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Policy Development - Public Sector Project Cost Control
Cost over-runs and delays to public infrastructure projects

The Liberal Party notes the ongoing delays to the completion of the HS2 project, which is now projected as of February 2020 to cost more than £106 billion pounds, almost twice the original budget not withstanding delays to its completion.

Cost overruns and delays to the completion of publicly funded projects are a frequent feature of media reports, with recent examples such as:

Crossrail, initial budget of £14.8bn, the total cost has risen to more than £18.25bn with final completion pushed back to 2022.

Hinkley C cost has risen from £20.3bn to £22.9bn as of Sept 2019.

Ely's bypass opened in Nov 2018 at a cost £49million pounds, £13 million over budget due to "tricky conditions".

Lowestoft 3rd crossing put back out to tender after reports cost could reach £100 million pounds but only one contractor was willing to bid. The latest cost estimate as of August 2020 is now 134 million pounds.

Upper Orwell Crossing, Ipswich abandoned Jan 2019 at a projected cost of £97m, but with an independent review saying it would be closer to £139m.

Reading third crossing – projected £150 million pounds.

In Scotland there have been similar controversies with the Aberdeen by-pass and the Edinburgh Trams project.

Infrastructure spending is vital for promoting economic activity and regional development, particularly in periods of recession when it boosts employment, but is dogged by a national inability to deliver on time and to budget.

These budget overruns represent the unexpected expenditure of taxpayer’s monies and should be critically scrutinised to ensure the electorate is getting value for money.

Explanations include each project being treated as unique, with no attempt to recycle designs or experience, the full scope and hence costs of projects are not properly understood prior to tendering and the costs of land purchases are not fully factored in.

Many bidders are seemingly unable or unwilling to quote a fixed cost, or potential bidding low to win the business knowing local or national govt will pick up the cost overruns. In some cases, this prospect is leading to the cancellation of important projects such as the Upper Orwell Crossing.

There also appears to be a lack of domestic companies with the size to take on such projects, with the choice likely to be further restricted post BREXIT as the country focuses on domestic bidders in preference to those from the near continent.

Central and local government and private business should be encouraged to work together to better manage the cost of projects and to promote best practise professionally across the construction industry.

The Audit Commission should report on major government funded infrastructure projects as well as public sector expenditure to identify areas of improvement and to provide early warning of projects in need of early intervention.

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