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Transport for London begins engineering division merger to help plug £1.9bn funding gap

Transport for London is shaking up the way it delivers future construction projects by merging its two main engineering arms as part of a cost-cutting drive.

The organisation will join together its surface access and rail and underground engineering arms to form one larger, centralised team.

Teams delivering the Silvertown Tunnel and Northern Line Extension will be brought together to share best practice and cut costs as part of the move.

TfL is also streamlining procurement to save £60m over four years as part of what officials describe as a “root-and-branch review”. 

London’s transport operator is attempting to plug a £1.9bn funding gap created by mayor Sadiq Khan’s plans to freeze fares for the next four years.

The fare freezes came despite the Treasury cutting its grant to TfL by £2.8bn in the chancellor’s November Spending Review.

As part of his manifesto, Mr Khan called TfL “flabby and inefficient” and said millions could be saved from streamlining its operations.

This included the merging of all engineering functions within the organisation, ensuring shared procurement and programme delivery functions.

Other TfL savings

  • Improved procurement and renegotiation of contracts from suppliers and other third-party spending which accounts for more than two-thirds of TfL’s total budget (estimated saving £50m-£60m).
  • The reprioritisation and consolidation of IT projects (estimated saving £20m-£30m).
  • Cutting the most expensive of the 3,000 agency contractors currently engaged by TfL.

TfL’s acting managing director for planning Alex Williams told Construction News this process had already started with aim of creating a much more “robust project delivery team”.

He said: “One example of this is that we have one team delivering Silvertown, a road tunnel, and one team delivering the Northern Line extension at Nine Elms.

“Bottom line is they are both tunnels, both require the same skillset so the plan is to get these two teams together, get some economies of scale, get some sharing of information across those teams and get a better project in a cheaper way.”

London Underground’s interim managing director Andrew Pollins said the move would be a “massive change” for TfL.

He said the organisation currently had ”pockets of engineers everywhere” and the changes would create ”better value and avoid duplication”.

TfL will provide more details on the structure of the new body in its autumn business plan.

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