HS2 talking with contractors to reduce costs on the project

HS2 chief executive Mark Thurston has said that the organisation is "in talks" with contractors to reduce costs on the project. Speaking at a recent Construction News summit, Thurston declined to comment on reports of rising costs but admitted that the true costs of contracts originally valued at £6.6bn were not fully understood when the contractors were appointed. Thurston spoke of “cost-gaps”, rather than make any reference to the project being over budget.

The official line from HS2 remains that the mega-project's construction will rebalance the economy by connecting eight of the ten largest UK cities, increase rail capacity on the current system and reduce journey times, while also creating thousands of jobs across the UK.

"There is a budget for HS2 and the company I run has been clear that it has to deliver the railway for that number. I don't subscribe to the idea that it (the project) is over budget.

Mark Thurston, HS2 chief executive.

With other major projects like Crossrail already coming in significantly over-budget and delayed by almost a year however, convincing government of the business case for further infrastructure investment may become even harder as concerns over the industry's ability to deliver major projects on budget continue to mount.

Speaking at the summit, Thurston said HS2 was working hard to with contractors to try and “close the gap” in an attempt to make it more affordable. He also made it clear that it was a gap that could be closed.

Denying that the project was over budget, Thurston said: “There is a budget for HS2 and the company I run has been clear that it has to deliver the railway for that number. I don’t subscribe to the idea that it is over budget. When you think of when the budget was set for phase one in particular, which was in 2015, we always maintained that until we put contractors into play, we would not understand the true cost. We are sitting with our contractors as we speak to close that gap and I won’t comment on the size of that gap."

Commenting on the latest developments, Stop HS2 Campaign manager Joe Rukin unsurprisingly claimed that the real reason for Thurston not commenting on specific figures is because the eventual final figure is going to be a “massive number” that will serve to be “another nail in the coffin of the project”. Rukin claimed that "the only real choice for government is to scrap HS2 before it is too late".

Bosses at HS2 say that London and Birmingham are already planning for the arrival of HS2 with early preparation work said to be well underway at 60 sites between the two cities. Earlier this month, it was also announced that the search had started to find the successful bidder to construct Birmingham’s HS2 Curzon Street station. The four new stations which are planned for construction between the two are expected to unlock opportunities for 30,000 new homes and 130,000 jobs as part of wider developments around them.

It should be no surprise that pressure is mounting to reduce costs on the project. A leaked report last month by PWC revealed that HS2 will cost 25% more than similar projects in other countries and also last month Tory MP Boris Johnson said that transport projects in the north of the country "ought to take precedence over HS2". The latest reports of cost-cutting on the project, will undoubtedly spark contractors' fears over margins being squeezed and commercial considerations notwithstanding, the industry will be keen to see more clarity on the project's costs and delivery in the months ahead.