Oakervee: Industry fragmentation has pushed up HS2 cost

The cost of HS2 is “substantially higher” than high-speed rail lines in other countries because the UK construction industry is more fragmented then elsewhere.

That’s according to Douglas Oakervee’s independent review of the project published yesterday.

The review led prime minister Boris Johnson to offer his backing to the scheme, although he has taken some responsibilities away from delivery body HS2 limited and criticised “past failures of leadership and cost control”.

In his review, Oakervee blamed the UK’s reliance on “many tiers of subcontractors” for driving costs up. He also singled out HS2’s higher specifications including the fact that trains will run at higher frequencies and at higher speeds than equivalent schemes.

And Oakervee recommended that if HS2 could not achieve a “satisfactory position” with the main works civils contractors on the second phase of HS2 with acceptable prices and a “reasonable level of value engineering” then HS2 Ltd should consider re-procuring some or all of the contracts.

Nonetheless, the report also worked of the “significant detrimental consequences” for the supply chain and the “fragile UK construction industry” if HS2 were cancelled.

The full review can be read here.