Hailed as a significant part of the UK’s Industrial Strategy, High Speed 2 rail’s (HS2) goals were to boost the UK economy by upgrading and interconnecting 21 routes in the northern rail infrastructure, whilst radically reducing travel time to the Capital. Phase 1 (London/Birmingham) was planned to launch 2028.

The original HS2 business case, developed in 2015 and given parliamentary approval in 2017, is no longer fit for purpose: –

1. Two years into a seventeen year programme plan, with £8 bn sunk costs, the total cost estimate has increased by 57 % (from £56 to £88bn);
2. The programme timetable may be delayed overall by 5 years (22 rather than 17 years);
3. The benefits calculation is understated.

Lord Berkely has been critical in his report of HS2’s corporate capability to deliver, highlighting his concerns on the cost estimates, after independent evaluations show costs could be twice the original estimate (circa £107bn).

Why did the cost estimates fail? The fog may lift in February 2020, when the previous HS2’s chair, Douglas Oakervee, issues his independent assessment, coupled with the latest National Audit Office report.

Allan Cook’s (HS2’s Chair) August 2019 report pulls back the veil on key underpinning issues: –

1. The “gold plated” specifications were created in a desk top environment, setting the network to run at speeds and train frequencies far higher than those successfully deployed in Europe and Japan to date. The specifications and associated costs were not fully explored;
2. Cost estimates were initially derived from “in house” analysis, with little involvement from Industry (ie 3.4% involvement for 2016 baseline versus 23% in 2018/19 baseline);
3. The standard Government business case model used falls short, ie: –
   • The 60- year benefits tracking period is deemed too short;
   • Changing land values are inaccurate.

The Programme Dog and Its Tail  

Movement in an approved programme budget by a risk factor of 10-15% may have been acceptable, but not 57% in two years. Is the budget wagging the programme or the programme wagging the budget? It is not clear what could be developed for the original budget of £56bn, and what would be lost as a result of sticking to it.

If the current business case model requires more development then time and effort into this fundamental piece of work should be taken. All other activities could be slowed down, until rigorous governance has been demonstrated and the budget envelope is clear.

Corporate Capability Through The HS2 Looking Glass

Like it or not technology, economic factors and talent pools will change faster than the current HS2 organisation’s capabilities. If the programme survives, the introduction of agile, self disruptive leadership skills will be required to assist teams to continually gaze into the “HS2 looking glass” and rapidly evolve their thinking on the following: –

1. Fear of failure could become embedded in the culture and thus inhibit innovation and transparent risk reporting;
2. A radical “engineering led” goal can be difficult to translate into meaningful tenders and value added commercial models, if the business is not structured to work cross functionally and with skill sets to match the lead function;
3. Creative employee and contractor packages will be necessary to attract and retain talent, as well as offset competition, from Central Government, other Agencies and Industry;
4. New ways of connecting with supply markets, tendering, contracting, benchmarking, value engineering and collaboration need to be found, to create solid contract and relationship management foundations for later down the track.