“HYSTERICAL”: NHS IT PROJECT FIASCO MANAGER APPOINTED AT HS2 – £72 BILLION BILL IF HS2 FOLLOWS 158% PUBLIC SECTOR OVERSPEND TREND.

HS2 ACTION ALLIANCE

NEWS

 

February 9, 2014.

 

“HYSTERICAL”: NHS IT PROJECT FIASCO MANAGER APPOINTED AT HS2 – £72 BILLION BILL IF HS2 FOLLOWS 158% PUBLIC SECTOR OVERSPEND TREND.

 

The average overspend on 11 recent major public sector building projects has been 158%, indicating that if HS2 was true to form it would cost in the region of at least £72 billion – and this is using the very lowest government cost estimate.

 

And now HS2 budget management confidence has hit a new low with the appointment of Patrick O’Connell, the man who wasted huge chunks of taxpayers money in the NHS IT fiasco, as head of programme and strategy.

 

“This is hysterically funny and tragic in equal measure. This man cost the taxpayer millions for absolutely no return for the NHS. This makes HS2 odds-on to go crashing through the budget buffers,” said Richard Houghton of HS2 Action Alliance, the biggest national HS2 opposition campaign.

 

Research undertaken by HS2 Action Alliance indicates that the two most recent HS2-comparable projects – HS1 and the Channel Tunnel – went 35.71% and 99.37% respectively over budget. The government’s own cost estimates for HS2 vary between £28 billion and £73 billion.

 

“The figures, even the lowest ones, are far too big to comprehend, but the effect all too familiar. In fundamental terms, it could mean boom for contractors, but a mini recession for everybody else as budgets are cut and taxes levied to address the overspend on HS2,” said Richard Houghton.

 

“This research proves that public sector building projects like HS2 are nearly always afflicted by enormous cost inflation, and this is already happening to HS2, where costs are out of control even on paper.

 

“If we apply the 158% figure to HS2, and use the very lowest estimated cost that has been bandied about in recent months of £28 billion – which excludes £14 billion of government allocated ‘contingency’ – it means the final cost of the project will be about £72 billion – or a cost of about £1,400 to every single adult in Britain.  But the government is currently estimating that HS2 will cost £50 billion including the cost of trains – but those trains are costed at 2011 prices.

 

“So where is this extra £22 billion going to come from? To put it in perspective, that would pay for the disaster-plagued NHS IT programme twice over, something which in itself was 216% over budget.

 

“HS2 is not needed, not wanted by the British people and is an horrendous waste of money. It’s truly baffling why the Labour Party is propping-up the Tory-led Coalition to force through HS2 against the wishes of the British people. They need to come to their senses soon and remove their support for this political vanity project, which is a gravy-train for big business, but will cost ordinary people dearly for many years to come.”

 

Ends

 

Further information:

John Read

john.read@readdillon.com

07774 476391

 

Iain Macauley

im@pressrelations.co.uk

07788 978800

 

http://www.hs2actionalliance.org/

 

 

 

 

Escalation of costs of 11 major public sector capital infrastructure projects

Project

Initial cost estimate (£million)

Final actual cost (£million)

Difference (£million)

Cost overrun (%)

High Speed 1

4,200

5,700

1500

35.71

Scottish Parliament

40

414

374

935.00

British Library [1]

450

511

61

13.56

Channel Tunnel

4,740

9,450

4710

99.37

Edinburgh Tramline

545

776

231

42.39

The Dome [2]

260

260

0

0.00

Jubilee Line Extension

2,100

3,500

1400

66.67

National Programme for IT in the NHS [3]

3,100

9,800

6700

216.13

Welsh Assembly

17

70

53

311.76

Widening of the M25 Motorway

2,740

3,400

660

24.09

Birmingham Library

193

189

4

2.07

 

Average cost overrun

   

1425.91

158.42

 

 

References

 

High Speed 1

Final actual cost

National Audit Office (2012) ‘The Completion and Sale of High Speed 1’ available at http://www.nao.org.uk/wp-content/uploads/2012/03/10121834.pdf

Arter, K. (2009) ‘Economic Impact of High Speed 1’ available at http://www.lcrhq.co.uk/media/cms_page_media/32/HS1.final.report.pdf

