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HS2 costs, rail shambles and tech marriages: Infrastructure at the Summit

From Network Rail’s timetable shortcomings to cost pressures on HS2, Binyamin Ali looks at the biggest infrastructure talking points from the CN Summit.

The CN Summit brought together leaders from infrastructure’s major players, from HS2 and Network Rail to Highways England and National Grid.

Many of the clients represented had announced significant milestones as well as setbacks in the weeks leading up to the Summit, giving BBC business journalist Declan Curry plenty of questions to ask as chair of the day one session.

A report in the Sunday Times on 18 November claimed HS2 could be delayed by a year and exceed its budget, while Network Rail had been picking up the pieces of its recent timetabling debacle.

HS2 chief executive Mark Thurston took to the stage first in a one-to-one interview with the BBC’s Mr Curry, who started by asking about the reports of cost overruns on phase one.

HS2 cost pressures and risk

Mr Thurston said he did not “subscribe” to the idea that the scheme was overbudget.

“We’ve always maintained that until we bring the contractors and consultants into play, and they really understand what it’s going to mean to design and construct this railway, we won’t really understand the true cost and that’s what’s playing out now,” he said.

However, he said HS2 had “not made a secret of the fact there is a cost pressure”, adding that the client was assessing the “best way to close that gap” in costs. He declined to confirm the size of the gap.

CN Summit 2018 Mark Thurston HS2 JOB3008T1101

CN Summit 2018 Mark Thurston HS2 JOB3008T1101

HS2 chief executive Mark Thurston confirmed cost pressures on the project

The pressure on costs is the main reason for the delay to the start of civils work on the £55.7bn scheme Mr Thurston said, which was originally scheduled to start in November 2018. This was pushed back for a second time earlier this year to June 2019.

HS2 now has “a detailed scheme design [for] 89 per cent” of the civils work on phase one, Mr Thurston said.

“We’re very confident that […] in spring next year, we’ll get back to the funding envelope or budget that government can afford,” the CEO added.

Asked what the pressures on cost meant for the margins of HS2 contractors, Mr Thurston said it was “as much their obligations as ours” to ensure work remained commercially viable, by exploring innovative and efficient methods.

“My challenge to our supply chain is: are we being as creative as we could be, are we mobilising quickly enough, have we got the best people in these businesses? If we get those right, there’s no reason why [contractors] shouldn’t make returns,” he said.

Mr Thurston did, however, say that risk allocation on HS2 needed to be reviewed. “The appetite and the ability for risk in contracts to be absorbed by the tier one joint ventures is probably too rich. We need to find some other way,” he said.

Lower Thames Crossing update

Mr Thurston was followed on stage by Highways England Lower Thames Crossing project director Tim Jones, who started his presentation on the progress of the project by taking a tongue-in-cheek jab at the environmental challenges faced by HS2.

“I’ve got environmental issues coming out of my hair,” Mr Jones said, “including a sodding whale that will not leave the Thames. High-speed rail doesn’t have that.”

The impact of the Lower Thames Crossing scheme on the environment is one of several issues currently being debated as it goes through its second public consultation.

However, until October when the chancellor Philip Hammond announced in the Budget that PFI and PF2 would be abolished, Highways England had been operating under the assumption that both the Thames Crossing project and the £1.6bn A303 Stonehenge Tunnel would be funded by PF2.

When asked about the axe, Highways England chief executive Jim O’Sullivan told Construction News there had been no prior warning from the government. 

“We weren’t pre-informed of the announcement,” he said, but added that, during subsequent conversations with government, it was confirmed that “the two projects […] will be appropriately and adequately funded”.

Although Mr Jones did not directly refer to this, he was keen to stress how important it will be for Highways England to prove, as far as is possible through studies and simulations, the economic benefits the crossing will bring.

Lower Thames Crossing revised plans Oct 18 southern tunnel portal Kent Highwasy England

Lower Thames Crossing revised plans Oct 18 southern tunnel portal Kent Highwasy England

The Lower Thames Crossing will add 90 per cent additional capacity across the Thames

“HGV traffic will be critical to the success of the Lower Thames Crossing. The traffic model suggests 40 per cent of traffic on that network will be HGV,” Mr Jones said.

