.......so who came up with the original cost which has now trebled? Was that NR» or the Government?
That depends ... firstly on whether it's true.
I can't understand why so little effort is made to explain what these cost and time numbers mean. It makes most comments on them into nonsense - as happened for the channel tunnel, and more recently for
HS2▸ .
Politicians want these time and cost numbers from the very start, before much work has been done on defining what the project entails. In a commercial contract senior management want that too. Inevitably those initial numbers have a large uncertainty, which the customer may accept - i.e. " as soon as you can for a reasonable cost". The equivalent cost estimate is a "known cost" basis, which means it goes up as more expensive problems become known.
That's fine if everyone understands it. But it is different from a guaranteed cost or delivery time, which involves extra payment and time allowed so as to reduce the risk. If we (or the press) think it's a "promise" when it's a "target" (the distinction Paul Clifton was making, but not clarifying, yesterday), we all get confused.
In the
CP5▸ delivery plan, for project W001a, there are two "Regulated Outputs" - for "Entry Into Service" - in June 2016 to Newbury, Oxford, Chippenham, and in May 2017 to Bristol
TM‡. Both stages had passed
GRIP▸ 3 (single option selection) by July 2014, and GRIP 4 (single option scope defined) is due by August 2015. But the real start time is "First timetabled public use of the infrastructure", for which the "indicator" is December 2016 or May 2017 for the two stages. Of course the work for GRIP 4 is what tells you how much money, resources, and in practice (resources being very much finite) time is going to be required. So I conclude that the "regulated "outputs" are not really fixed and firm or promised dates, just two performance criteria on which NR will be formally judged by
ORR» but allowed to miss them if their excuses are good enough.
This may all be explained somewhere, but if it is I expect it is hidden inside documents so long, jargon-ridden, and numerous as to make it invisible.
The situation with costs is similar, but it is harder to find single-project costs anywhere. About all I can find is the 2013 Periodic Review* by ORR, dealing with NR's capital plans for CP5. Here, in the introduction, it says:
81. Around ^7bn of projects are at an early stage of development and hence the costs are uncertain. Fixing this cost now could involve paying a large ^risk premium‟. So to ensure better value for money we have taken a new approach to setting the efficient level of costs for these projects, building on a proposal made by the Rail Delivery Group (RDG‡). We have made a provisional cost assessment now but we will finalise the total efficient cost progressively by March 2015 as project plans become more mature.
The idea that this is new to ORR is very worrying.
Later it expands this a bit:
[9.86] We considered Network Rail‟s response to the draft determination, where we agreed with some of its points and acknowledged that costs for some projects may have changed considerably since the SBP as scope has developed further.
9.87 The enhancements cost adjustment mechanism is a new process that will deal with changes to cost estimates (both up and down). We think that this process will address Network Rail‟s points as we will agree more accurate efficient costs when the projects reach a more advanced stage.
When assessing costs, it aggregates projects rather than showing them separately. In Chapter 9, on enhancements, we read:
9.14 Network Rail proposed in its SBP that the outputs and funding for some of these should only be fixed once they have reached a later stage when a single option has been selected (i.e. GRIP 4). This was the main issue we faced in determining efficient costs and is explained more fully in the section ^major issues in assessing enhancements‟.
Again, that suggests a lack of an agreed basis between NR, ORR, and
DfT» on this fundamental issue.
Electrification schemes, i.e. all the current projects added together, were ^3.2 Bn in the Strategic Business Plan.
9.58 A further point made by Network Rail was that, since the SBP submission the costs for Great Western electrification, Midland Main Line electrification and East West rail have increased by about ^376m in total as a result of further development and design work. It acknowledged that the new approach is specifically designed to deal with this happening but considered that it would be sensible to include this additional amount in our assumptions for the determination. As the portfolio of projects develops costs for some may increase whereas costs for others may decrease. We have not added the amount Network Rail suggested at this stage, just as we have not assumed any further cost reductions. This will be addressed through the enhancements cost adjustment framework.
That suggests a modest cost increase which is covered by this "cost adjustment" mechanism, acknowledging that the initial costs were not meant to be complete. But it well short of what is being reported now.
If the cost increase of nearly ^1Bn is even roughly right (and it probably is not, but how would we know?) that cost increase would be a serious concern.
The timescale may not be, though it would be hard to spend all that extra money without taking time to do so. And while there is that gap of 6 months from
EIS▸ to new timetable, introducing a timetable can't be put off at short notice - that 6 months does not sound generous for proving runs over the whole network before the deadline for committing to the timetable change.
*
Periodic Review 2013: Final determination of Network Rail^s outputs and funding for 2014-19 October 2013