The publication of a progress report by the National Audit Office on High Speed Two, addresses how the sector delivers affordable world class infrastructure with substantial benefits. Does this mean reform in how projects are planned and delivered?
Whilst major projects do overrun, new innovative approaches, more collaborative working and new technology demonstrates there is potential to improve the planning and delivery of world class infrastructure.
Today’s National Audit Office (NAO) report provides an update on the progress of High Speed Two (HS2). It examines why the schedule is delayed, explains why costs have increased and evaluates the risks which need to be managed.
The report is critical of both the Government and HS2 Ltd. It describes how the original estimates were overly optimistic, with budgets set too early to fully appreciate the scale, complexity and risk such a large programme would entail.
Improving major project delivery
With the Government set to rollout significant investment in infrastructure in the upcoming Budget, it is important that lessons are learnt from HS2 and other major projects. ICE outlined many of the steps necessary in a paper looking at why projects so often overrun budget and schedule last year and these themes are echoed in the report.
Until a detailed scope and options assessment of a project are complete, the true cost of it cannot be known. Governments should be weary of allocating a budget prematurely, as many factors can increase cost early on in a project’s life. Detailed planning and geotechnical investigations should be conducted before a final budget is set.
One way to start restoring trust would be to cost estimate ranges. These are based on a ‘should-cost’ analysis -an analysis undertaken separately prior to procurement to better inform the client of expected cost and to manage and benchmark performance. It allows easy communication of the inherent uncertainties at the early stages of a project as well as ensure contingency is built in.
A project where cost estimate ranges would have been useful was the 2012 Olympic and Paralympic Games. The early budget was £2.4bn, yet the final cost was 270% higher, at £8.8bn. The infrastructure was no less needed, the benefits still outweighed the cost.
Too much focus is placed on securing the lowest possible capital cost for an infrastructure asset. There needs to be a better understanding and prioritisation of the Government’s approach to whole-life benefit. Cost benefit analysis has often placed emphasis on economic benefits without properly considering social and environmental value.
Much of the business case for HS2 concentrates on productivity, for instance, without, arguably, enough emphasis placed on the social benefits of connectivity in the regions of England, or the environmental impact of fewer cars on the road.
Finally, programme management must improve. Better procurement practices, including ‘should cost’ modelling, improving and sharing access to data and improving the integration and expertise of governance structures are all critical steps.
The connectivity challenge must be met
Whatever the result of the Oakervee Review into HS2 and whether or not the programme goes ahead, there is a single and inescapable fact the Government must face up to: the railways are full. Even as far back as 2014, 26% of morning peak trains arriving into London were over capacity. Overall passenger numbers are expected to increase by a further 40% by 2040.
Rail congestion has constrained economic growth for most of the last decade. Whilst reduced journey times ’grab the headlines’, the real benefit would be increased capacity.
If fully built, HS2 would support three existing major lines by moving intercity services from those lines to a dedicated high-speed line – unlocking more capacity, providing more commuter services and encouraging companies to move freight by rail.
New digital signalling, whilst part of the solution, cannot meet the challenge alone. Alongside that, the case for additional transport infrastructure, to level-up all areas of the country, is compelling. Since 2010, the fastest growth in rail demand has not been in London and the South East, but in and around Birmingham and the Midlands.
The North and Midlands have seen under-investment in recent decades. Projects to support the Midlands Engine and the Northern Powerhouse have been a focus for the Conservative Government and the Coalition before it. Looking to 2050, the need to decarbonize transport is a much more significant driver than when HS2 was first conceived.
Tackling climate change means investing in cleaner transport solutions. Rail, when powered through renewable energy sources, is vastly less polluting than road or air travel. A high-speed rail network could provide the improved capacity and travel times required to encourage a shift from road and air.
The public support a focus on benefits, not costs
Much of the public debate has revolved around the cost of HS2. Yet, this represents a fundamental misunderstanding of public need and concern. Just 3% of the British public view a low overall cost of construction as the most important factor in determining the success of major infrastructure projects, whilst 74% agree that ‘politicians should talk more about the benefits, rather than the costs, of major infrastructure projects.’
What matters far more to the public, according to ICE’s polling is that major projects regenerate communities, that they are reliable and cost effective to maintain for the long-term and that they strengthen long term economic growth.
The first elements of the West Coast Mainline were built in the 1830s. If HS2 is built and lasts as long as the West Coast Mainline has so far, it will still be carrying trains in the year 2210. So, it is essential that we get it right from the beginning.
The infrastructure we build tomorrow will still be used by our great - great grandchildren. The key priorities for those in the built environment, are how to ensure we leave them a legacy of world-class infrastructure that fits their future needs.