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30.10.15

Uncertainty over what new GW electrification costs cover – ORR

Network Rail’s new estimate of the cost of the Great Western electrification programme (GWEP), which has nearly doubled since last year, should not be accepted until independently verified, the ORR says. 

In written evidence submitted to the Public Accounts Committee, the Office of Rail and Road (ORR) said it is not possible to tell what exactly the new cost range estimate, £2.5bn to £2.8bn, actually covers. 

Specifically, Richard Price, the CEO of the ORR, does not know whether it covers just the elements of GWEP that have already been through ECAM (the enhancement cost adjustment mechanism) – that is, electrification of the routes between Maidenhead, Bristol, Cardiff and Oxford – or whether “this is the anticipated final cost of all GWEP works”, which would also include Cardiff to Swansea, the Welsh Valley Lines, Reading to Basingstoke and the Thames Valley branches. 

Just ahead of the Committee’s evidence session last week, Network Rail’s CEO Mark Carne submitted a letter with the new figures – previously unseen by the regulator – saying he was providing the range to avoid giving a “frankly spurious accuracy around a single number”. 

But Price, who also appeared in the session, has told the Committee: “If industry is presented with a cost which has not been subject to scrutiny, a value for money risk is created because Network Rail may work to an inefficient estimate and its supply chain may bid up to this amount. 

“We expect the remaining parts of the GWEP programme and other enhancement schemes to be submitted to the ORR, and these will also go through the ECAM process to establish their efficient cost.”

At last week’s session, the Committee chair Meg Hillier MP, denounced the new range as a “staggering” increase. She also claimed that both the regulator and Network Rail had fallen “asleep on the job”, saying that risks in the project should have been predictable. 

RTM also learned, during an IET electrification seminar, that Network Rail and the DfT are still in discussions as to whether timescales for GWEP should be delayed

During Parliamentary questions yesterday (29 October), transport secretary Patrick McLoughlin was quizzed over the new figures. 

He said: “Some of the costs of such electrification programmes have run over budget. That is not acceptable, but they are huge and very important schemes. I think that regenerating our railway system and making it modern for the 21st century is very important.”

Comments

Gb   30/10/2015 at 14:31

This doesn't give us much confidence in the estimates for HS2 which will be hugely greater. However, development and enhancement of our existing railway system to increase connectivity and capacity must take preference over spending money on HS2.

Pedr   30/10/2015 at 15:58

How sensible to buy new rolling stock capable either of electric or diesel-electric traction. But the indecision adds cost in this respect.

CB   02/11/2015 at 14:26

It is incredible that the CEO of the ORR does not know what the cost covers to the extent that is suggested in this article. Surely this cannot be true?

RTM   02/11/2015 at 15:52

Hi CB, You can click the link at the top of the piece and see the written evidence. Judge for yourself!

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