The contractors who have won the civil engineering deals for the first phase of High Speed Rail 2 (HS2) are to be incentivised to deliver cost efficiencies, however HS2 Ltd has insisted that the project costs won’t be a race to the bottom.
The winning joint ventures are to spend the first 16 months of the contract working in collaboration to produced detailed designs. There will then be a point at which cost and quality is assessed and there will be a decision on whether to rethink or proceed.
The £6.6bn and associated section breakdown prices for each section are written into the contracts. Contractors will be incentivised against this Initial Target Price (ITP).
“We have to be satisfied with the proposed design before we give approval to move onto stage two – construction,” said a spokesperson. “That’s what allows us to keep the oversight over cost and quality.”
It is understood HS2 Ltd is genuinely attempting to produce a collaborative environment along the lines of the Institution of Civil Engineer’s Infrastructure Client Group, and the group’s drive to improve collaborative working through Project 13.
HS2 Ltd has also explained the differential between the initial price for the phase one civils works given back in September 2015 – which was £11.8bn – compared to the £6.6bn worth of contracts announced on Monday.
It said the original £11.8bn figure was an OJEU estimated cost, which also included the estimated cost of the 2a (Birmingham to Crewe) contracts. The phase one civils works was estimated at £5.4bn to £8.6bn. At the time the procurement process started, the high speed rail line’s hybrid bill was still going through Parliament, and there was a risk that any significant changes could have impacted costs, so the initial costs accounted for that.