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Exclusive | Armitt on cutting HS2 phase 2 costs

New sheffield hs2 station

The capital cost of High Speed 2 (HS2) phase 2 could be reduced by £22M per km by implementing best practice from comparative international schemes, an independent official report has found.

Writing exclusively for New Civil Engineer [See box below for full article], National Infrastructure Commission chair Sir John Armitt expanded on the report which he co-authored, by saying that the possibility for cost reduction did exist and it was an “opportunity” to find new and more efficient ways of delivering the line. But he pointed out obstacles that need to be overcome to cut costs, including saying that in the UK “we don’t have the same developed supply chain as in some other countries”.

“This is the first new line project of this scale for more than a century, and it provides the opportunity to find new and more efficient models of delivery that could become a blueprint for other major transport projects to follow and drive better value for money for taxpayers,” he said.

Armitt said these measures included maximising collaboration between local planners, designers, operators, contractors and suppliers; demanding innovation in the design of infrastructure, stations and rolling stock; learning from best practice abroad, and recognising whole life costs and environmental considerations - all within tight budgetary control.

The International Benchmarking Study was commissioned in 2014 by the Department for Transport and concluded in November 2016 but not made public until this week. It was written by accountancy firm PWC and a panel of experts chaired by Armitt and focuses on phase 2 of the high speed rail line, which extends the route from Birmingham to Manchester and Leeds.

Early estimates have put the capital cost of phase 2 at £81M per route km of the line, but by optimising cost and programme efficiency the report said this could be reduced by up to 27%.

If fully realised, it said these opportunities could reduce the capital cost to £59M per route km.

Despite the potential savings, the report also said that although the capital cost of the line was at the “high end” compared to international schemes, there were certain differences which were unavoidable and limited opportunities for cost reduction.

These included a higher density of existing infrastructure, population density and distribution, challenging topography, and proximity and crossing of existing transport corridors.

Detailing these, it said HS2’s strategic objective of improving connectivity and enabling regional growth required three new stations to be built, which differed from comparators which had fewer intermediate stations.

These objectives, it said, “drive costs that cannot be avoided without reductions in strategic outcomes and benefits”.

It also said most international lines used existing stations when entering into city centres, cutting the capital cost. However, due capacity constraints, this was not possible for HS2 with new terminal stations at Manchester and Leeds “underpinning the business case for phase 2”.

HS2 Ltd said it was “taking on board” lessons learnt from other countries’ experiences and working with industry to innovate to deliver the new railway.

“We encouraged the formation of joint ventures between major British infrastructure companies and experienced international organisations, and we are working with them to develop our detailed engineering designs,” an HS2 spokesperson said.

Sir John Armitt

“Anyone who has been stuck on a train because of signal failure, points failure or even the effects of bad weather, knows that our railway network is past its prime. Our Victorian era network has a proud history, but we will not be able to rely on it forever.

“In many cases, that may mean using new technologies such as digital signalling to improve capacity and efficiency. But on congested routes such as the West Coast Main Line, which has already undergone one highly disruptive upgrade since the turn of the century, we may already be reaching the limits of what can be achieved.

“In these cases, we have to look at building anew if we are to have a railway that is fit for the future. And doing so can have significant advantages. I was in charge of delivering the UK’s first-ever high speed rail line, connecting London King’s Cross through Kent to the UK end of the Channel Tunnel, which is now the most reliable route in the country.

“That’s why I have always supported HS2, which provides a core element in the modernisation of our railway system – boosting capacity, cutting journey times and relieving crowding on existing lines. The price tag for the scheme is high, around £55bn, and I am fully aware of the concerns that have been raised about this. We should remember that the country will benefit from the new capacity for a century or more, but equally we should make every effort to identify where savings can be made.

“Benchmarking has an important role in testing whether we are achieving value for money, and when the independent panel I chaired examined how HS2’s costs related those for similar schemes from Europe, China, Australia and Taiwan, the results were challenging. The costs per kilometre of the other schemes varied from £11M to £79M, whereas the target design cost of HS2 phase 2b to Leeds and Manchester is £65M per km – close to the top end of the range.

“Some of the reasons for this are unique to this project, or to this country compared to others. Land values are higher in the UK, and we don’t have the same developed supply chain as in some other countries. HS2 has more intermediate stations than many international high speed lines, helping it connect more regions of the country. And other countries use existing commuter routes into city centres, whereas the high utilisation of these lines in the UK means new infrastructure is needed.

“But cost reductions can still be achieved on phase 2 of HS2. This is the first new line project of this scale for more than a century, and it provides the opportunity to find new and more efficient models of delivery. These include maximising collaboration between local planners, designers, operators, contractors and suppliers; demanding innovation in the design; learning from best practice abroad, and recognising whole life costs and environmental considerations - all within tight budgetary control.

“HS2 offers the chance to increase capacity and reduce journey times between many of our largest cities. My panel’s report suggests we can achieve this whilst still reducing capital costs, and so now is the time to look again at cutting edge technologies and new ways of working to make sure that phase 2 of this vitally important project delivers the best possible value for money for users and taxpayers.”

Armitt cropped

Sir John Armitt

Sir John Armitt was chairman of the International Benchmarking Study Panel for HS2, and is chairman of the National Infrastructure Commission

 

Readers' comments (1)

  • You are looking in the wrong place for savings John! How about saving £10 billion by going back to the original option appraisal routes and hence bringing the economic benefits forward by 10 years?

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