Building the two phases of HS2 simultaneously could cut costs and help create a critical mass for the supply chain, a move that could help consultants and contractors attract and retain the right skills in a competitive global marketplace.
The analysis comes from Mark Cowlard, global head of rail at EC Harris, in response to a strong signal this week that incoming HS2 chairman Sir David Higgins will recommend to government that the £21.2bn second phase is built concurrently, or at least overlapping, with the £21.4bn Phase 1.
In November, prime minister David Cameron asked Higgins to come up with ideas that would rein back costs on the £42.6bn project. Higgins was interviewed last weekend by The Sunday Telegraph, in an article that contained a strong steer that his report would recommend beginning work simultaneously on the London to Birmingham line and the two lines north from Birmingham to Leeds and Manchester.
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Cowlard told CM: “Accelerating the programme makes sense from a delivery perspective as you can give the supply chain a greater volume of work, that will be attractive to them and will help with the [skills] attraction issue.
“It’s important as a nation that we attract and retain the engineers and the programme managers in the UK, and that we establish academies [recently announced by Vince Cable] to train and develop these leaders.”
Cowlard highlighted that HS2 – whether completed concurrently or in two phases – would compete for the best design and project management talent with a long list of infrastructure projects worldwide, including Jeddah Metro, Riyadh Metro, Doha Metro and the Saudi Land Bridge in the Middle East, and others in Asia including the Kuala Lumpur to Singapore High Speed Rail Link.
He also agreed that accelerating the overall programme – currently scheduled to run from the start of Phase 1 implementation in 2016 to completion of Phase 2 in 2032/33 – would cut costs, firstly by reducing the impact of inflation on the second phase.
“If Phase 2 is due to take six to seven years, and simply looking at inflation, assuming it’s running at 4% in the railway engineering market, then you could be looking at substantial savings for each year the programme is reduced.”
"If Phase 2 is due to take six to seven years, and simply looking at inflation, assuming it’s running at 4% in the railway engineering market, then you could be looking at substantial savings for each year the programme is reduced."
Mark Cowlard, EC Harris
Cowlard’s second point was that "the projected boost to the GDP of cities such as Leeds, Sheffield and Manchester would be brought forward by several years, as would the creation of the estimated 400 000 jobs that HS2 will create."
And cost savings would also arise from offering the market a longer pipeline of work. “The more you offer the supply chain, assuming they collectively have the capacity to deliver, the greater cost benefit you get from giving them the additional surety of a greater volume of work over a reduced period. Suppliers can then reduce project prelims and business overheads,” said Cowlard. However, he declined to estimate the likely cost savings.
He added that a two-phase approach was partly driven by the need to spread government spending, a factor that could weigh less heavily if external investors became interested in the scheme.
But Cowlard added that time is short if Higgins’ plan is to run both phases together or at least to overlap them.
“There is a critical need to avoid delay in commencement of the delivery programme, planned for 2017. Crossrail’s main delivery works are scheduled to complete at the same time, in 2017. Securing early support from its supply chain will be a factor that will contribute to effective and efficient delivery, and learning from experiences of the programme. Retention of individuals is also key – they could easily be enticed by the huge number of mega rail and metro projects around the world, often offering tax free salaries."
In the Sunday Telegraph interview, Higgins also highlighted the costs of delay in the parliamentary process – a Hybrid Bill laying the legal groundwork for Phase I alone is currently progressing. He told the paper: “The longer you take in committee stage, you take the risk of adding cost. And if it takes three years instead of one, it adds two years of inflation to the project. The meter is always ticking.”
