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PPP Arbiter criticises Transport for London for lack of clarity over Tube costs

PPP Arbiter Chris Bolt yesterday said he was “disappointed” with Transport for London for failing to provide cost information on upgrade work in a format that allowed benchmarking with other projects.

Under the terms of their PPP Agreements, each of the three PPP Infracos must submit Annual Asset Management Plans (AAMPs) to London Underground. These documents must describe each Infraco’s plans for the following nine years and be consistent with their Asset Management Strategies.

Tube Lines, the sole remaining privately owned PPP, along with the Transport for London-managed BCV and SSL Infracos all have to provide the information on a comparable basis to allow an independent assessment of their relative performances. Tube Lines will remain privately owned until June, when its shareholders Amey and Bechtel complete the sale of their stakes in June.

Information must be prepared on a comparable basis, be presented in a uniform format and be at a level of detail that enables judgements to be made about whether
each Infraco is acting in an efficient and economic manner.

However, since the collapse of Metronet, London Underground has ceased providing the information in a comparable way.

Bolt said the move was disappointing as it meant it is harder to gauge whether taxpayers are getting value for money.

“This is disappointing,” he said. “If taxpayers and farepayers are to have assurance that value for money is being delivered, comparison of performance - both internally and externally - will remain important. This will be so even when TfL’s agreement in principle to acquire Tube Lines is concluded.”

The two former Metronet Infracos are now owned by Transport for London (TfL). Although these Infracos are separate legal entities with separate financial accounts, all their staff are directly employed by London Underground and senior London Underground executives sit on their Boards. At the time of the takeover of former Metronet Infracos by TfL, London Underground gave a commitment to Bolt that the Infracos’ AAMP cost tables would include relevant cost and performance
information to enable an appropriate and valid comparison with Tube Lines.

Delivery concerns

The Arbiter’s review of the former Metronet Infraco’s asset management plans has flagged concerns over delivery of much of the programme.

On track renewals the Arbiter’s report said the current approach will result in a bow wave of work in the third review period that begins in 2018. It said it is not clear to what extent the output of this process meets the PPP contract output requirements.

On stations it says it is not clear that the current programme beyond 2012/13 will meet the PPP contract output requirements.

On key upgrades it says the the Bakerloo Line upgrade is at the pre-feasibility stage and consequently none of the costs and programmes have been validated. But it says there are a number of key issues, yet to be resolved, that will have a major effect on the cost and programme.

On the Victoria Line upgrade it says that although London Underground believes PPP contractual delivery deadlines are still achievable, some risk remains such as items affected by the late delivery of trains. Just four have been delivered instead of 17 as of March 2010.



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