£886m Bill For TfL Following Failed Tube Upgrade Contract

Rachel Holdsworth
By Rachel Holdsworth Last edited 23 months ago
£886m Bill For TfL Following Failed Tube Upgrade Contract
Photo by Jack Gordon from the Londonist Flickr pool.

Transport for London's bumbling over upgrading the sub surface tube lines will cost London hundreds of millions of pounds.

That's not our assessment, by the way. It's that of the London Assembly, which has been looking into the failed contract between TfL and Bombardier to upgrade the Circle, District, Metropolitan and Hammersmith and City lines, which collapsed in 2013.

Bombardier was appointed in 2011 and was supposed to supply a new signalling system to allow automatic train control (ATC). London Underground says Bombardier

presented so-called experience and so-called expertise that they did not have, subsequently we found out, so there is no doubt that at the outset of the programme they did not have the capability of delivering it, although they said they did.

In short, TfL believes it was "duped" by the engineering company.

Thales, which took over the contract last year, is now working on something entirely different — because the system Bombardier said it could build, simply did not work.

However, the London Assembly believes TfL didn't have the internal expertise to assess whether or not Bombardier were able to deliver what they promised. The farce also dragged on for longer than it should because, the Assembly believes, there was a culture of 'good news' at TfL.

These failures mean the project is now five years behind schedule, meaning more congested journeys and quite simply, fewer people willing or able to travel.

How much will this cost?

TfL estimates it will lose £271m in fares income, and that London will lose around £180m a year that would have been added to the economy had the upgrades been completed as planned. To add insult to injury, TfL paid Bombardier £85m to get out of the contract.

And then the big one: TfL now has £886m less to spend on infrastructure projects than it thought it did.

To put that into context, the Northern line extension to Battersea is projected to cost £998.9m. The north-south segregated cycle superhighway cost £17m. The Rotherhithe-Canary Wharf bridge is estimated to cost £88m. How many future projects will have to be shelved?

Don't bank on it not happening again

There are some other lessons here, too. Bombardier was selected under a procurement process that KPMG found to be not well thought out. The scoring system was flawed and EU best practice guidelines weren't followed.

(This reminds us a lot of criticisms of the process to select Heatherwick Studios to design a certain Garden Bridge...)

But there's also the issue of expertise within TfL. The lack of people in public office who are highly knowledgeable about specialist areas has been highlighted with housing, as councils are unable to outwrangle developers' legal teams over viability studies and affordable homes. Now it turns out TfL doesn't have the legal or risk assessment skills to properly manage a project this complex.

So just hire better people, right?

Except the mayoral frontrunner, Sadiq Khan, is campaigning on a platform of paying for fare freezes by cutting the "flab" from TfL and cutting the cash available for consultants. You know, the people with the specialist abilities to spot things like the Bombardier cock-up.

Is the Labour candidate promising false efficiencies?

This article has been amended to correct a confusion over the cost of the cycle superhighway budget overall and the north-south cycle superhighway.

Last Updated 17 March 2016

chiswegian

A lot of TfL cash spent on consultancy is for specialist technical expertise in areas like signalling or road design so rather than Sadiq Khan saying he will halve the money spent on consultants, he should say what TfL projects he will cut.

computer user

'But there's also the issue of expertise within TfL. The lack of people in public office who are highly knowledgeable about specialist areas has been highlighted with housing, as councils are unable to outwrangle developers' legal teams over viability studies and affordable homes. Now it turns out TfL doesn't have the legal or risk assessment skills to properly manage a project this complex.'

This is what happens when you contract everything out. Years ago, London Underground would have been responsible for developing and maintaining systems like this. Councils built their own houses, the government constructed new nuclear power stations. Once you stop doing that, you lose the skills and knowledge to even make an assessment of what is the proper price, let alone whether something is going to actually work. Look at the spiralling costs of the electrification of the Great Western Mainline. 'We haven't done this for 30 years, so we have no one left who knows how to do it and what costs are involved'. I seem to recall that Ken Livingstone had TfL directly operate one of the bus franchises on the basis they would know what the price was of running bus lines and whether a bid to do so was accurate or not.

Kay

TfL needs to start hiring more contractors to do this sort of thing. It's not difficult. You can argue that they can hire management consultancies but these always come with agendas. Contractors tend to get the job done. I know they have some contractors now, many actually, but they're never really "involved" in the decision making, which naturally alienates them.

Greg Tingey

Is the Labour candidate promising false efficiencies?
Of course he is. Along with his ridiculous "fares freeze" that will starve TfL of yet more money.
Are any of the other candidates really much better, though?

londoner990

If Bombardier have not carried out their contract why has TfL paid to get out of it? They should have asked for compensation.