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Costs soar 400% on Carillion's Sheffield tram-train

The cost of South Yorkshire’s tram-train project has soared by 400 per cent in five years, a report from the National Audit Office (NAO) has revealed.

The link between Sheffield and Rotherham, which is being built by Carillion, has seen estimated costs rise from £15m in April 2011 to £75.1m in December 2016, according to the public spending watchdog.

The NAO report found that the original cost estimate “had errors due to the under-developed design” of the project, while the design stage also had to be extended, leading to cost increases. 

Plans for the project were first announced in 2009, with work initially scheduled to finish in March 2016. The scheme is the first of its kind in the UK and will enable trams to run on existing rail tracks between the two cities.

Costs rose to £44.9m in November 2014, while Network Rail said last summer that the cost of the project would rise by a further £25m.

The project was recommended for cancellation by the Rail Investment Board in July 2016, which also presented the option of taking the works away from Network Rail and Carillion by re-tendering the project, or continuing the project with Network Rail meeting the funding gap itself.

However, this recommendation was overruled by rail minister Paul Maynard in September 2016. He allowed the project to continue with a final budget of £75.1m.

The work is now expected to complete in May 2018, with the first tram-trains running next summer.

Carillion signed an early engagement contract with Network Rail in February 2013 to help design the project, and began negotiations on the design-and-build contract in November 2014.

A construction contract was signed between Network Rail and Carillion in August 2015, but work did not start until January 2016 due to a redesign of the Tinsley Chord, the section of track linking the railway to the tram network.

The NAO said a government-commissioned report seen by Network Rail in summer 2016 found that “the early involvement of Carillion in the design process did not work well” and that the project “lacked the necessary expertise and suffered from high staff turnover”.

The NAO said: “The Department [for Transport] and Network Rail have learned lessons from the pilot but it is too early to determine whether the project will realise the wider strategic benefits.

“The Department and Network Rail have begun to capture the operational issues involved in using tram-trains in the UK and have, for example, established new technical standards for the signalling.

“Network Rail has shared lessons learned with other tram-train promoters.

“The [DfT] has not yet evaluated the value for money of the pilot project or the extent to which it will reduce the costs of introducing similar schemes in other cities.”

Carillion declined to comment.

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