HS2 chief executive Mark Wild told the Public Accounts Committee this week that the programme is roughly two months from concluding revised agreements on its last two cost-plus main works civils contracts, and that doing so could avoid up to £2 billion of future cost risk.
The figure is an avoided-risk estimate offered by the client’s own chief executive to a select committee. It is not a booked saving, and it hasn’t been independently verified.
Which contracts, and what a reset changes
The two outstanding deals are with Balfour Beatty Vinci, delivering 90km of route through the West Midlands, and Skanska Costain Strabag, building the 21km of London tunnels from West Ruislip to Euston. HS2 struck revised deals last month with the other two main works civils contractors: EKFB, the Eiffage, Kier, Ferrovial Construction and BAM Nuttall joint venture running 80km from the Chiltern Tunnel north portal to Long Itchington Wood, and Align, the Bouygues, Sir Robert McAlpine and VolkerFitzpatrick team responsible for 24km including the Colne Valley Viaduct and the Chiltern Tunnel.
The resets keep the reimbursable structure and layer payment incentives on top, tied to efficiency, cost control and programme. Wild’s own assessment of the arrangement was not a sales pitch. “They’re not the most optimum if you were to start from scratch,” he said, “but they’re very good in creating downward pressure for the first time.”
The number worth holding onto is the one about exclusions. The EKFB reset, Wild said, produced a “seismic shift,” cutting contract exclusions from several hundred to fewer than 20. Anyone who has administered a cost-reimbursable contract knows what several hundred exclusions does to a monthly valuation. That’s where the £2 billion is supposed to come from.
The schedule Wild wants
Civil engineering complete in 2029, track-laying starting March 2029. Both are targets rather than commitments, and the next six months are being spent on programme and construction sequence. Neither Balfour Beatty Vinci nor Skanska Costain Strabag was quoted, so this is entirely the client’s account of a negotiation that isn’t finished.
Euston is a separate problem, and it’s growing
MPs were also told the stalled Euston terminus estimate has climbed from £3.8 billion to around £8 billion. Dean Creamer, the Department for Transport’s director general for major rail projects, said funding will likely mix public money with private finance, possibly a public-private partnership for the station itself, development land receipts and tax increment funding. None of that is settled.
On the stations generally, the assessment offered to the committee was that the two big station contracts “suffered from optimism bias in estimating.” Rolling stock and both station contracts still need rebasing ahead of an April reset target.
The pattern worth noticing
HS2’s recovery, as it’s being described, is almost entirely a commercial exercise rather than an engineering one. Nothing about the tunnels or viaducts changed. What changed is who carries which risk and how many ways a contractor can claim outside the target price. That’s the lesson for every large public programme currently choosing a contracting model: the exclusions list is the contract.