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Costs warning over super sewer

Costs could spiral on construction of London’s proposed super sewer because of the delivery model, the government’s public spending watchdog has warned.

The National Audit Office said the government’s plan to use a third party to build and operate the Thames Tideway Tunnel contained certain risks.

Thames Water is to procure an infrastructure provider to finance and deliver the super sewer. It expects this body to be in place by May 2015 to formally award the main construction contracts.

But eight teams have already been shortlisted and sent tender documents across three packages that make up the estimated £2.3bn main construction phase of the scheme.

“The final costs of delivering the tunnel by this route are unknown, since they will be decided through competitive bargaining,” said the NAO in a report this week.

“There is a risk that because Thames Water is procuring the construction contracts but is not an investor (and therefore has no direct financial interest in the project), it has limited incentive to keep the price down.”

Construction is expected to start in 2016 and complete in 2023. But first the scheme must win planning permission.

A spokeswoman for the project said: “We are committed to ensuring the Thames Tideway Tunnel offers the best value for money to Thames Water customers and UK taxpayers.

“We welcome the NAO’s support for this objective and look forward to demonstrating how this will be achieved, including through the tenders for construction which are already under way, and for the cost of finance which will start soon.”

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