Industry

28 JAN 2019

TFL ILL-INFORMED ABOUT CROSSRAIL DELAY WHILE COSTS SPIRAL TO £30M A WEEK, KPMG FINDS

Auditor KPMG has revealed up to £30m per week is being spent on the delayed Crossrail project as it published its findings into the governance and finance of the organisation.

Perhaps just as worrying for the government and the project’s backers is also the 20% risk that Crossrail will exceed its newly-approved £17.6bn budget, as the report says.

The cost of the vital London network has skyrocketed to that figure after several pushbacks to the eventual opening, while an official announcement of when it will be open to the public is still not known after it was hoped it would be this autumn.

The independent reviews into Crossrail Limited's governance and finance arrangements were commissioned last September by the joint sponsors, Transport for London (TfL) and the Department for Transport (DfT). The KMPG report comes on the back of the DfT granting Crossrail a further £2bn of loans and cash after the auditor calculated that an extra £1.6bn to £2bn was needed for work to be completed.

"Performance monitoring and reporting at Crossrail did not provide adequate notice of the need to revise the opening date and the resulting cost impact."
Transport for London spokesperson.

According to KPMG, the biggest impact on the final cost will be how long contractors working on stations continue to be paid. This date could be stretched out with Crossrail Ltd’s chief executive Mark Wild admitting earlier this month there was “still thousands of hours of construction work to do in the tunnels”.

The report by KPMG states: “Demobilisation of main contractor and supply chain resources must be achieved to reduce significantly the current expenditure rate of approaching £30m per week. Achievable progress by Contractors and their supply chains in completing the key activities remaining and the impact of interfaces between some of the key contracts, which in turn will impact the timing of contractor (tier one and their supply chains) substantial demobilisation, remains a key uncertainty when forecasting outturn costs.”

Another significant point highlighted by the auditor is that performance monitoring and reporting did not lead to “adequate advance notice being provided of the need to revise the opening date” and thus having detrimental impacts on final costs.

As a result of this, KPMG has recommended changes to the governance of Crossrail to achieve more effective oversight. Examples of these changes include the appointment of Tony Meggs as chair and Nick Raynsford as deputy chair who both took up their roles on 14 January.

Commenting on the review, a spokesperson for TfL said recommendations were being considered and that actions had already been taken to ensure the line is completed as quickly as possible.

“The reviews identify some key points about the delay to the opening of the central section of the Elizabeth line,” she added. “These include that performance monitoring and reporting at Crossrail Ltd did not provide adequate advance notice of the need to revise the opening date and the resulting cost impact. It also finds that demobilisation at the project also led to a reduced level of coverage in critical areas of risk oversight and reporting around commercial and financial risks.”

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