Using a gold-plated shovel

I have come across an interesting chart prepared for what appears to be an internal report by a group working within Indian Railways. This chart compares high speed rail construction costs, per kilometre, around the world.

Comparison of high speed line construction costs (source: Indian Railways)

Comparison of high speed line construction costs (source: Indian Railways)

Now clearly the technical challenges to be overcome can vary widely from one high speed rail link to another, and this will inevitably reflect in the costs – a factor that is illustrated by the more than seven to one ratio in the cheapest to the most expensive per kilometre rates in the examples in the chart – but the UK’s own HS1 does appear to be in an unfortunate class of its own. Also, with the costs for HS2 Phase 1 nudging up towards the £100m per kilometre level, the UK seems determined to keep the dubious distinction of being the world’s most expensive place to build new railway projects firmly in its grasp.

To pinch a compound adjective from a previous Transport Secretary, the “eye-watering” costs of building new railways in the UK is not something of which the Government is unaware. It was an issue that HS2 Ltd considered in its original report to Government way back in December 2009 (High Speed Rail London to the West Midlands and Beyond: A Report to Government by High Speed Two Limited). HS2 Ltd was even concerned enough to splash out some of our cash on commissioning a “detailed benchmarking exercise” comparing construction costs in the UK to those in continental Europe. The findings are presented in Chapter 4 of that report, in paragraphs 4.1.25 to 4.1.31.

So what insight did the taxpayer gain in exchange for his hard-earned cash? Well, the main excuse, sorry I mean reason, is that those crafty Continentals appear to have avoided “the major construction scope and cost associated with the provision of major new terminal stations and dedicated approaches through urban areas” (paragraph 4.1.28). It is certainly true that the costs of providing a new high speed link to a central London terminal represent a significant portion of the costs for both HS1 and Phase 1 of HS2. However, the costs of Phase 2 of HS2 are much less dominated by urban tunnelling, but the per kilometre costs still manage to clock up about £50million, which is still higher than all of the other non-UK examples in the chart.

I feel that I really must ask a question at this point. If HS2 Ltd and the Government knew in 2009 that extensive urban tunnelling was so bad for the bottom-line figure, then why on earth opt for a design for HS2 that approaches London from the west and employs a London terminus situated to the north-east of the central zone, necessitating a long and difficult approach into the Capital? It seems that we badly wanted to retain our position at the top of the cost league.

To the credit of HS2 Ltd, the report does admit that even “after taking into account UK-specific needs to create new terminals and urban approaches, the comparison of European rates and rates derived for HS1 and HS2 shows UK unit rates for construction typically up to double those being achieved in mainland Europe” (paragraph 4.1.29). So the report comes up with a few suggestions of why this might be.

You might find it of interest to look through the list that HS2 Ltd sets out in paragraph 4.1.29 of the report. The first item listed is that with HS1 and HS2 UK contractors have been deprived of continuity of work. Now I’m not sure about HS1, but surely the whole point about HS2 is that it will provide continuity of work when Crossrail construction is running down, so I don’t see that this reason has much validity.

The other items listed generally seem to arise from the way that things are done in the UK, and the manner in which the industry is organised. If I may simplify what HS2 Ltd has said, there is too much use of gold-plated shovels and the questions of competence that I addressed in my blog The failings of the brewery entertainments manager (posted 26 Apr 2013) also have cost implications.

It is important to realise that HS2 is not on a level playing field when it comes to trying to achieve the success of some of its counterparts around the world. The significant additional costs that construction in the UK entails will put a financial millstone around the neck of the project, surely condemning it to failure.

Acknowledgement: The chart reproduced above is taken from Subhash C Sagar and Yogesh Verma, Case Studies – High Speed Rail System (> 250 kmph) 2007, which may be downloaded here.


One response to this post.

  1. Posted by chriseaglen on June 29, 2013 at 9:40 am

    There are different health and safety regimes which change costings. Also cross tunnel accesses cost more than straight bore. Large excavations in urban areas are slower and more expensive due to working hour curbs. Non-of this is not know. Railways perfect inverse logic reasonsing and blame allocation as any commuter knows. There will not be many shovels for HS2 but expensive capital. Not so many UK jobs as clusters of people moving from Crossrail to HS2. Why approach from West also maximised the costs for only half tunneling under the Chilterns through aquifers.
    Also do question the per Km cost for Phase 2 as there is the rising curve for the lag in extent of work todate compared with Phase 1. One year difference. Also Site Investigations and Ground Surveys for Ground Baseline Report is likely to add cost to both Phase 1 and Phase 2. More like fools gold currently, better gold plate power generation for the future economic prosperity and supply reliability.


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