London Underground document promises partnership with private sector on £7bn upgrade.
Contractors have mixed reactions to new details of the £7bn public-private upgrade of the London Underground network.

Firms this week welcomed LU’s promise to work in “partnership” with the private sector on the vast projects and were pleased with a promise that only consortia that can raise more than £500m will be allowed to bid. That, they said, would streamline the bidding process.

But they were also wary about how the promise to work in partnership would work in practice, and about some details of the project’s payment structure.

The details emerged in an 80-page document that also gives a new breakdown of the spending under the deal. One bidder applauded a statement early in the document in which LU says a criterion for prequalification will be a “commitment to partnership”.

He said: “They have effectively learned the lesson of rail privatisation – that where you have the train operator and the organisation running the infrastructure beating hell out of each other, no one wins.” But another contractor said: “It doesn’t matter what the document says now. It’s the manner in which the project is executed which is important.” Contractors, though, were unanimously in favour of a requirement that each consortium raise £500m-750m in their own funding before being allowed to bid for work, as this would narrow the field of bidders.

The document says: “Contractors should bear this expectation in mind when considering their ability to meet the prequalification criteria.” Bidders said, as a result, only six to eight bidders were likely to emerge.

The size of the sum reflects the scale of the project: one or both of two sets of Tube lines, which will be upgraded and maintained over 25-30 years. The third set has already been awarded to Railtrack.

Another bidder said the spending profile outlined in the document was disappointing. The document shows that £590m will be spent on the “sub–surface” line stations to be run by Railtrack; £540m on Bakerloo, Central and Victoria line stations; and £620m on Jubilee, Northern and Piccadilly line stations over 15 years, starting in 2001.

Bidders believe LU’s projections of how quickly this and other spending on trains and civil engineering works could be carried out are pessimistic, and that they could do the work more quickly.

They claim they had expected the bulk of the work to be carried out in the earliest years of their contracts, but the spending profiles for each section of track shows even expenditure over 15 years.

  • Taylor Woodrow has teamed up with top private finance initiative equity funder Innisfree, Siemens Transportation Systems, multidisciplinary group Gibb and engineer Mott MacDonald to bid for the Tube contracts.