HS2 “on track” despite departure of CEO 15 Sep 2016

Shani Wallis, TunnelTalk

Predictions by national media and project detractors that announced departure of the delivery company Chief Executive Simon Kirby from the delivery company HS2 Ltd is indication of a time of uncertainty ahead for the mega-rail project in the UK are being dismissed by the UK Government, managers of the project, and members of the UK tunnelling industry. Comments to TunnelTalk in researching the possible implications created a sense that the project has now come too far for “anything short of the catastrophic” to put a halt to the project. Even the vote by the UK to leave the European Union in June and the dramatic fall in the value of the UK currency, its stockmarket, and its international credit rating in the immediate aftermath, was considered unlikely to the impact that many had predicated.

Table 1. Major civil construction contract packages
Contract Scope Tunnels Value (£m)
S1 Euston Tunnels and Approaches 8,000m 600-900
S2 Northolt Tunnels 14,000m 850-1,400
C1 Chiltern Tunnels and Colne Valley Viaduct 15,000m 800-1,300
C2 North Portal Chiltern Tunnels to Brackley n/a 800-1,300
C3 Brackley to Long Itchington Wood (LIW) n/a 600-900
N1 LIW to Delta Junction/Birmingham Spur n/a 900-1,500
N2 Delta Junction to West Coast Main Line Tie-in n/a 800-1,300

It would certainly not please tunnelling interests in the project should it falter or come under pressure. More than 20% or nearly 60km of the initial 224km, £55 billion investment for the Phase 1 project between London and Birmingham is in tunnel (Table 1) and almost £11 billion in main civil construction contracts is currently out for tender. Tunnelling includes long reaches of twin-tube TBM bored tunnels under urban areas and beneath rural areas of designated natural beauty and cut-and-cover tunnels to protect local environments and underpass existing infrastructure.

Nine bidders, comprising UK and European construction companies, are competing for the £11 billion of civil contracts on the 160km section between London and Crewe (Table 2). Several of these are large tunnelling packages of more than 8km, 14km and 15km of twin-tube, TBM-bored, precast concrete segmentally lined running tunnel (Table 3).

Table 2. Shortlisted bidders for HS2 Phase 1 construction
Bidder Partners Lots bid
Align JV Buoygues/VolkerFitzpatrick/Robert McAlpine S2/C1/C2/C3
ASL Acciona/Sisk/Lagan Construction C3
BBV Balfour Beatty/Vinci/BeMo Tunnelling C1/C2/N1/N2
Catalyst Bechtel C3
CEK Carillion/Eiffage Genie /Kier S1/S2/C2/C3
Fusion Morgan Sindall/BAM Nuttall/Ferrovial Agroman S1/S2/N1/N2
LFM Laing O’Rourke/FCC/J. Murphy C1/N1/N2
Momentum Dragados/Hochtief/GallifordTry S1/C2/C3/N2
SCS Skanska/Costain/Strabag S1/S2/C1/N1

Confidence in the future of the project however, was nonetheless shaken when last week CEO Simon Kirby of delivery company HS2 Ltd made an unexpected announcement that he had accepted a post as COO of the British flagship engineering company Rolls Royce and will be leaving HS2 at the end of 2016 and after a period of two and a half years in the post.

In a statement, Kirby said: "HS2 is not just a highly ambitious project, but also one which will leave a lasting legacy for Britain. It has been, therefore, a huge honour to have been its Chief Executive and to have been involved in creating a leadership team made up of the best talents from this country and elsewhere. I have absolute confidence in their ability to deliver the project and, in doing so, to help transform the way we do things in this country." Kirby joined HS2 in May 2014 from the Board of Network Rail.

In responding to the announcement, HS2 Chairman Sir David Higgins said: "I am delighted for both Simon and Rolls Royce that he has been appointed to this position. Whilst naturally we will miss his experience and leadership, I also recognise that he is joining a truly great, global company in an industry in which he has previously worked. In his time with the company, Simon has used his vast experience to recruit and shape a world-class team, which over the coming years and decades will turn HS2 into a reality. That team will continue that process as we begin the process of finding Simon's successor.”

Table 3. HS2 Phase 1 tunnel packages
Tunnel Length Shafts TBMs i.d. Civils Package No. Design
Euston 7,000m 3 2 7.55m South 1 (inc. Old Oak Common station box) Mott MacDonald/URS
Northolt 14,000m 4 4 8.55m South 2 Mott MacDonald/ URS
Chilterns 13,400m 4 2 8.55m South 3 (inc. Colne Viaduct) Atkins
Long Itchington Wood 1,500m 0 1 8.55m Central 1 Greatworth–Birmingham Interchange (30km) Capita Symonds/ Ineco
Bromford 2,800m 0 1 8.55m North 1 Birmingham Int’l Stn–Handsacre Arup

Further comments of confidence came from politicians who support HS2, despite its estimated £55 billion cost, as well as other members of the tunnelling industry and those associated with the project.

There was a reminder that the HS2 Hybrid Bill, that will provide the legislative framework required to proceed to Phase 1 construction, received substantial cross-party support of nearly 10 to 1, or 399 votes to 44, at its third reading in the Lower House of Commons in March before then moving on to the Upper House (the Lords) for further review and scrutiny ahead of anticipated final Royal Assent at the end of this year (2016), and a start of construction scheduled for 2017.

A Government release following the announcement stated that: “The Government is committed to HS2 and has no plans to change the project. HS2 is on time and on budget and construction will start next year."

But for Chris Grayling, recently appointed Secretary of Transport in the UK Government reshuffle after the EU referendum Brexit vote, the announced departure of Kirby comes before an expected decision on the project’s Phase 2 extension from Birmingham to Manchester and Leeds. Phase 2 is reported to be significantly over the £28.3 billion funding level agreed as part of a UK Government spending review in 2015, although £9 billion of savings have since been identified and further savings are suggested by revising the link into Sheffield away from a preferred route that would have required boring several long tunnels beneath the city.

HS2 links into the UK north of London
HS2 links into the UK north of London

Those associated with the project have suggested that Kirby has contributed his strengths of building an organisation and team and that an executive of different qualities is now needed to take the project into the construction phase. “Just as Doug Oakervee established the delivery company for HS2 and managed early promotion and planning studies for the project, Simon Kirby established the HS2 organisation [now with an 1,200 employees] and a new set of skills are needed to progress into construction.”

Speaking of the possible ramifications of the UK referendum vote to leave the European Union, the thought was that rather than arguing to cancel the project, the case can be made that the project is now needed more than ever, to contribute to revitalising the northern powerhouse of the UK and securing a future for the UK on the broader economical and international trading stage.

The response to thought that the project could become stalled in a Government review of the project similar to the other major civil infrastructure project in the UK, the £18 billion Hinkley Point C nuclear power station, was that unlike Hinkley Point, HS2 is a wholly publicly funded project, with funding sourced entirely by the UK Government from taxplayers revenues and UK Government borrowing. Hinkley Point is an entirely privately funded project with the major financing being contributed by EDF, the French energy generator, and by China via contribution of nuclear generating technology and Chinese financing agreements.

Managing the budget and preventing escalation of mega-project costs is notoriously difficult and a task that will be for Kirby’s successor to control and get to grips with.

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