Initial cost estimate

Butcher, L. (2011) ‘Railways: Channel Tunnel Rail Link (HS1)’, available at www.parliament.uk/briefing-papers/sn00267.pdf

Butcher, L. ‘Channel Tunnel Rail Link (Supplementary Provisions) Bill’ available at http://www.parliament.uk/briefing-papers/RP07-75.pdf

Scottish Parliament

Final actual cost

‘£414m bill for Holyrood building’, BBC, 21st Febuary 2007, available at http://news.bbc.co.uk/1/hi/scotland/6382177.stm

Potts, K. (2008) Construction Cost Management: Learning from Case Studies, Oxon: Taylor & Francis, available at http://site.iugaza.edu.ps/kshaath/files/2010/10/Construction_Cost_Management_Learning_from_Case_Studies.pdf

Initial cost estimate

Devine, T. M. (2006) The Scottish Nation, A Modern History, London: Penguin

White, I. and Sidhu, I. (2005) Building the Scottish Parliament, The Holyrood Project, available at http://www.parliament.uk/documents/commons/lib/research/briefings/snpc-03357.pdf

Fraser, P. (2004) The Holyrood Enquiry, available at http://www.scottish.parliament.uk/SPICeResources/HolyroodInquiry.pdf

British Library

Final actual cost

‘Sparks fly over British Library costs’, Times, 1st July 2006, available at http://www.timeshighereducation.co.uk/news/sparks-fly-over-british-library-costs/94291.article

Jackson, S. ‘Project Cost Overruns and Risk Management’, available at http://www.reading.ac.uk/web/FILES/innovativeconstructionresearchcentre/icrc-31-c-ProjectcostoverrunsandriskmanagementARCOM2002.pdf

Initial cost estimate

National Audit Office (1996), ‘Progress in Completing the New British Library’, available at http://www.official-documents.gov.uk/document/hc9596/hc03/0362/0362.pdf

National Audit Office (1990), ‘New Building for the British Library’, available at http://www.official-documents.gov.uk/document/hc8990/hc06/0650/0650.pdf

Channel Tunnel

Final actual cost

Anguera, R. (2005) The Channel Tunnel – An Ex-Post Economic Evalutation, Strategic Rail Authority, London, download available at abstracts.aetransport.org/paper/download/id/2071)

‘Failed talks force Eurotunnel to bankruptcy’, NY Times, 13th July 2006, available at http://www.nytimes.com/2006/07/13/business/worldbusiness/13iht-eurotunnel.html?_r=0

Initial cost estimate

Channel tunnel may have made Britain £10bn poorer’, CILT International, issue 13

Anguera, R. (2005) The Channel Tunnel – An Ex-Post Economic Evalutation, Strategic Rail Authority, London, download available at abstracts.aetransport.org/paper/download/id/2071)

Edinburgh Tramline

Final actual cost

Audit Scotland (2013) ‘The Audit of Best Value and Community Planning, The City of Edinburgh Council’, available at http://www.audit-scotland.gov.uk/docs/best_value/2013/bv2_130530_edinburgh.pdf

Ross, S. ‘Edinburgh tram back on Princes St after 57 years’, Scotsman, 5th December 2013, available at http://www.scotsman.com/news/transport/edinburgh-tram-back-on-princes-st-after-57-years-1-3221131

‘About the tram service and project’, The City of Edinburgh Council, available at http://www.edinburgh.gov.uk/info/20236/about_the_trams/1968/about_the_tram_service_and_project/2

Initial cost estimate

Lowe, J G (2010) Edinburgh trams: a case study of a complex project. In: Egbu, C. (Ed) Procs 26th Annual ARCOM Conference, 6-8 September 2010, Leeds, UK, Association of Researchers in Construction Management, 1289-1298, available at http://www.arcom.ac.uk/-docs/proceedings/ar2010-1289-1298_Lowe.pdf

Audit Scotland (2011) ‘Edinburgh trams Interim report’, available at http://www.audit-scotland.gov.uk/docs/central/2010/nr_110202_trams.pdf

