HS2 already £800m over running cost target

HS2 is reporting mounting cost pressure from overrunning enabling works and higher building cost estimates for the London terminus at Euston.

Rising cost pressures on the £40.3bn first phase were revealed in the first report to Government by HS2 Minister Andrew Stephenson.

While the latest projections have risen at an early stage, the forecast is still within the Government’s extended funding envelope of £44.6bn.

HS2 has still to factor in the cost impact of Covid-19, which will be detailed within the next six months.

So far £9.6bn has been spent already, a further £11.5bn is contracted, and £13.9bn is yet to be contracted and remains an estimate.

The target cost also includes a £5.3bn contingency for managing the risk and uncertainty that are an inherent part of delivering major projects.

Of the £800m cost pressure identified so far, around £400m is attributed to enabling works overruns.

Since starting in 2017, enabling works contractors have encountered more significant challenges than anticipated, such as the need to safely remove more asbestos than expected.

More detailed scoping of the Euston Station redevelopment has identified a significant cost pressure, currently reported at £400m.

Stephenson warned that further work is ongoing to validate these initial estimates and this could identify further pressure.

“As this remains at the design stage, work is underway to consider opportunities, efficiencies and scope reductions in order to redress these pressures and we will report further on this in the next report,” he added.

On Phase One, the Delivery into Service date range for initial services from Old Oak Common to Birmingham Curzon Street remains 2029 to 2033.

The report stated: “HS2 continues to predict that it will provide services within this range but notes some pressures on the earliest date from COVID impacts and delayed handovers from enabling works, which it is seeking to mitigate.

“Schedule estimates will be more reliable once the main works are fully mobilised next summer and once the Rail Systems elements have been contracted.”

Initial opening of services from Euston remains 2031-2036, subject to further work on the study of design and delivery options.

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