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Mon May 27 2019

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Crossrail overspend in detail, section by section

3 May Deluded Crossrail managers ignored mounting evidence that the project was running away without them, the government spending watchdog says.

Value for money has yet to be ascertained, the NAO says
Value for money has yet to be ascertained, the NAO says

In a report, published today, the National Audit Office states that the way Crossrail has been delivered has driven unnecessary costs and damaged public value.It also analyses how, why and where the project ran into trouble.

Crossrail’s compressed schedule, the contractual model, the loss of downward pressure on costs, and the absence of an achievable plan were set against an atmosphere where ‘can do’ became unrealistic, the National Audit Office (NAO) says.

But until the Elizabeth line opens it is not possible to determine the overall value for money for taxpayers.

In April 2019, Crossrail Ltd announced that it plans to introduce Elizabeth line services on the central section between October 2020 and March 2021. However, Crossrail has not yet completed its assessment of the impact of this opening schedule on costs and it is still unclear when the full Elizabeth line service will start. Crossrail Ltd must now focus on completing its plans and delivering against them, the government’s financial watchdog says.

In February 2019, the NAO published a memorandum on Crossrail for the House of Commons public accounts committee (PAC), which examined the project’s overall progress, costs and potential for future delays. PAC concluded that final costs remained uncertain and that there was no date for when the railway would be fully operational.

In today’s report, called Completing Crossrail, the NAO has further identified how the programme ran into difficulty, which has so far led to £2.8bn of additional financing for the programme, including around £2bn of loans from the government to the Greater London Authority and Transport for London (TfL).

The programme has been dominated by a fixed completion date of December 2018 set by Crossrail Ltd and the joint sponsors, the Department for Transport (DfT) and TfL. This date drove much of Crossrail Ltd’s decision making. Aiming for December 2018 meant multiple activities ran in parallel. The delivery approach, delays to some contracts and the decision to set and then stick to the December 2018 opening date, increased risks, the NAO says.

Despite this deadline, Crossrail Ltd did not start to produce a sufficiently detailed delivery plan against which to track progress until late 2018. Consequently, Crossrail had a gap in its understanding of delivery risks and the likelihood of meeting the December 2018 opening date.

By 2015, problems started to emerge and opportunities to change approach were missed. The sponsors had few effective contractual levers to enable them to take action as they had provided Crossrail with a high degree of autonomy to deliver the programme. 

Changes required to the design and to contractors’ delivery schedules has increased costs on most of the 36 main contracts. These changes resulted in increased contract costs of around £2.5bn between 2013 and 2018.

This £2.5bn cost increase was due to a combination of design changes (£714m), contractors’ claims for compensation events (£936m), schedule of works changes (326m), changes to scope (198m). A further £337m of additional cost is attributed to ‘other’ causes, including unexpected site conditions.

Pressures on the programme continued to escalate through to the end of 2018. Between February 2017 and December 2018, for example, the forecast final cost of the contract to install track and key systems in the tunnels increased by 80% from £532m to £956m. [See table below.]

Crossrail Ltd also made decisions that drove unnecessary cost. In early 2018, it began carrying out train testing and construction activity in alternating time periods, to allow for early sight of potential train and signalling system issues. However, this testing was of limited use and took any spare time and space from construction workers on site. Crossrail also reduced the size of its central programme and risk management teams during 2018, in anticipation of the programme reaching completion in December 2018. It is currently attempting to rehire these personnel. 

Amyas Morse, the head of the NAO, said today: “Throughout delivery, and even as pressures mounted, Crossrail Ltd clung to the unrealistic view that it could complete the programme to the original timetable, which has had damaging consequences.

“DfT and TfL must support the new Crossrail Ltd executive team to get the railway built without unrealistic cost or time expectations.

“While we cannot make an overall assessment of value for money until Crossrail is complete, there have been a number of choices made in the course of this project that have clearly damaged public value.”

Meg Hillier MP, chair of the public accounts committee, said: “As my committee recently reported, the Crossrail programme has been mired by spiralling costs and delays. We have now learnt that services may not run for another two years.

“The NAO's report provides much needed answers.  It is concerning that Crossrail Ltd deluded itself for so long about its ability to meet its original opening date, and the £17bn-plus programme‘s project management was not up to the job.

“Given that it is past the point of no return, Crossrail Ltd must now deliver to its revised plan if it is to provide much needed services to passengers and businesses.”

Crossrail cost overruns broken down

Changes in the forecast cost of selected contracts on the central section to December 2018            
Cost increases have occurred across the programme            
             
  Forecast costs       Cost increases  
             
Contract Target at Award(£m) Jan 2015(£m) Dec 2018(£m)   Award to Jan 2018(£m) Award to Jan 2018 (%)
             
Tunnelling, shafts and portals            
Eastern tunnels 1 484 754 730   246 51
Western tunnels 1 490 737 749   259 53
Thames tunnel 1 196 269 229   33 17
Station Tunnels East – Early Access Shafts & Sprayed Concrete Lining Works 1 246 360 510   264 107
Pudding Mill Lane Portal Civil Works 1 52 131 184   132 254
Eleanor Street and Mile End Shafts Civil Works 46 56 255   209 454
             

Station main civils

           
Farringdon Station 239 436 634   395 165
Liverpool Street Station 147 271 374   227 154
Paddington Station 181 339 571   390 215
Bond Street Station 126 182 412   286 227
Whitechapel Station 110 229 659   549 499
Tottenham Court Road Station 98 135 282   184 188
Woolwich Station 70 N/A 234   164 234
             

Route-wide civil engineering and systems

           
Systemwide (Tunnel track and electrical fit-out) 323 360 956   633 196
Platform Screen Doors 27 N/A 63   36 133
Signalling 51 N/A 131   80 157
Communications & Control 43 N/A 139   96 223
             

Other

           
Ilford Stabling Sidings 1 154 N/A 153   99 183
 

Notes

1. Contracts completed prior to January 2018 and show their final values. The figures for Thames Tunnel and Pudding Mill Lane reflect the costs when they were at 98% and 99% complete respectively – the final 100% figures were not reported in Crossrail’s Board reports.

2. Target at award denotes the anticipated cost of the contract at award and does not include adjustments for risk. Other cost values are contractors’ forecast of final costs which may include adjustments for cost risks where the contract is not yet complete.  All values are drawn from Crossrail Ltd board reports.

3. All values are in cash prices.

4. N/A means that the forecast costs of these contracts was not reported in January 2015.

Source: National Audit Office analysis of Crossrail Ltd information

MPU

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