HS2 plans to renegotiate its contracts with the joint ventures delivering the London-Birmingham rail scheme as part of a \u201cfundamental reset\u201d of the delivery programme.<\/p>\n
HS2 chief executive Mark Wild, who started in his role earlier this month, told a meeting of parliament\u2019s Public Accounts Committee yesterday there would be no re-procurement of already agreed HS2 contracts.<\/p>\n
But he said that the project would immediately \u201cbear down on costs\u201d, especially on the under-way main works civils elements.<\/p>\n
HS2 chief financial officer Alan Foster told the committee that contractors themselves accept that their contracts can be changed.<\/p>\n
\u201cThere\u2019s a recognition that we need to find a better alignment of incentives between the taxpayer and the delivery of the works.<\/p>\n
“We are looking at how we can make variations to those incentive mechanisms and find a way so that they can work better for both parties,\u201d he said.<\/p>\n
\u201cThis is clearly something where we have to reach a compromise but there are opportunities there for improvement, and we do see that as an intrinsic part of the reset.<\/p>\n
“I\u2019ve personally spoken to all of the CEOs of the parent companies.<\/p>\n
“We\u2019ve got 14 significant entities that sit above the JVs, and all have expressed a willingness to discuss and work through a renegotiation.”<\/p>\n
Liberal Democrat MP Sarah Olney expressed scepticism that the contractors would accept any significant changes to contracts they have agreed.<\/p>\n
But Wild said they would be because it is in their interest, and that of their shareholders, to work on a project that is at a lower overall risk than it would otherwise be.<\/p>\n
Wild declared previous cost control work on the scheme as a \u201cfailure\u201d and \u201cunacceptable\u201d.<\/p>\n
“It\u2019s clear to me [\u2026] that HS2 in its core mission to control costs – deliver this for the lowest feasible cost – has failed,” he said.<\/p>\n
Wild, who ran London’s Crossrail project from 2018<\/a> until 2022, said he has identified three main issues on HS2:<\/p>\n On the contracts, he said that the project company willingly took on risk.<\/p>\n “I don\u2019t mean to criticise people, it must have been very challenging, but the fact is the transition of risk from the supply chain to HS2 has resulted in a situation where our contracts are basically cost reimbursable and HS2 must manage the risk profile.<\/p>\n “I don\u2019t think HS2 has [managed the contracts] in a coherent way.”<\/p>\n Wild said it would take another 18 months to develop a new baseline for the programme – with timescales and cost estimates – due to the previous errors.<\/p>\n “That may seem an extraordinary amount of time,” he admitted.<\/p>\n “I got this wrong at the beginning of [my time at] Crossrail. We tried to set the baseline within six months, and it was proven to be too optimistic.”<\/p>\n It was also revealed that a new estimated timeline for the megaproject, or details of how Euston Station will be funded and built, would not be ready for 18 months.<\/p>\n Alan Over, director general of the Department for Transport\u2019s major rail projects group, told the committee that establishing a delivery model and financial assumptions for the Euston Station build, which was announced in October 2023<\/a> as to be delivered using private finance, would also take until 2026.<\/p>\n The project is proceeding there on the basis of former prime minister Rishi Sunak\u2019s desire for six platforms at the station, but in a manner that could be changed if future government\u2019s extend the rail project beyond Birmingham, he said.<\/p>\n \u201cWe do want to make sure our successors will have that option so we\u2019re actively planning for future proofing at the HS2 station that would make provision for a possible extra three platforms, or possibly four platforms, next to the ones that we have a concrete plan to build,\u201d he said.<\/p>\n\n