Latest Rail News

15.11.18

HS2 Phase 2 could be almost 30% cheaper, Armitt’s PwC review finds

Costs for HS2’s Phase 2 could be 27% lower if the company succeeds in implementing a series of opportunities to make the project more efficient compared to its European counterparts, a long-awaited report has revealed.

The findings come from an independent PwC investigation commissioned by former chancellor George Osborne in 2014. The review was finished in 2016 but had not been published until this week, with HS2 Ltd repeatedly resisting FoI requests to release the information – despite the Financial Times obtaining a leaked copy last month.

The two-year study, led by an expert panel headed up by NIC boss Sir John Armitt, looked at 32 comparator high-speed rail schemes.

It found that the early cost estimate of £81m per route km for HS2’s Phase 2 is at the high-end of the range of costs of similar international projects, although this must be taken in context of “significant differences” in the strategic objectives, UK conditions, and sponsor requirements of the scheme’s northern leg when compared to most European lines. It is also expected that this early-stage estimate will mature as the scheme progresses.

However, opportunities have already been identified to cut down costs to just £59m per route km, or £20bn overall – a saving of 27% compared to original forecasts.

The lion’s share of this – up to 12% – would come from supply chain efficiencies and by adopting different ways of designing and building high-speed assets “in a more integrated way.” This includes implementing delivery, contracting and procurement models that “reduce layering, create a closer affinity between design and construction, and encourage investment in staff development, innovative designs and construction equipment.”

According to PwC, the large potential saving is owed to the fact that the construction industry in the UK is more fragmented than in other countries, which then puts up supply chain costs, reduces investment, and creates inefficiencies in design and construction.

“This is not a new finding, but the scale of HS2 presents opportunities for cost and schedule reduction,” the report said. “There is also an opportunity for Phase 2 to benefit from the improvements in these areas that are realised through Phase 1.

“In other countries, the benefits of a multi-year programme of HSR schemes were seen in terms of: the continuity of client professionals; industry investment; innovation; affinity between design and construction functions; use of historical data for structures and risk allowances; and collaboration between client and supply chain.”

A smaller proportion of the savings – up to 5% – would be delivered through localised route and scope refinements; up to 4% could be saved by slashing asset costs, namely through reducing requirements and specifications and using efficient construction methods; 3% by reducing requirements for rolling stock and infrastructure maintenance depots; and 3% by learning from other schemes to deliver stations at “significantly lower costs.”

“There might also be opportunities to reduce costs further through delivering the scheme in phases or making passive provision,” the report noted. “Of course, any options to do so should be carefully assessed so that the deferment of parts of the scheme does not result in a failure to attract passengers.”

Top image c. Nick Ansell/PA Archive

Comments

There are no comments. Why not be the first?

Add your comment

 

rail technology magazine tv

more videos >

latest rail news

Government’s role in new passenger-centric railway ‘will have to change’, says Williams Review lead

21/03/2019Government’s role in new passenger-centric railway ‘will have to change’, says Williams Review lead

The man leading the Williams Rail Review has warned that the government’s role in the UK railways “will have to change” as the ... more >
Government promises to look ‘very carefully’ at £218m bid for second Chelmsford station

21/03/2019Government promises to look ‘very carefully’ at £218m bid for second Chelmsford station

The government will look “very carefully” at a £218m funding bid for a new railway station in Chelmsford, Theresa May has said.... more >
Carillion-bound boss appointed to lead Kier

20/03/2019Carillion-bound boss appointed to lead Kier

Kier has appointed Andrew Davies as its new chief executive, two months after the building contractor ousted Hayden Mursell on the back of debt i... more >

editor's comment

23/01/2018Out with the old...

Despite a few disappointing policy announcements, especially for the electrification aficionados amongst us, 2017 was, like Darren Caplan writes on page 20, a year generally marked by positive news for the rail industry. We polished off the iconic Ordsall Chord (p32), hit some solid milestones on Thameslink (p40), progressed on ambitious rolling stock orders (p16), and finally started moving forward on HS2 (p14) ‒ paving the way for a New Ye... read more >

rail industry focus

View all News

interviews

Women in rail - is the industry on the right track?

12/03/2019Women in rail - is the industry on the right track?

RTM sits down with Samantha Smith, sole female member of the TransPennine Route Upgrade Alliance Leadership Team, to find out more about encourag... more >
TfN Strategic Transport Plan: not just for transport's sake

22/01/2019TfN Strategic Transport Plan: not just for transport's sake

Peter Molyneux, Transport for the North’s (TfN’s) strategic roads director, has been leading on the development of the seven economic... more >
Exclusive: Midlands Connect and WMRE talk collaboration and investment in the Midlands' railway

22/01/2019Exclusive: Midlands Connect and WMRE talk collaboration and investment in the Midlands' railway

In the jigsaw puzzle of regional transport decision-making, there must be collaboration and compromise. Midlands Connect media lead James Bovill ... more >

last word

Encouraging youngsters to be safe on the railway

Encouraging youngsters to be safe on the railway

This summer, Arriva Group's CrossCountry and the Scout Association joined to launch a new partnership to promote rail safety among young people. ... more > more last word articles >

'the sleepers' daily blog

The West Midlands 30-year strategy

19/03/2019The West Midlands 30-year strategy

Malcolm Holmes, executive director of West Midlands Rail Executive (WMRE), outlines the West Midlands Rail Investment Strategy 2018-2047. Th... more >
read more blog posts from 'the sleeper' >

comment

26-30 Railcard: taking advantage of opportunities

19/03/201926-30 Railcard: taking advantage of opportunities

After a nine-month national trial, the rail industry launched its seventh National Railcard for 26-30-year-olds on 2 January 2019. Rail Delivery ... more >
Caledonian Sleeper: a railway icon re-imagined

19/03/2019Caledonian Sleeper: a railway icon re-imagined

The world-renowned Caledonian Sleeper, due to begin operations at the end of spring 2019, completed its first Scotland to London journey earlier ... more >
East West Rail: the next steps

19/03/2019East West Rail: the next steps

In January, five route options for the central section of East West Rail were published as part of a public consultation on the next phase of the... more >
Rail's role in transit-orientated developments

19/03/2019Rail's role in transit-orientated developments

Jonathan Bray, director at the Urban Transport Group (UTG), argues that transit-oriented developments are the future – and that rail has a ... more >