Guided bus: Are cost increases inevitable?
IN the early 1990s a report by the House of Commons public accounts committee concluded that major road construction schemes came in on average 104 per cent above the original budget used to justify them. That is almost exactly the budget overrun (so far)
IN the early 1990s a report by the House of Commons public accounts committee concluded that major road construction schemes came in on average 104 per cent above the original budget used to justify them. That is almost exactly the budget overrun (so far) on the guided bus scheme.
In contrast British Rail, when it was still in public ownership, delivered the East Coast main line electrification scheme, Waterloo International Terminal and the upgrade of the old Boat Train route for the first Eurostar services to Paris and Brussels all within the original cost estimate.
So, why do public authorities get these things so seemingly hopelessly wrong?
The starting point is optimism. If they encounter no unforeseen problems, previous construction prices are to be relied on and landowners do not realise how desperately an authority needs to buy their land, all will be hunky-dory and the price is deliverable - notwithstanding objections and alterations
For example, when the guided bus scheme was originally costed, following the Cambridge-Huntingdon Multi-Modal Study, which reported in June 2001, the county was confident the £56million estimate was robust.
By the time CCC went cap-in-hand to the Government for funding in 2003 the cost had risen to £73million, partly because some improvements were envisaged to the original scheme.
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On the day that funding was announced, we learned the cost was now £86.4million, including inflation and all other conceivable contingencies.
Due to a combination of construction price inflation, landowners who knew they owned land vital to its successful development and improvements to specification, the price has eventually risen from £86.4million to £116million.
After nearly a year of negotiation with the Department for Transport, the true figure emerged in a Government announcement.