Transport for London (TfL) has expressed frustration at the apparent funding shortfall of more than US$1.77bn calculated by the PPP Arbiter in guidance requested prior to contract talks for the next phase of Tube Lines work, to begin in 2010. Tube Lines is responsible for the maintenance and renewal of the Jubilee, Northern and Piccadilly lines on the London metro network. The company began its 7.5 year contract in 2003 and the next phase is up for negotiation to cover work over the 2010-17 period.
The PPP Arbiter estimated the cost for the next 7.5 years of work was US$8.95bn-US$9.6bn. It said the analysis drew upon both firms’ data as well as benchmarking with other metros. TfL, the owner of the tube network, asked in April for guidance and said the verdict of the ‘rough estimate’ that the envisaged works could cost more than was in the budget was an ‘extraordinary circumstance’. It added that such a large funding shortfall should be met by the Government as it had introduced the PPP procurement system to the tube network.
TfL said that the difference in the cost estimates with the PPP Arbiter arose primarily in the grey areas of central costs, differential inflation and risk, and adding that it can’t scale back the works.
