As Crossrail’s opening date is pushed further and further into the future and costs spiral over budget, Joey Gardiner asks why the biggest construction project in Europe has swerved so far off track and how this could impact the rest of the industry
‘On time and on budget.” The number of times those following the construction of the UK’s most ambitious piece of new railway in a generation, Crossrail, listened to that monotonous mantra is probably beyond count. Throughout all evidence to the contrary, from strikes and design problems to a substation explosion and major contractor collapse, the same fixed mask was maintained to the outside world. “On time. On budget.”
Except, as the world now knows, it’s not.
In July, transport minister Jo Johnson admitted the £14.8bn cross-London railway – Europe’s largest infrastructure project – was £590m over budget, citing “cost pressures”. Then last week, the public company building it, Crossrail Ltd, admitted the central section will not open as planned in time for Christmas this year, but instead anything up to a year later. And even now the final cost of this latest delay is still to be quantified – with reports of a further £400m bill and no official pretence that even the budget announced in July can now be held.
“This would and should have been brought in on time and on budget”
Rob Holden, ex-chief executive, Crossrail
With one national newspaper describing it as a “national embarrassment” reminiscent of the construction of the Channel Tunnel, a senior contracting industry source said: “The problem is we’ve spent the last few years saying Crossrail was different, an exemplar of the industry working properly. This is not where we’d want to be.”
These problems follow a clean bill of health from the National Audit Office in 2014 and years of plaudits for the project. So, what has gone wrong at the UK’s flagship rail scheme, how much could it cost, and what might this all mean for the industry?
The clear story that emerges from the various official and unofficial accounts is of multiple problems conspiring to make delay unavoidable. Despite desperate attempts to repair numerous cracks in the edifice, on 31 August the dam burst, with the official admission of delay until “autumn” next year. Being quizzed by the London Assembly last week, Crossrail chair Terry Morgan admitted his disappointment. “Numerous technical problems arose. As we mitigated one risk, other risks began to materialise,” he said.
While construction issues have undoubtedly contributed, the immediate reason for the delay has been the failure of Crossrail to make progress installing and testing the immensely complex signalling software for the new railway, which has to do the job of linking the new underground signalling between London Paddington and Abbey Wood with the separate systems for the eastern and western overground sections.
The difficulties of achieving this were clearly hugely exacerbated by the explosion of a premanufactured electricity substation at Pudding Mill Lane near Stratford last year, which Crossrail chief executive Simon Wright told the London Assembly had delayed the commencement of train testing from October last year to February this year.
But many feel the problems go further back. Rob Holden was chief executive of the project until 2011, and blames the problems on the decision made shortly after his departure to delay procurement of the rolling stock. This was done amid political controversy over the award of a separate contract, for Thameslink rolling stock, to German firm Siemens, which was said to have jeopardised the future of the UK’s last train-making factory, based in Derby. Holden says this has meant the new rolling stock, which has to be totally integrated into the signalling system, is being brought in at the exact same time as the railway itself.
He says: “The one overriding lesson from the problems with the Channel Tunnel was to never ever bring in new trains and infrastructure at the same time. The original plan [for Crossrail] was the trains would be brought in earlier and tested on GWR lines to iron out issues beforehand – but the decision was taken to defer for political reasons.”
The upshot, Holden says, is that “blame comes on the project, when actually this vital decision was taken in another place. This would and should have been brought in on time and on budget.”
However, Crossrail’s Morgan denied the procurement delay had any relation to the project delay, accusing Holden of having “a short memory”, and saying Transport for London welcomed the decision to change procurement route – from PFI to direct purchase – when it happened.
A TfL spokesperson said: “The procurement of the trains has had no impact on the delayed opening of the central section. Informed by the lengthy delays to the train procurement for the Thameslink project, which was carried out through a PFI, a decision was taken by the DfT and TfL that TfL would procure the trains directly. The risk to train delivery under a PFI was much greater. The only change we made to the train procurement was done with the clear intent of de-risking the programme. The trains are now being delivered, and are already serving parts of the Elizabeth line route in the east and the west.”
Either way, Holden says the delay demonstrates a failure in control of the project. “The signalling system has always been the issue on the top of the risk register for this project, particularly given its complexity. It clearly has not been given the attention it deserves.”
Crossrail’s Wright denied this to the Assembly. “It’s an unprecedented scheme, combining three different systems. We always knew it was going to be hard, and it’s proven to be just that,” he said, describing the signalling software as “immature”.
“To bring together the systems together has been harder than we hoped. We started testing later than we wanted, and those tests have not gone as well as we’d hoped,” he said.
Amid all this debate about the signalling, it might be tempting to believe that the construction industry has clean hands. Alas, this is very far from the truth. In fact, Crossrail’s statement announcing the delay made clear that part of the reason the testing programme has been compressed is because construction work has overrun.
Wright told the Assembly that fit-out work in the tunnels is actually still ongoing, meaning that the tracks can only be accessed for testing part of the time, limiting the organisation’s options when problems arise. He said he didn’t anticipate starting “24/7 testing” until October. “Testing has been less than productive due to incomplete infrastructure, with assets not completed due to construction delays,” he said.
While Wright did not detail the reasons behind the delays, the real problems have appeared to come, as with the Jubilee Line extension, in the mechanical and engineering (M&E) and fit-out phase. There have been widespread reports of installed M&E work in stations and tunnels having to be ripped out and replaced because of incorrect or incomplete initial designs. In addition, M&E workers at one station – Woolwich – went on strike at the start of this year over bonus payments.
