advised eight months ago that the trains were 18 months late”.

A spokesperson for TfL responded: “The trains are already successfully serving parts of the Elizabeth line route. Their procurement has had no bearing on the fact that the line […] was not completed in time.”

Finally, Sir Terry has revealed that he expects a further cost increase on Crossrail to be announced in the coming weeks.

This parting shot, while in some ways amplifying his failings on Crossrail rather than diluting them, raises one question that will no doubt make HS2 in particular feel uncomfortable.

What exactly does ‘cost pressure’ mean?

The question is important in light of Mr Khan’s response to Sir Terry, stating that he knew of “growing cost and schedule pressures” but that it had not been clear this would effectively mean a “decision to delay” the project.

“That decision was taken by the Crossrail Ltd board on 29 August,” Mr Khan said.

This cost and schedule pressure became a nine-month delay, a £590m overspend, plus potentially a further cost increase if Sir Terry’s revelation about the budget is accurate.

On Crossrail then, ‘cost pressure’ became shorthand for ‘overbudget’.

Over at HS2, CEO Mark Thurston also used the phrase “cost pressure” when discussing phase one of the £55.7bn project at the CN Summit last month.

So far, HS2’s ‘cost pressure’ has manifested itself as a seven-month delay to the start of civils work. With contractors now in talks on reducing costs, what will ‘cost pressure’ mean for its budget?

Readers' comments (1)

  • cost pressure the latest cover for over budget!! year one QS would spot that,



    PM

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