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Cost benchmarking to be first casualty of Tube Lines buyout

Independent benchmarking of the cost of London’s multi-billion pound Tube upgrade looks set to be the first casualty of Transport for London’s (TfL’s) takeover of Tube Lines.

Independent benchmarking of the cost of London’s multi-billion pound Tube upgrade looks set to be the first casualty of Transport for London’s (TfL’s) takeover of Tube Lines.

Amey and Bechtel’s sale of the one remaining Tube contractor back to TfL for £310M reached financial close this week.

TfL’s buy back of the contract effectively ends the Tube PPP and leaves the role of the PPP Arbiter in limbo.

PPP Arbiter Chris Bolt set what he considered to be the fair costs for carrying out Tube upgrade work based on comparisons with other metro systems.

To do this PPP contractors had to provide cost information in a way that could be readily benchmarked. When TfL took over failed upgrade contractor Metronet in 2008 it pledged to continue to do this.

But in May Bolt criticised TfL and its subsidiary London Underground for failing to stick to its agreement (NCE 20 May). This raised concerns that independent efforts to examine TfL’s efficiency were at risk.

TfL has since told Bolt that it will seek to end the Arbiter’s role completely.

“The Arbiter understands that TfL proposes to agree changes to the contracts which make it clear that no party will seek directions or guidance from the Arbiter in future,” said the Arbiter in a statement.

“In that event, the other powers of the Arbiter, such as those relating to the collection and analysis of benchmarking data, fall away.”

TfL said it was “confident” that the new arrangement would enable it to make substantial cost savings, but did not make clear how this would be judged.

It said an “urgent review” of the PPP upgrade programmes would be its first objective, with the aim of delivering the Tube improvements “with the best possible value for money” and with the minimum of disruption for Londoners and businesses.

Former Tube Lines shareholder Amey will continue to manage the delivery of around £300M of maintenance work on the Jubilee, Northern and Piccadilly lines per year for the next seven and a half years.

But Bechtel, the other ex-shareholder will stop working on the programme.

Former Aecom European programme management director Andie Harper has assumed the role of chief executive of the TfL-run Tube Lines.

He had previously led the transfer of Metronet from administration to TfL.

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