It does appear that initial civil engineering works on the project progressed well – with the NAO report making clear Crossrail managed to save £500m by procuring the work at the bottom of a recession. However, even here, costs mounted above predictions, with one source claiming contractors had made around £500m of additional claims (known as “compensation events” in the NEC contracts being used) made against the project by 2016. Even by 2014, in fact, the detail of the NAO report makes clear that the real outturn cost of contracts was somewhat higher than the targeted contract price.
The annual ministerial progress update in summer 2017 was the first government admission of “cost pressures” on the project, which by February this year Crossrail’s Morgan admitted was pushing the project “very close on the funding envelope”.
Construction unions see this all as a vindication of warnings they have been making for some time. Bernard McAulay, national officer for construction at Unite, says: “It’s been a complete shambles, to put it mildly. They’ve had people designing things, and then the designs change after they’ve been put in and it has to be taken out. These problems have been all over the project. The organisation has been in denial mode.” Nevertheless, a spokesperson for Crossrail denied that any such problems were behind the announced delay.
Some allege that leadership changes, with the departure of Crossrail’s longstanding chief executive, Andrew Wolstenholme, in May this year, at the same time the project’s chair Morgan was also given the job of chairing HS2, have compounded the problem. Labour Party peer Lord Adonis has said transport secretary Chris Grayling should not have allowed this to happen on a “project that was clearly failing”.
Meanwhile, those in charge are not able to give any real assurances on exactly when the project will now open, and how much it will cost. TfL commissioner Mike Brown was due to meet with Treasury officials last Thursday to start the process of determining final costs, telling the London Assembly: “It’s early days in the assessment of the cost over and above [what is] agreed. We don’t have certainty as to what those costs may be yet as it’s very programme dependent.”
It is also clear that a detailed programme of the remaining works, which include, according to Wright, “several months” of full-time testing, then trial running without people, then trial operations involving people, before regulatory approval of the safety case, is still being worked up. Hence Crossrail is not able to give any estimate of the date for full opening of the line – meaning through running from Reading, Berkshire, in the west to Abbey Wood, south-east London, and Shenfield, Essex, in the east – which was due at the end of next year. London mayor Sadiq Khan said he was “extremely frustrated, disappointed and angry about the delay”, adding: “We’re awaiting a revised schedule; from that will flow an estimate of the cost.”
As more details emerge, it will be possible to gauge the impact of the troubles on the reputation of UK construction, which many saw as having recovered with the successful delivery of the Olympics, only to be hit this year by the collapse of Carillion and delays to Tottenham Hotspur Football Club’s new ground. Former Conservative transport minister and ex-TfL board member Steve Norris is sanguine. “There have to be questions about the late notification of these problems. But overall this has been well-delivered, and the cost overrun is within what I think most people would say is a very reasonable envelope.
“In the context of this incredibly challenging project I can’t say this will damage the construction industry.”
Others, however, are less optimistic. The senior contractor source says: “It’s not yet a disaster for the industry]. But if we see another nine-month delay down the road then it will be a real disaster.” Holden agrees: “I think it sets us back quite a long way. Crossrail was perceived to be a successful project. This is not just a six-week delay – something pretty serious has to have happened to have this kind of delay.” There is clearly a long way to go on this project – and, for the industry, a lot remains at stake.
2007– Government agrees £15.9bn funding package for Crossrail
2009– After royal assent to the Crossrail Act the year previously, work starts on the project at Canary Wharf railway station
2010 – The project is reviewed and the budget is cut to £14.8bn to offset already rising costs as austerity measures are introduced by the coalition government
2011– Rob Holden steps down as chief executive. Procurement of rolling stock reviewed. Andrew Wolstenholme appointed new chief executive
2012– Crossrail tunnelling starts
2014– Rolling stock contract awarded to Bombardier. National Audit Office says project is managing public money well, but notes it is slightly behind on schedule and cost
2015– Major tunnelling and engineering work completes, fit-out phase begins
2016– First reports emerge of M&E work being installed then ripped out, then re-installed. Unite later brands Crossrail “the Hokey Cokey line”
June 2017– Transport minister Paul Maynard admits “cost pressures” but says government is working with TfL to “ensure that the project is being effectively managed and will be delivered within funding and on schedule”
November 2017– Explosion at a substation at Pudding Mill Lane station as two voltage transformers fail, delaying track operation until February
December 2017– Unite announces M&E staff at Woolwich to go on strike in pay dispute
February 2018– Crossrail chair Terry Morgan admits project “very close on the funding envelope”
March 2018– Crossrail announces Wolstenholme to leave in May
May 2018– First reports that project has gone over budget. Crossrail officially informs London mayor Sadiq Khan on 31 May of cost increases
June 2018 – Crossrail board first informed by executive of rising pressure on the programme due to signalling testing not progressing as hoped
July 2018– Transport minister Jo Johnson announces £590m increase in Crossrail budget, to £15.4bn. Crossrail board told programme situation “now very difficult”, with a special board meeting convened in August. TfL commissions independent review of programme
August 2018– Special board meeting on 29 August decides it is no longer possible to safely and reliably open central section in December. Public announcement 31 August
September 2018– Work commences to re-programme works and cost the new schedule