UK: The other side of the track

[John Ashworth]

The other side of the track

Dec 2nd 2011, 9:39 by R.B. | LONDON
Economist

Last week I went to see one of the construction sites where the new Crossrail route will run, a commuter service that will flow east-west through London, from Maidenhead to Shenfield. It is due to open in 2018 and is an extremely ambitious project. It aims to increase the rail capacity of London by 10%, and to bring a further 1.5m people within 45 minutes of the centre of the capital.

The biggest construction project currently going on in Europe has a price tag to match: £14.5bn. In fact, £1 billion was taken off the cost when the coalition took power: it negotiated a later completion date in order to save that money. But it is still an extraordinary sum.

I saw some of the reasons for this when I visited Royal Oak in west London. This is the spot where the train will go down a ramp and underground, across the capital. The ramp has already been built, and you can see the “eye” of the tunnel: the circle where the tunnel boring machines will carve out a 6.2m-wide hole. That is due to start in spring 2012. In advance of that, the ground is being prepared so that when the giant drill gets started, none of the other structures in the area will move.

This is a tricky spot for construction work. The Westway flyover is right next to the site, so its foundations are very close to where the tunnel will be. On the other side run mainland trains and also the Hammersmith and City tube line. And that’s just the obvious stuff. The construction team are also diverting a sewer that runs in this area, and they have to make sure gas mains and cables are not disturbed by the works.

Boring tunnels underground is a huge feat of engineering. But it also requires an astonishing amount of preparation. It’s a big job even if there aren’t other things to take care of. But when you’re burrowing underneath a very densely populated city, complete with its densely populated communications and utility network, not to mention worrying about housing foundations, noise and local communities, a lot of work, effort — and yes, money — are taken up with such things.

Crossrail is just one example of what such work requires. On such a densely-populated island, most infrastructure projects are on brownfield sites, rather than starting in pastures new. That’s usually the right thing to do: infrastructure is already in that place for a reason, and there’s little point using a greenfield site unless a very definite business case can be made for it. But it means that any project, however simple, is likely to stumble over a lot of other networks on the way.

That is not the only reason such programmes are so pricey, of course. Infrastructure UK, a body within the Treasury charged which is helping private sector companies invest, says that project costs in Britain are “excessively high”. In a government-commissioned study of the rail industry which came out in May, Sir Roy McNulty found that costs in Britain were 40% more than elsewhere in Europe. Some of the reasons for this in the rail industry are quite distinct: incentives are misaligned and elements of the franchising system does not encourage efficiency, for example. Sir Roy reckoned that tackling the many “barriers to efficiency” could bring down costs by 20-30%.

A separate report by Infrastructure UK in December 2010 suggested came up with further suggestions for what raises costs for other sorts of infrastructure works in Britain. Labour and commodity prices are high, but comparable to other parts of Europe. But some projects are started before the design was complete, says Infrastructure UK, many schemes are over-specified and too many bespoke designs are used. On this last, in Madrid, for example, subway stations all look the same, whereas Britain tends to use distinctive architecture for each one. That is more fun, but is a lot more pricey. There were other interesting notes: British construction companies tend to be smaller than their European counterparts, for example, so a scheme of work may involve several teams at different stages, rather than a single company which can project-manage more efficiently over a longer time.

One of the main causes pinpointed was the stop-start nature of investment programmes and the lack of a clear programme of future work – on November 29th the Treasury issued a National Infrastructure Plan with a £250 billion shopping-list of projects, which aims to address precisely this point. The government hopes that tackling some of these problems will bring costs down: it is aiming for £2-3 billion a year. Having seen the Crossrail construction site, though, I suspect a comparable hastening of projects may be too much to hope for.