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HS2 £1bn over target costs following geotechnical risk warning

Sources close to High Speed 2 (HS2) have confirmed that the main civils work are around £1bn over budget following a cost warning by geotechnical engineers last month.

Speaking to GE’s sister publication NCE, the sources have said that interim costs submitted by contractors are currently above HS2’s target cost of £6.6bn.

Leading geotechnical engineers warned last month that the cost of delivering HS2 could rise sharply as a result of the use of target cost contracts without geotechnical baseline reports (GBRs).

NCE’s sources have revealed that the collective price was coming in at “around £1.2bn” over budget, another said that some bids were “as much as 30% to 40% higher” than their individual target price.

It is understood that the notice to proceed has been pushed back from November until February 2019 with one source claiming that they had been told to “go away and sharpen their pencils” to cut costs.

The news follows GE’s report that that the price rise resulting from the client effectively passing all risk to the contractor could be as much as 30%. Several engineers said that they were “dismayed” that HS2 has chosen not to use GBRs, which have been widely used on other major UK projects, and the concern over the issue is widespread among a number of other individuals that GE spoke to.

Nonetheless, HS2 has dismissed these cost claims and said that it did not consider GBRs to be necessary at the design stage.

NCE has reported that the joint ventures for all four of the main civil works are currently coming in above budget.

The JVs were appointed by HS2 in July last year to develop the main civil works designs for phase 1 of the line. On receiving the bids at an acceptable price, the teams will be given a notice to proceed allowing them to start building the line.

However, a HS2 spokesperson said that the project “remains on track, and within [the] original cost package”.

 

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