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November 9, 2016

Great Western Main Line modernisation to cost an extra £2.1bn, says NAO report

The cost of modernising the UK’s Great Western Main Line (GWML) is currently estimated to be £5.58bn, an increase of £2.1bn since 2013, in addition to delays in electrification of the route by at least 18-36 months, according to a report by the National Audit Office (NAO).

The cost of modernising the UK’s Great Western Main Line (GWML) is currently estimated to be £5.58bn, an increase of £2.1bn since 2013, in addition to delays in electrification of the route by at least 18-36 months, according to a report by the National Audit Office (NAO).

The cost increases and recent changes in new trains order indicate that programme funds need to be reassessed, along with electrification revisions.

National Audit Office (NAO) published a report on 9 November, highlighting the flaws and failures in the Department for Transport’s (DfT) modernisation of GWML.

The Great Western route has some of the most overcrowded services in England and Wales and has estimated passenger growth of 81% between 2013-14 and 2018-19.

Before 2015, the report stated that the department did not sufficiently plan and manage all projects, which now make-up the Great Western Route Modernisation industry programme. 

"Significant challenges to the timetable still remain and there is more to do to achieve value for money."

In 2015, Network Rail replanned the infrastructure programme after it became clear that costs were increasing and the schedule could not be met.

Electrification between Maidenhead and Cardiff is now expected to cost £2.8bn, which is an increase of £1.2bn (70%) against the estimated cost of the programme in 2014.

The report stated that Network Rail’s 2014 cost estimate was unrealistic and too optimistic about the productivity of new technology.

In addition, it also claimed that Network Rail's underestimated how many bridges needed to rebuild or modify and also the time and costs needed to obtain planning permission, as well as other consents for some works.

Costs were also further increased by failures in its approach to planning and delivering the infrastructure programme. The report estimated that delays in the electrification programme will cost the department up to £330m.

The department plans to vary its order of Intercity Express trains so that they can operate under both diesel and electric power. It will also receive less income from the Great Western franchise between September 2015 and March 2019.

This is because the train operator will bear the costs of providing extra trains and leasing depots, as well as higher running costs from operating diesel trains for longer, while also receiving less revenue from passengers than expected, the report stated. 

Some passengers in the north and west of England may have to wait longer, some nine months and up to two years respectively, to see improvements including increased capacity in services because of the delays to the programme. Further delays would be difficult to address and put pressure on the department’s rail franchising programme.

Network Rail has a challenging task to deliver the key benefits from the infrastructure programme, within the current schedule and budget.

Although the schedule for electrification contains some ambitious assumptions, the budget for the electrification programme between London and Cardiff currently has less funding available to manage risks than Network Rail believes it needs.

Some passengers will have to wait longer to see the full benefits of modernisation because of budget constraints.

The department has delayed electrification on some stretches of the route as costs cannot be met within the funding package.

The department currently intends to electrify these sections but not until the next rail investment period, which runs from April 2019 to March 2024.

National Audit Office head Amyas Morse said: “The modernisation of the route has potential to deliver significant benefits for passengers but this is a case study in how not to manage a major programme.

"The department's failure to plan and manage all the projects, which now make-up the Great Western Route Modernisation industry programme in a sufficiently joined up way, combined with weaknesses in Network Rail's management of the infrastructure programme, has led to additional costs for the taxpayer. 

"It is encouraging that since 2015 the department and Network Rail have a better grip and put in place structures to manage the programme in an integrated way. However, significant challenges to the timetable still remain and there is more to do to achieve value for money.” 

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