We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.

Donate to our crowdfunder

Examination of Witnesses

Part of High Speed Rail (Preparation) Bill – in a Public Bill Committee at 2:30 pm on 11th July 2013.

Alert me about debates like this

Terry Morgan: It would be helpful to remind you that three years ago, as we went through the hybrid legislation and started to get ready for deployment, there were a number of delays in the process. That delayed the physical work. We found ourselves in a situation of negative float, with a programme that was due to deliver in 2017. The cost to complete was in excess of £17 billion. That is an example of the importance of ensuring that key decisions are made at the right time, and that what might seem to be quite trivial decisions tend to have a much deeper consequence down the food chain than we realise.

We had the opportunity to readdress that situation. Basically, a lot of the funding that we forecasted we would need was around mitigating interface risk between conflicting interests on the programme. We had one opportunity to look forward and say what the best value for money solution was, and we revised the timing from 2017 to 2018. As a consequence, not only did we close down the £1 billion overspend that we were forecasting, but we offered up a further £1 billion of savings; so we moved our internal cost to complete estimates by £2 billion and created a cost envelope that was £1 billion less than we had previously been allowed.

Therefore the balance between risk and how much funding is needed is very material. Three years on, we are on time and forecast that we will deliver this programme within the funding envelope. Inside that envelope there are still funds allocated to unknown contingencies that we will need to ensure that we can cope with, rather than have a project that has to ask for more funding. For me that situation is a complete and utter disaster and prevents the right decisions being made. In the past, many such projects suffered because cuts were made to the requirements in terms of spending and the project manager did not quite know how to deliver the project for those revised costs. The experience was—surprise,  surprise—that the costs originally estimated were realised at the end of the day. You have to be brave enough to recognise that these budgets are, by their very nature, risky; but they are manageable, provided that you ensure you have sufficient funds to deal with risks that arise that could not have been imagined.