UK: Secretary of State for Transport Louise Haig has announced measures which aim to ensure the costs of the High Speed 2 programme ‘are brought under control’, including an independent review of governance.
The incentives of the main HS2 contractors are also being reviewed, which the government said could lead to contracts being renegotiated or amended. The government has also stated that ’it is not resurrecting’ Phase 2 between the West Midlands and Manchester which was cancelled by the previous administration.
There will be regular meetings where the Transport Secretary, Rail Minister Lord Hendy and the Chief Secretary to the Treasury will ’challenge delivery and remove obstacles to securing the full benefits of the railway more cost effectively’.
Haigh will task incoming HS2 Ltd CEO Mark Wild — who has held roles including CEO of Crossrail, Managing Director of the London Underground and Chief Executive of Public Transport Victoria in Australia — with assessing the current position on cost, schedule and culture, and providing an action plan to deliver the remaining work as cost effectively as possible, including at a realistic budget and schedule.
The government will also continue to publish six-monthly reports on the progress of HS2, ensuring ‘complete accountability and transparency’ on the project’s progress.
Major Transport Projects review
A Major Transport Projects Governance & Assurance Review will be led by James Stewart, who has advised the public sector on the delivery of schemes including the Olympics and Crossrail.
The review will investigate the oversight of projects, including the effectiveness of forecasting and reporting of cost, schedule and benefits, as well as actions to deliver cost efficiencies.
It will primarily draw on experiences related to HS2 to ensure recommendations and learnings are applied to its delivery as well as to future projects.
It will look at:
- the effectiveness of DfT’s sponsorship and oversight model and changes that are needed to support efficient and transparent programme delivery;
- corporate governance within HS2 Ltd and the interfaces with DfT;
- the overall approach to governance, support and oversight;
- the various levels of assurance in place including the independent Project Representative function;
- the effectiveness of cost, schedule and benefits forecasting and reporting at a programme level within and between DfT, HS2 Ltd and the wider government system;
- the approach to procuring and managing the Main Works Civils Contracts, including contracting strategies and rationale for approach, how contracts and joint ventures were put together, including the allocation of risk, and how these contracts have been managed throughout the programme lifecycle;
- culture, behaviour and ways of working across the HS2 programme, the role of psychological safety alongside transparent reporting, and assessment of capability to review the extent to which the programme’s resources were mobilised appropriately, including resourcing strategy for business-critical roles.
The recommendations will be presented to the government this winter.
Making sure lessons are learnt
On October 20, the government said that over the years, the cost of [HS2] Phase 1 had ‘soared, due to poor project management, inflation and poor performance from the supply chain, without sufficient explanation of what is to be done to deliver to budget.’
Haigh said ‘it has long been clear that the costs of HS2 have been allowed to spiral out of control, but since becoming Transport Secretary I have seen up close the scale of failure in project delivery — and it’s dire. Taxpayers have a right to expect HS2 is delivered efficiently and I won’t stand for anything less.’
She said ’it’s high time we make sure lessons are learnt and the mistakes of HS2 are never repeated again’.
In response to the government’s announcement, a spokesperson for HS2 Ltd said the project promoter ‘recognises that there are many lessons to be learned from delivery to date’ and it is ‘actively implementing the changes within our control to stabilise costs’.
HS2 is ‘a complex project of strategic importance to the UK’s rail network, which will not only provide better journeys, more services and fewer delays for rail passengers, but will unlock economic growth and tackle regional inequality’, a spokesperson added.