The Dome

Final actual cost and initial cost estimate

Potts, K. (2008) Construction Cost Management: Learning from Case Studies, Oxon: Taylor & Francis, available at http://site.iugaza.edu.ps/kshaath/files/2010/10/Construction_Cost_Management_Learning_from_Case_Studies.pdf

See also

National Audit Office (2000), ‘The Millennium Dome’, available at http://www.nao.org.uk/wp-content/uploads/2000/11/9900936.pdf

Jubilee Line extension

Final actual cost

Mitchell, S. R. and Vickers, A. J. M., (2003) ‘The Impact of the Jubilee Line Extension of the London Underground Rail Network on Land Values’, available at http://www.andywightman.com/docs/Mitchell_Vickers_Jubilee.pdf

Unison (2005) ‘The Private Finance Initiative: A Policy Built on Sand’, available at http://www.bipsolutions.com/docstore/pdf/11789.pdf

Initial cost estimate

Allport, R., Brown, R. and Glaister, S. (2008) ‘Success and Failure in Urban Transport Infrastructure Projects’, available at https://workspace.imperial.ac.uk/rtsc/public/Success%20and%20Failure%20in%20Urban%20Transport%20Infrastructure%20Projects.pdf

NHS National Programme for IT

Final actual cost and initial cost estimate

House of Commons Committee of Public Accounts (2013) ‘The dismantled National Programme for IT in the NHS’, available at http://www.publications.parliament.uk/pa/cm201314/cmselect/cmpubacc/294/294.pdf

Dixon, H. ‘Cost of abandoned NHS record system £10bn and rising’, Telegraph, 28th September 2013, available at http://www.telegraph.co.uk/health/nhs/10317998/Cost-of-abandoned-NHS-record-system-10bn-and-rising.html

 

Welsh Assembly

Final actual cost and initial cost estimate

Colman, J. (2006) Wales Audit Office, ‘The Senedd’, available at http://www.wao.gov.uk/assets/englishdocuments/Senedd_2008_report_eng.pdf

Audit Committee (2008), The Senedd’, available at http://www.assemblywales.org/cr-ld7285-e.pdf

Widening of the M25 motorway

Final actual cost and initial cost estimate

National Audit Office (2010) ‘Procurement of the M25 private finance contract’, available at http://www.nao.org.uk/wp-content/uploads/2010/11/1011566es.pdf  page 10

House of Commons Committee of Public Accounts (2011) ‘M25 Private Finance Contract’, available at http://www.publications.parliament.uk/pa/cm201011/cmselect/cmpubacc/651/651.pdf

Birmingham Library

Final actual cost

‘Library of Birmingham: Official opening of £189m building’, BBC, 3rd September 2013, available at http://www.bbc.co.uk/news/uk-england-birmingham-23934792

‘Library of Birmingham welcomes one millionth visitor’, ITV, 13th December 2013, available at http://www.itv.com/news/central/topic/library-of-birmingham/

Initial cost estimate

Sharman, L. ‘A new £193 million library for Birmingham’, Local Gov, 3rd April 2009, available at  http://www.localgov.co.uk/A-new-193-million-library-for-Birmingham/14884

‘The future of Central Library’, BBC, available at http://www.bbc.co.uk/birmingham/content/articles/2008/06/30/new_library_designers_feature.shtml

 

 

 

 



[1] Until 1988 there had been no total budget for the project, and construction had to be planned and budgeted for on an annual basis. In 1988 Ministers agreed a cash target totalling £300million for the completion of ‘Phase 1A’, while a further £150million was allocated in 1990 for the ‘Completion Phase’.

 

[2] Construction costs were £260million, and came in on target. Overrun in the costs of The Dome occurred due to a reliance on National Lottery Grants for the operational funding of the project both prior to and after its opening. The Millennium Commission initially estimated the project would require £399million of funding, although ultimately provided £628million.

 

[3] Does not include cost estimates for the future use of Lorenzo care records system (£572million), the legal costs relating to the termination of the Fujitsu contract and the resetting of the CSC contract, currently estimated to amount to a further £31.5million and £2.9million respectively. These bring the costs of the National Programme for IT in the NHS to £10.406billion.