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Comment | Let's be honest about mega-project costs

New Civil Engineer has fallen foul of the Crossrail 2 PR machine this month by daring to suggest that the cost of London’s next mega- project had “ballooned” from £30bn to £40bn.

The new “nominal cost” quoted is the actual amount of money Transport for London is proposing to set aside to pay for the scheme over the next 15 to 20 years. That compares to the circa-£30bn cost that has been, and continues to be, cited by its project promoters, which is the cost at 2014 prices.

And that is the point. 2014 prices. It is 2019, not 2014. Five years have passed and costs have already risen. It’s called inflation. According to the Bank of England’s ready-reckoner everyday goods or services costing £30 in 2014 would now cost you £33. Construction inflation has consistently run higher than the Consumer Price Index over that period and is currently a full percentage point ahead – so it is simple truth that the project will now cost more.

Crossrail 2 tells us this month that it is “simply false” to say that costs have substantially increased. Yet its chief executive Michèle Dix warned back in 2017 that costs would go up, if political indecision continued indefinitely. She told New Civil Engineer’s UK Transport conference that such indecision on her project would add £2bn a year to project costs – a “big figure”, she said.

To be fair, the project has been relentlessly trying to cut costs. The project also tells us this month that the ongoing independent affordability review of the project has cut that nominal cost from a £45.3bn high when submitted to the National Infrastructure Commission (NIC) for assessment in 2016.

And that may be true. But this is the thing. No-one was publicly quoting £45bn in 2016. So introducing £40bn now just looks like a ballooning cost. Sorry Crossrail 2, but it just does.

And that’s the issue; or the industry’s issue. We keep misinforming people and it is leading people to doubt what we say and what we do.

The original Crossrail, of course, is the prime example, where project bosses steadfastly kept telling the world through the power of the BBC and others that it was a “Fifteen Billion Pound railway” right up until it became abundantly clear to all that it wasn’t.

And High Speed 2 (HS2) is in danger of being even worse. Because it is surely fooling no-one – not even transport secretary Chris Grayling – that it can be delivered as currently specified for the quoted £56bn price.

Right now it is trying to keep the £56bn dream alive by pressurising contractors to cut construction costs on phase one while exploring simplistic scope reductions on phase two.

What it should be doing is being honest with itself and the public that the project is going to cost more, but then really selling the reason why and the arguments for continuing. Crossrail 2 is likely the same.

Much debate surrounds the future skills needs of engineers in the era of rapid technological advance. Retention of technical knowledge was understandably top of the list when the ICE asked the question of members in its skills review last year.

But people skills have to be right up there too. We have to get better at communicating. We have to be able to tell people why things must cost what they must cost; to be able to give them all the options; and then give them confidence that we can deliver on the option chosen.

We are there to serve society. We can only do that if we are more empathic.

  • Mark Hansford is New Civil Engineer’s editor

Readers' comments (1)

  • Whilst honesty and clarity with regard to the costs associated with major projects would be welcome, project promoters and engineers also need to be better at communicating the real benefits that major projects will bring to the country/regions once they are realized.

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