Mr Cameron responded yesterday to the growing attacks on the costs of HS2 by saying the government would work away to get the costs of this very expensive project down. If you are going to build it, that is a sensible aim. The statement was made on the same day as the MOD announced yet another escalation in the costs of building the two new aircraft carriers.
Why do we have such problems in this country with runaway costs on big projects? When I buy a new piece of equipment for my home I choose one I like and agree a fixed price for its manufacture and supply. The contract is binding and I end up paying the original price. Why can’t we buy trains and boats like that?
The boats are different because the UK state wants one offs that have never been built before and will doubtless never be built again. The state as customer gets dragged into the costs of design. the state then regularly changes its mind about what it wants, giving the contractors need or excuse to hike the price. The state as customer needs to get better at deciding what it wants and sticking to it. It also needs to nail down more of the purchase cost as a fixed price.
When it comes to buying trains, there are plenty of fast trains available around the world without having to design completely different ones. Given we have in mind a big order, it should also be possible to ask the winner of the bidding competition to build significant amounts of them in the UK under licence. Building track is a one off in terms of the route, but other wise can be standardised to a considerable extent.
The difficult to knows in the case of HS2 include the compensation and land acquisition costs,and the amount of work that will have to be done to create stable and flat ground conditions for laying the track. More surveys and preliminary negotiations with landowners can start to cut the risks of overrun on the estimates. The costs of the track and signals themselves should not be open to a lot of guesswork and can be specified precisely, in advance, to a standard already in use and production. A sleeper or a signal is a ubiquitous railway product that can be costed and calculated.
I remain against HS2 overall. If it has to go ahead then at the very least it should be possible to lop £10billion off the current projected costs, by going for as many components as are in current production and by completing accurate survey work of the land costs, and conditions. There should be a deadline for the final plan which then does n to allow variations for fear of cost escalations. If the idea is to add stations, vary the routes and make other changes as we go along then the bills could get even bigger.