Tideway has insisted that the £4.2bn super-sewer will be delivered within budget despite seeing the contingency for the project “substantially eroded” due to engineering complications.
The project has launched a cost-saving exercise after an interim report and financial statement from the client identified significant engineering challenges.
These included issues at Blackfriars, where the project had encountered Victorian gas mains, and at King Edward Memorial Park, where construction of the cofferdam has taken longer than planned.
Tideway’s report, which covers the six months to 30 September, noted that “taken together with general costs pressure across the programme, this has substantially eroded available contingency”.
It added: “To mitigate the cost pressures, Tideway has begun to implement cost-saving measures in partnership with our contractors and remains focused on achieving the baseline target.
“These measures include working with our MWCs [main works contractors] to eliminate overlap, taking measures to increase productivity, undertaking value-engineering and delivering overhead savings.”
Total project costs for the six-month period were reported to be £325.3m, bringing the total cumulative spending to £1.48bn. Work has now begun at 20 of 21 sites along the Thames.
Commenting on the challenges faced at Blackfriars, the interim report said: “Works have progressed to overcome significant engineering challenges caused by the proximity to two large Victorian gas mains.
“We have been working very closely with Cadent to investigate the need to divert these gas lines and ensure that the lines are not damaged.
“The initial results from the damage assessment conducted suggest that the gas main line may not require diversion. Final damage assessment results are expected by the end of the year.”
The report said Tideway had secured funding for the full construction costs of the project, noting: “We have reached a point of financial resilience where we have secured sufficient funding to cover our construction costs, having raised an additional £325m of new term debt during the period.”
A spokesperson for Tideway said the client was confident the project would be delivered within the £4.2bn budget envelope: “There have been a number of complex engineering challenges and risks to overcome in the early stages of the project.
“With these behind us and having put in place several measures to reduce cost, our budget is intact.
“Tunnelling for the project started last week from our site in Battersea and we are set to complete the project on schedule and to budget.”