“There’s no other road in the UK that does that. Even the A14 barely gets to 26 per cent.”

The ability to accommodate increased HGV traffic will be of significant importance in a post-Brexit world, Mr Jones told delegates at the summit, given that the crossing will be close to the ports of Tilbury and London Gateway.

“The economic model is strengthened by the amount of activity in these areas,” he said.

Subject to the outcome of the ongoing consultation, Highways England could submit the DCO application to the Planning Inspectorate in 2019, with “procurement [expected to] start at the backend of next year.”

The crossing is expected to add 90 per cent additional capacity across the Thames and reduce the use of the Dartford Crossing by about 20 per cent.

It will also be the longest road tunnel in the UK at 4 km in length, and be “one of the largest twin bore tunnels in the world at 16 m,” Mr Jones added.

Under the current programme, the new road could be open by 2027.

Major client snapshots

The Lower Thames Crossing update was followed by a panel session, featuring:

  • National Grid director for capital delivery Ian Cartwright
  • Network Rail route managing director Rob McIntosh
  • Highways England executive director of major projects Peter Mumford
  • Tideway head of asset management Sian Thomas

The discussion kicked off with the theme of collaboration. It wasn’t long before Mr Curry asked Mr McIntosh what lay behind the recent timetabling fiasco, which led to delays and cancellations across the country.

“We could spend today and tomorrow on the timetable shambles,” he started. “[It was] the product of some practitioners trying to collaborate and make something work that was never going to work.

“It was borne out of a situation where at the very highest level, there was misaligned incentives. You then get into a place of the organisation that don’t listen to each other, and Network Rail is an organisation that is shocking at listening, particularly to its supply chain,” he said.

Mr McIntosh added that the client was accountable for the problems and “would make changes in the coming years to put that right.”

Innovation and skills

On the topic of innovation, National Grid’s Mr Cartwright said his firm has found success in encouraging its supply chain to challenge its practices and procedures at tender stage, which has led the organisation to ask itself more frequently, “why can’t we do that?”

He explained: “More often than not, it can work for us and the constraints we’re imposing are more self-inflicted as opposed to any real practical or engineering reason. The supply chain is building almost exactly the same assets that perform the same role, maybe in different parts of the world.”

Mr McIntosh cited the East Coast Main Line, where Network Rail is teaming up with a technology partner to establish definitive output targets before moving onto procurement

“Very importantly, we’re not buying the technology – it’s not a one-off procurement,” he said.

“What we’re buying is a life-cycle relationship. It’s a marriage. I very much see the technology provider in that context and the contractor being sat with me [and] my team.”

Although Tideway has used various new technologies throughout the design and construction of the super-sewer to date, head of asset management Sian Thomas said there’s one area of technology where she’s holding her breath.

“We’re building a sewage tunnel. We don’t want to put people into that tunnel if we can avoid it,” Ms Thomas said.

“One of the things we’re looking at is remote-operated vehicles and drones to be able to get in and inspect the tunnel. But the technology is not quite there for us to be able to do that.

“But in five years’ time, it’s bound to be – we’re banking on technology keeping [up its current] pace [so] we can look at our certain perspective and make use of that,” she added.

Another major talking point of the discussion was that of skills.

Tideway Tunnel tunnelling machines 1

Tideway Tunnel tunnelling machines 1

Tideway is looking to use remote-operated vehicles and drones to avoid sending operatives down into the super-sewer

Both Highways England and Network Rail have moved into their next control periods, while HS2 civils work is also scheduled to get going next year.

Highways England executive director of major projects Peter Mumford was asked about the number of skilled workers available to handle the burgeoning pipeline of civil infrastructure work.

He acknowledged the pressure on skills, but said he expected there to be a “change over the next control period”.

This change, he said, related to the way “projects are designed and ultimately constructed, [which] will be different over that five-year period, and the five years that follow after that.”

He added: “That presents an opportunity for a broader range of skills, particularly around the use of technology, robotics, digital capabilities in terms of design – all of these things will attract new people who previously would not have been attracted to our sector.”

This increased use of technology will “help from a skills strategy point of view,” Mr Mumford added.

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