Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Accepted
Department and HS2 Ltd disagree on total programme cost estimates and methodology.
Conclusion
The Department and HS2 Ltd still disagree on the estimated total costs for completing the programme. Despite using the same data, the Department and HS2 Ltd told us that estimates differ because they disagree over a range of technical factors relating to the methodology used for the estimates and assumptions used, for example over the value of remaining risks on the programme and productivity savings.16 HS2 Ltd also had limited cost information from the supply chain, which reduced its ability to assess which cost increases were necessary.17
Government Response Summary
The government agrees with the recommendation, stating it has commissioned a comprehensive review of the programme and agreed areas of cost estimation with HS2 Ltd. It is working to finalise the cost estimating methodology over the summer and implement it by 2026, providing further updates to the Committee.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee's recommendation. Target implementation date: Spring 2026 2.2 The Secretary of State has commissioned the CEO of HS2 Ltd to undertake a comprehensive review of the programme, including HS2's current cost position and the capability and culture of HS2 Ltd, and to make recommendations to inform the programme reset. 2.3 The department and HS2 Ltd have agreed the areas of cost estimation that need to be addressed to enable a robust and reliable life-cycle cost of HS2 to be set, these include, reset of project schedule and duration, consolidation of costs incurred, scope delivered, quantities remaining and an evaluation of supply chain productivity. 2.4 The department is working closely with HS2 Ltd, accompanied by NISTA and HM Treasury advice, to finalise the cost estimating methodology over the summer and to fully implement it as part of the reset of the programme in 2026. 2.5 Once this process is complete, the department will provide a further update to inform the Committee at the earliest opportunity providing additional further details on the agreed approach to cost estimation methodology.