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Cost escalation hits M25 widening benefit to cost ratios

The financial benefit of the £5.5bn M25 widening scheme has collapsed by as much as 60% as a result of rising costs, the Department for Transport has revealed.

In a written response to a question from Liberal Democrat transport spokesman Norman Baker, new transport minister Chris Mole revealed the benefit to cost ratio of the section between junctions 16 and 23 has collapsed from 5.5:1 to 3.5:1 due to rising costs.

Similarly the ratio for the section between junction 27 to 30 has fallen from 2.4:1 to 2.0:1.

 

SectionJunction 16 to23Junction 27 to30
 Benefit cost ratio
Ministerial approval at TPI entry in 20045.52.4
Ministerial approval to increased costs for widening—27 July 20074.22.4
Ministerial approval to maximum expected cost for M25 DBFO contract—1 April 20093.52.0

 

Mole revealed that the capital construction costs have escalated on both sections.

“The approved estimate for widening the M25 between Junctions 16 and 23, and between Junctions 27 and 30 was £900M at the time these projects entered the Targeted Programme of Improvements in 2004,” said Mole.

“The capital cost of these widening schemes was re-estimated and approved at £1.28bn in July 2007. At this stage it had been agreed that the widening of the M25 between Junctions 16-23 and Junctions 27-30 schemes would be procured through the M25 design, build, finance and operate (DBFO) contract. The estimates did not include the cost of financing via the private finance initiative route.

“The contract was awarded to Connect Plus on 20 May 2009 with total capital costs for the two widening sections of £1.02bn. This represents the fixed price from Connect Plus for development and construction of the two sections being widened but excludes the cost of financing.”

Readers' comments (1)

  • Another Metronet?
    Can Atkins or Balfour Beatty be relied upon to deliver such a project and maintain budgets?

    Unsuitable or offensive? Report this comment

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