Source · Select Committees · Public Accounts Committee
Recommendation 22
22
Accepted
HS2 Ltd's two-stage procurement process delays confident cost estimates for complex projects.
Recommendation
HS2 Ltd explained that it had not expected to have an estimate of costs that it was confident in until the end of 2022 following work by the construction partner on a detailed, ‘bottom-up’ costing of the design.55 This followed the two-stage procurement process that HS2 Ltd told us it is employing on the HS2 programme, where the construction partner is first appointed based on capability and suitability and then works with HS2 Ltd to develop a design and agree a target price for construction.56 The Department confirmed that this is a standard approach for large construction projects where there is significant unknown risk and where more design work is required before a realistic target price can be agreed.57 45 Written statement to Parliament, HS2 6 monthly report to Parliament: October 2020, 13 October 2020 46 Committee of Public Accounts, High Speed 2: 2022 Spring Update, 16 May 2022, Q 48; Written statement to Parliament, HS2 6 monthly report to Parliament: October 2022, 27 October 2022 47 Committee of Public Accounts, High Speed 2: 2022 Spring Update, 16 May 2022, Q 48; Written statement to Parliament, HS2 6 monthly report to Parliament: October 2021, 20 October 2021 48 Committee of Public Accounts, High Speed 2: 2022 Spring Update, 16 May 2022, Q 48; Written statement to Parliament, HS2 6 monthly report to Parliament: March 2022, 16 March 2022; Written statement to Parliament, HS2 6 monthly report to Parliament: October 2022, 27 October 2022 49 C&AG’s Report, para 2.19 and Figure 7 50 Q 5 51 Ibid 52 Ibid 53 Ibid 54 Q 8, C&AG’s Report, Figure 7 55 Qq 6, 8 56 Q 10 57 Q 11 HS2 Euston 15
Government Response Summary
The government agrees, noting it transparently disclosed the significant £4.8 billion revised cost estimate to Parliament via the National Audit Office when it became available, and reaffirms its commitment to upholding transparency in the HS2 programme.
Government Response
Accepted
HM Government
Accepted
5.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2023 5.2 The HS2 Parliamentary report published in October 2022 set out HS2 Ltd.’s assessment of a £0.4 billion pressure for Euston station above its £2.6 billion budget, which was aligned with the range against which it had incentivised Mace Dragados to deliver the single-stage design, which was £2.6-£3.6 billion. Information regarding the significant additional pressure from the £4.8 billion revised estimate only became available in January 2023. In advance of the subsequent Parliamentary Report, which was published in June 2023, the department disclosed this transparently to Parliament through the National Audit Office. 5.3 The department is committed to upholding transparency in the HS2 programme.