There have been 2,100 'compensation events' related to contract changes © Crossrail
There have been 2,100 'compensation events' related to contract changes © Crossrail

Crossrail 'failed to manage contractors'

Will Green is news editor of Supply Management
19 July 2019

Crossrail’s failure to manage effectively a high number of main contractors contributed to costs escalating by £2.8bn, according to MPs.

In a report the Public Accounts Committee said between 2013 and 2018 changes and delays to the programme increased costs by more than £2.5bn, with nearly £1bn the result of additional payments to contractors for changes caused by Crossrail.

The report said 2,100 such “compensation events” had accumulated on Crossrail by 2016, and Crossrail explained they were “part of the process for resolving contractual issues as they arise” and were “designed to avoid leaving claims to be resolved at the end of the programme, with the risk of disputes needing to be resolved in court”.

The PAC said Crossrail awarded 36 contracts to firms to build tunnels and stations and install track, electrical power lines and other systems. This approach “increased the interdependencies between the work of different contracts… thereby increasing the delivery risk on the programme”.

“No one was coordinating the activity of all contractors and acting as an effective ‘controlling mind’, despite the fact that the programme partners, Bechtel and Transcend Ltd, were originally contracted by Crossrail Ltd to fulfil this role,” said the PAC.

Crossrail told the PAC it was “resetting its commercial and contractual approach”, including renegotiating with main contractors.

The report said “over-optimism” was prevalent and “hugely damaging to the programme” and it criticised the payment of bonuses to executives – including £481,000 in 2015-16 and £160,000 in 2016-17 to the chief executive – for managing a programme that was “not delivered successfully”.

The total cost of the project, around two years late, currently stands at £17.6bn. The PAC said the final cost “remains unknown”. The central section, between Canary Wharf and Paddington, is expected to open between October 2020 and March 2021, while the full railway may not open until 2022.

PAC chair Meg Hiller (Labour) said: “Crossrail Ltd has failed to understand the complexity and risks of Crossrail, to manage its main contractors, and to integrate different strands of the programme successfully.

“The Department for Transport is ultimately responsible for the use of taxpayers’ money on Crossrail; it still does not appear to have got a grip of the problems.”

 Want to stay up to date with the news? Sign up to our daily bulletin.

LATEST
JOBS
Horsham, West Sussex
£25-35k + pension
Beaumont Select
London
£80-95k + Bonus + Excellent Benefits
Beaumont Select
SEARCH JOBS
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates
GO TO CIPS KNOWLEDGE