While HS2 is a major transport project of many engineered parts, and is in no way limited to big civils, as often happens with many infrastructure projects the associated visuals regularly focus on showing tunnels. Civils are photo-friendly, sometimes large tunnels especially so, such as the many recently completed and celebrated long tunnel bores on the HS2 project.
There is a flipside to the attention. Being so visible, civils works can bear the brunt of assumptions about the overall performance of projects, even if the primary blame for problems of opening delays and rising costs arise elsewhere, for the most part. Decisions made early, and more conceptually, by others and well removed from the eventual hard graft of tunnelling in earth and rock.
Much, then, depends on how the game is set up.
Even as risk management in civils has continued to improve over years for detailed design, construction works and throughout supply chains, it is from the domains ruled by others – in organisations and management, and planning and procurement, and support or lack thereof – that the bigger risks to outcomes for an infrastructure project can emerge.
And, so, HS2 rail project is under the spotlight again over schedule delays and cost overruns. Another investigation is underway, only this time far more comprehensive for the multi-year, multi-dozens of billions of pounds rail project being built between London and Birmingham. It is to be overhauled and undergo a strategic “turnaround”.
A radical reset.
But it will be some time yet before the project’s owner-operator, High Speed Two (HS2) Ltd, along with Government ministers, and officials in the project Sponsor, the Department for Transport (DfT), can better judge best when trains can start to run and at what final cost.
After the opening date for HS2 became increasingly uncertain along with the project’s outturn cost, last autumn the newly-elected Labour Government descended on the case and instigated an intervention.
HS2 Ltd got a new chief executive, Mark Wild, who was appointed at the end of 2024. He previously helped final delivery of another full-sized rail service involving many tunnels, the Elizabeth Line (Crossrail).
For a rapid, initial assessment he consulted widely, inside the project, with stakeholders and with other external parties, including those able to do their own review – such as James Stewart. The Government had appointed Stewart earlier to assess the performance of the DfT, civil service and previous government ministers in areas of governance and assurance of major transport projects, principally looking at HS2 (see box panel).
The Stewart Review came out in June this year, along with the release of Wild’s initial assessment, which had been delivered in late March – only three months after his appointment. Also in June, Michael Brown was appointed as new Chair of HS2 Ltd, effective from July.
Early in his overview letter to the Government, Wild states a useful benchmark, concerning costs. All costs quoted were benchmarked to Q3, 2019 prices. Seems simple enough. Unfortunately, discussions and documents concerning multi-year infrastructure and energy projects, whether in the UK or internationally, often talk costs without stating clearly the benchmark year for reference of each. When talking across years that can become a confusion. Are they like-with-like comparisons?
Most people naturally think about money in the value of their own day. Without clear guidance, public and professional may struggle to weigh the financial figures and budgets arising from earlier times, and discussing those of the future. Not all documents are clear in this regard, to enable those comparisons to be clear.
So, in simply and clearly stating the ‘Q3, 2019 prices’ benchmark, Wild provides a firm footing. Albeit briefly. For the initial discussion does not dive into financial analysis, for first there were bigger issues to highlight, from which all figures emerge.
Benchmarks are important, especially with “collective decision making” having been a key factor raised ion what went before, and will be to come. Clarity is needed, throughout, for all, to appreciate and discuss proper benchmarking of time and costs. There will be blizzards of figures produced in the coming months, all coming together to get firm picture on the past, present and options from which to decide what happens next.
On Wild’s findings, first a note: it was initial only, based upon an independent ‘top-down’ model; nailing a more detailed insight would need a wealth of data to get a better baseline, built from the ‘bottom-up’ and that needs months of effort, it is expected. Need such data and needing to much time to get it might surprise for a project well underway.
Meantime, what was seen in the initial, ‘top-down’ view?
Phase 1 of HS2 runs from London to Birmingham. The initial section to open covers the majority of this section, from the inner edge of the capital, at Old Oak Common, to the north. According to the initial assessment, it cannot be opened for at least another eight years, most likely, as it is “not deliverable in the current window of 2029-2033.” The months needed now for extra data gathering, for sharper analysis, pale in comparison to those years still to go before trains run.
Blame for the schedule delay was put down to two problems: first, civils slippage in the past (estimated one-third complete versus two-thirds planned (according to the last usable baseline schedule, B 7.1); second, too little time was allowed for the extensive and expensive non-civils works and equipment to fit-out the line and have the fleet of rolling stock.
