Crossrail costs rocket by close to £1bn

Costs on two thirds of the main construction contracts for Crossrail have shot up by close to £1bn, according to information released by Crossrail.

The organisation delivering London’s new rail link, called the Elizabeth line, connecting Shenfield in east London to Reading in the west, awarded 65 tier one contracts for works such as piling, station construction and tunnel fit-outs.

To date, 43 out of these 65 contracts have been completed, while 22 contracts are still to complete. No information has been provided by Crossrail on these incomplete contracts.

But the jobs that have completed have shot up by 56% in cost from £1.6bn to a total of £2.5bn.

A document (attached) released by Crossrail, following a Freedom of Information request, has shown eye-watering increases in the cost of several contracts including a 254% leap in the costs of works at Paddington carried out by Carillion from £27.7m to £98m.

A contract for works on Bond Street Station carried out by a joint venture between Costain and Skanska jumped 186% from £33.3m to £95.4m, while a contract for works on Farringdon Station completed by a joint venture between Laing O’Rourke and Strabag increased 154% to £42m, up from £16.5m.

In addition, the cost of Vinci’s contract for works at Liverpool Street Station rose 133% from £22.7m to £53m.

Crossrail said in a statement: “The Crossrail project is over 85% compete, is scheduled to open on time as the Elizabeth line in December 2018 and will be delivered within its £14.8bn funding envelope.” 

It added none of the tier one contracts were awarded as fixed-price jobs “and therefore it was never anticipated that these contracts would be completed for the award price. The contract value at award does not reflect the risks that were retained by Crossrail Limited and contingency was allocated for this”. It said that “contracts were procured while market conditions in the aftermath of the financial crisis continued to compel contractors to bid for work at unsustainably low values – a factor recognised by Crossrail Limited (and its sponsors) at the time. The actual costs of these works are in line with Crossrail Limited’s initial estimates.”

It said that it had made a £1.1bn saving from its original £15.9bn funding package, which was approved back in 2007, after carrying out a value engineering initiative three years later.

More details here.