Mass transit project woes

Triple-blows before the year end for transportation projects in UK.

The smallest one was the delay in the £1 bn Northern Line extension to the Battersea area by a year to 2021, with attendant, as yet unassessed, cost over-runs.

But the bigger blows came by way of similar assessments of HS2 high speed rail project and Crossrail. The former is expected to significantly overshoot its £56 bn budget. The project has been constantly under the spotlight over questions about the reliability of its project reports and estimates. 

The latter, expected to increase London metro's network by 10%, had been showcased as an example of Britain's ability to deliver large infrastructure projects on time and was expected to have opened this month. Instead the £16.8 bn project is expected to open atleast two years late and with a cost over-run now of £2.2 bn. The project which involved digging 26 miles of tunnels below London's honeycombed soil and clay and 10 large stations was initiated in 2008 and was being executed autonomously through an SPV under the Transport for London (TfL). 

The news comes as a surprise given the aura of private sector efficiency which the project has projected till date,

Crossrail was supposed to be a state of the art scheme, transforming travel in London by adding more than 10 per cent to the capacity of the network. Delivered by a commercially savvy team insulated from politicians’ meddling, it would show that private-sector discipline could deliver public-sector projects on time and to cost... The mess has claimed the scalp of Terry Morgan, who stepped down as Crossrail and HS2’s chairman this month amid allegations of mismanagement... Keen to insulate a publicly funded project from political tweaking, protections were wired into Crossrail’s governance. While the project remained within its new tight budget “envelope”, its sponsors — Transport for London and the government — would have no rights of intervention. They were confined to one board member each with limited rights to receive information, TfL officials claim. They had no say in hiring, contracts or the salaries and incentives paid to staff. The deal gave Crossrail’s bosses great freedom so long as they lived within their budget. They took full advantage, paying themselves handsomely. When Mr Wolstenholme left this year, he received £765,689, including a £160,000 bonus, and £97,000 for “loss of employment”, despite numerous signs that the project was unravelling. The previous year, he banked £950,000, including a £481,460 bonus.

The delays have been caused by power supply installation failures, and integration of five different signalling systems across different metro lines and network rail. There have been reports of work being done in silos, poor co-ordination among the numerous contractors, badly managed management changeovers at contractors and suppliers, turnover among officials supervising the project, suppression of bad news, and so on. All this was compounded by rising costs, 

“It feels as if they clung on to the schedule they had until it became clear that it absolutely couldn’t be delivered,” Daniel Moylan, a former Crossrail Director, says. “But when they dropped it, it seems that they had nothing left to work to. That would explain what looks like a sudden collapse.”... Mr Shepherd says the issues with the system — where much of the modern signalling and control equipment is on board the trains — could have been predicted up to seven years ago had proper consideration been given to the programme and cost risks arising from its complexity. A shortage of senior signalling engineering experts (part of a global shortage) may also have added an extra challenge to the project, he adds.

This by Philip Shepherd, an industry consultant, nicely sums up the story of large infrastructure projects,

“People are always adventurous on costs and time because they don’t want to tell the truth. Industry often doesn’t want to tell politicians the true story as they want the work, the politicians don’t know enough so take the view of the salesmen, who are going to push the latest, new technology even if it’s untested. And the management often doesn’t care because they know they won’t be there when the project isn’t delivered on time and to budget.”

Germany, the paragon of engineering efficiency, is apparently the worst culprit in recent years of cost and time over-runs. The Stuttgart station has cost €9bn instead of the planned €6.5bn and was delayed by three years. The Berlin’s Brandenburg Airport (BER) has so far cost €6.9bn instead of €2bn and is nine years late, and is expected to open only in October 2020. Last week news emerged that another €1billion may be required. 

But the award for delays and cost overruns has to go to Hamburg’s just opened publicly financed 2100 seat philharmonic concert hall, the Elbphilharmonie, part of the Hamburg Hafen City regeneration project which when completed will almost double the city centre's size. Budgeted at €77 million, the hall’s final cost eventually ballooned to €789 million, an over-run of 925%!