Highways England’s first two funding periods are currently running £2.9bn over budget.
The roads watchdog has warned that a number of schemes are now at risk of being delayed, due to overspend.
According to the Office for Rail and Road (ORR), Highways England’s forecast total costs for its RIS1 major schemes is now £2.9bn higher in Road Period 1 and Road Period 2 than the original estimate of £14.76bn.
The increase is due to underestimating costs for major schemes at the beginning of RIS1, as well as adding more work into existing project scopes.
Last year a number of schemes were either cancelled, paused or pushed back into RIS2, which has added pressure to Highway’s England’s budget for the next funding period.
Out of 112 planned projects at the beginning of RIS1, 85 are now expected to have started by March 2020.
Highways England is still facing a deficit for major schemes in RIS1 of £465M, which it is hoping to get down to £301M. The ORR has warned several more schemes could be delayed as a result.
In its report Review of Highways England’s capital delivery plan, the ORR said: “Highways England have carried out extensive work to manage down the difference between forecast costs and approved funding for the RP1 capital plan from over £1bn to the current forecast of £465M.
“There is still a risk that this difference cannot be managed down without further changes to the portfolio to help address cost pressures and delivery risks, for example, further deferral of costs or flexed funding into RIS2. This will have an impact on the future roads period but this is being managed as part of RIS2 planning.”
The ORR added that Highways England must apply lessons from RIS1 to its RIS2 planning, adding that Highways England “has the team and capability in place” to manage the risks.
A spokesperson for Highways Engand said: “The network we manage and operate is one of the most advanced in the world and connects people across the length and breadth of the country. Through the programme of major improvements being delivered, we’re making journeys even safer, faster and more reliable. The recently published ORR and DfT annual assessments of Highways England’s performance both recognise the good progress we are making in delivering our planned improvement programme.
“The ORR report notes that we currently have £465M of planned overprogramming. Like many large infrastructure or utilities investment programmes, over-programming is common practice and was incorporated into the current Roads Period at the outset. Indeed, the ORR report (and NAO’s report on Highways England last year) noted that we started the Road Period with £652M of overprogramming, and are steadily reducing this as we progress through the first roads period (2015-2020).
“As noted in both the ORR and NAO reports, a number of schemes being designed for delivery in this first road period (2015-2020) were at an early stage when included in the first Roads Investment Strategy. While the current forecast costs of some of these have increased when compared with initial estimates, they remain within published RIS scheme ranges, and we are confident that we will deliver our first Road Period to budget and, as schemes continue to mature, we will be able to identify opportunities to reduce the scope or cost of schemes.”
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