This is all with respect to tunnel works outside central London. Within the centre there is the last leg of the line, to link to Euston with its new terminus station. Works are underway on this portion but the commentary on schedule was related to the section outside London, to be initially opened, in the plans.
What is the impact on costs? The last baseline (B.7.1) put the cost at £42.9 bn (Q3, 2019 prices), excluding the cost of Euston station (£44.6bn, when included). In the years since the costs have “regularly” increased, but weren’t firmed and still aren’t; there isn’t certainty “that all cost pressures have been identified.’ Stabilisation of costs needs, first, a firmer foundation of the schedule, from a “full programme reset”, the letter says.
Digging deeper, three “primary issues” were noted for the time and cost problems, and all of them were macro choices, made early on: in planning and procurement; and, in programme management.
On planning and procurement, the conclusion is the build started too soon, without enough design done; over optimistic cost and schedule estimates, and not enough provision for risk; efficiencies metrics were not up to the task; the contracting model did not drive performance, and focused on early wins rather than optimising whole-life, or overall, cost; and, doing so on civils packages that were too big.
On programme management, it says the client was “not set up to actively manage delivery”, and that despite a large headcount in HS2 Ltd there is a relative imbalance on its project delivery team’s size versus that of its corporate team – which “has grown excessively”. The project team’s commercial and technical capacities need boosted.
Bureaucracy is criticised, and internal culture – and that a focus on its de facto core mission appears amiss, in that it does not act “like an expert builder of a railway”, or operator, but rather is construction -focused. It appears insufficient as an owner-operator of a transport system with a focus on serving passengers, long-term, and well.
For ambitions now and ahead, HS2 Ltd is to change, being strengthened and reshaped to focus on delivery as an service provider, not a builder.
Wild’s letter talks of “systemic failure” emerging from pile-ups of “vulnerabilities”, compounding over time; although “there is no single root cause” it acknowledges difficulties due to Covid, Brexit and geopolitics affecting inflation, all worsening matters.
The project has been underway in not the easiest of times, and no review is needed to know that to those externalities can be added further woes, causes by political headwinds, tailwinds, and repeated reversals and twisters. Chaos at the top of politics affects large projects, in their governance, schedules and costs.
The plan, now, is proposals by year end, a new schedule by April 2026, and then to better track progress and performance.
STEWART REVIEW MAKES ITS RECOMMENDATIONS
The Government has accepted all recommendations made by James Stewart following his independent review of the governance and assurance of major transport projects, principally focused on HS2, as performed by DfT, the civil service and politicians with responsibilities in the past. Soon after winning the General Election, the Labour Government commissioned Stewart, in October 2024, to get to work. His report was released publicly in June, along with the Government’s response.
Principal findings of the Stewart Review tell of historic mishandling of the huge project, lack of ministerial oversight and scrutiny, and inadequate control by the project’s client – the owner-operator company, HS2 Ltd. Also, effective incentives with supply chain were lacking, resulting in, the Government saying, a position that “will collectively cost the taxpayer billions more than planned.”
The Stewart Review gave five key recommendations, which are to: bring back the HS2 taskforce for oversight; negotiate incentives to get cost savings for taxpayers; reform but boost the project client; make a decision on the Euston terminus station; and, ensure other DfT projects benefit.
On negotiating incentives, the new client leadership will be “renegotiating HS2’s large construction contracts” as well as overhauling the “skills and structure” of the entire organisation. The Review says that both HS2 Ltd and DfT, as project Sponsor, were both “underpowered” to handle HS2’s needs.
The blame, in part, is laid on choosing a ‘lean’ client model for HS2 Ltd. This “proved to be wrong” and was not changed as problems arose, the Review says.
It adds that both HS2 Ltd and DfT lacked sufficient resources, and also skills, with sufficient experience of commercial and delivery activities.
Interestingly, it is recommended that, in the reset, the new HS2 Programme be given a 5-year funding control period, with flexibility to move budget between years.
Stewart says the project “is in a state of flux and uncertainty,” and a “fundamental reset” is needed to get it finished and trains running. Two positives are noted, though: the scope was tightened previously, after Phase 2 and HS2 East were dropped; and, the engagement of Mark Wild as chief executive.
