Costs are rising because of problems completing stations © Crossrail Ltd
Costs are rising because of problems completing stations © Crossrail Ltd

Procurement a 'key risk' on Crossrail

28 January 2019

Crossrail is facing a 20% risk of requiring a further bailout, with procurement named as one of the key risk factors, according to a report.

The report from KPMG, commissioned by London mayor Sadiq Khan and transport secretary Chris Grayling, said that despite having last month received a cash injection of more than £2bn, Crossrail may still require further investment.

And the “single most significant impact” on the final cost is the time it will take to “demobilise” the army of contractors and their supply chain teams working on stations, the report said.

“Demobilisation of main contractor and supply chain resources must be achieved to reduce significantly the current expenditure rate of approaching £30m per week,” it said.

Much of the report was redacted but it listed the “key schedule risks” as procurement, managing interfaces across contracts, contractors’ capability due to resource constraints, performance of tier one contractors and a catastrophic event such as a fire occurring during testing.

The report estimates there is a one in five chance the costs of the project will fall into a “pessimistic scenario”, requiring another bailout. 

Crossrail was due to open last month but a new opening date is yet to be fixed. Its cost has already risen to £17.6bn.

The rail line is set to link Reading and Heathrow with Shenfield and Abbey Wood via twin tunnels under central London. 

Costs are rising primarily as a result of problems completing the 10 new stations, a factor which has “significant potential” to affect the project’s final cost.

A key uncertainty is the progress by contractors and their supply chains in completing key remaining works and “the impact of interfaces between some of the key contracts”.

This in turn, the report said, will impact the timing of contractor demobilisation and “remains a key uncertainty when forecasting outturn costs”.

Among recommendations in the report is for Crossrail to consider how to “best drive improvements in contractor and their supply chains’ productivity in a way that delivers net benefits to the programme in time and cost”.

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