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Tube Lines in costs row

London Underground has appealed to PPP arbiter Chris Bolt to step in to resolve a row with upgrade contractor Tube Line over cost forecasts. The row centres on the cost of work on the Jubilee, Northern and Piccadilly lines between now and 2017.

The Tube upgrade contractor and London Underground have been at loggerheads over these predictions for a year.

Tube Lines initially said that it could carry out the work for £7.2bn, considerably more than the £4.1bn London Underground said it could afford. In July, Tube Lines revised the figure down to around £5bn.

Interim managing director of London Underground (LU) Richard Parry said the upgrades ”must be delivered at a price which is clear value for money and acceptable to us, the mayor, government and passengers.”

“While we have had constructive talks on their future work programme which have seen some of their cost demands come down, Tube Lines’ price remains unacceptably high.”

Richard Parry, London Underground

“Tube Lines therefore has two key challenges. First, to deliver promised improvements on time. Second, to deliver the improvements in a way that is economic and efficient. “While we have had constructive talks on their future work programme which have seen some of their cost demands come down, Tube Lines’ price remains unacceptably high in some areas,” he said.

Tube Lines said that it had tabled an affordable solution which London Underground was unwilling to accept.

“We have made London Underground a very good offer that will bring the cost of work down to a level that it can afford whilst still being able to deliver the performance and upgrades that the underground needs,” said a Tube Lines spokesman.

“It is disappointing then that they should ask the arbiter to intervene when an affordable solution is there for the taking.”

Still a big gap

In September 2008 Bolt made an outline estimate which said that the work would cost between £5.1bn and £5.5bn for the work to be completed (NCE 9 September 2008).

“Tube Lines’ formal submission to London Underground in June proposed costs of £6.8bn over the next seven and a half years, although it identified possible savings to bring this figure down to just over £5bn,” he said.

“London Underground and Tube Lines have made significant progress in agreeing opportunities to reduce costs, but there is still a big gap between them. My role is now to determine a fair price for London Underground to pay for the maintenance, renewal and upgrading of the Jubilee, Northern and Piccadilly lines.

Readers' comments (2)

  • Why wasn't a public enquiry held in to the collapse of Metronet? Hundreds of millions of pounds was squandered that would now otherwise be available for public Infrastructure Projects. Does anyone know the real story in to the collapse? The shareholders do not seem to have been adversely affected by its collapse. TfL seems happy enough to allow them to tender for Tottenham Court Road and Victoria Station Projects with a combined value of circa £1bn, in addition to allowing them to tender for Crossrail central london sections as well.

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  • It is ironic reading about London Underground seeking value for money when it continues to award contracts to major contractors it believes and states publicly have not delivered or not offering value for money.

    Like the banking sector, it is that great group of mugs called taxpayers who are picking up the tab. Time for Public servants like bankers to get back to old fashioned proper control of their sectors for the benefit of our society they serve.

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