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London super sewer costs under pressure

26 November 2018 | By Will Mann

Tunnel boring machines are preparing to begin the tunnel drive

The company delivering London’s super sewer has said costs on the project are mounting due to a spate of “engineering challenges”.

Bazalgette, the holding company for the Tideway tunnel scheme, said it has identified “several cost pressures in the programme” and has already had to raid the contingency fund. It is also putting pressure on contractors to find cost savings. 

Total project costs for the six-month period to 30 September 2018 were £325.3m which brings the total cumulative cost to £1.48bn. The total budget is £4.2bn.

It is the second major infrastructure project hit by cost problems this autumn after Crossrail announced it would overrun by nearly a year.

The most significant of the Tideway engineering challenges are at Blackfriars, on the cofferdam projects at King Edward Memorial Park in Shadwell and at the Albert Embankment, plus on construction of shafts across the eastern area sites.

The company said: “Following significant progress on the project and now having mobilised on 20 of our 21 sites, Tideway has identified several cost pressures in the programme. Taken together with general cost pressure across the programme, this has substantially eroded available contingency.

“To mitigate the cost pressures Tideway has begun to implement cost saving measures in partnership with our contractors and remains focussed on achieving the baseline target. These cost saving measures include working with our MWCs (main works contractors) to eliminate overlap, taking measures to increase productivity, undertaking value engineering and delivering overhead savings.”

Bazalgette said it was “too early to conclude the extent to which these measures will mitigate the cost pressures”, and it would provide a further update in its March annual report.

A spokesperson for Tideway said: "

here have been a number of complex engineering challenges and risks to overcome in the early stages of the project. With these behind us and having put in place several measures to reduce cost, our budget is intact. Tunnelling for the project started last week from our site in Battersea and we are set to complete the project on schedule and to budget.”

There have been a number of complex engineering challenges and risks to overcome in the early stages of the project. With these behind us and having put in place several measures to reduce cost, our budget is intact. Tunnelling for the project started last week from our site in Battersea and we are set to complete the project on schedule and to budget.”

 

The 25km Thames Tideway tunnel is expected to be completed by 2023. It was given planning permission in 2014, with preliminary works getting under way in 2016, and tunnelling starting earlier this month.

The super sewer runs from Acton in the capital’s west underneath central London to Beckton Sewage Treatment Works in the east.

Comments

I'm a bit confused when you say "...raid the contingency fund"?

Project contingency is there to be spent. The idea is that when planning all you know is some things wont go to plan, but you don't know exactly which things. So you allow contingency. It acts to aggregate allowances of money and time to protect against risk and uncertainties, and is vital on projects.

If contingency is largely unspent, or if projects claim they don't have any, something is wrong.

You also say most of the work is now well underway. If this means that most of the potential risks have emerged, then having spent 80% of the contingency is not a problem. The problem arises when contingency is used very early, and none remains to protect the later stages of the project.

The key piece of information is how much contingency remains unallocated to protect the remaining 4-5 years.

Also the actions you mention to do with not wasting money, should really have been happening anyway. Is the project saying they have only implemented cost-improvement activities when they noticed the funds running out, and not as a matter of course?

Ian Heptinstall, 26 November 2018

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