Critical attention is being focused on the escalating cost of road-building following a scathing attack on the Highways Agency and its increasingly expensive road programme.
The challenge from the Commons Transport Select Committee comes as the National Audit Office has launched an investigation into the sharp price hikes on local and trunk road projects.
Accepting a critic’s characterisation of the HA as ‘an elitist organisation which is lumbering and risk averse,' the MPs say: ‘The Agency has no grip on the costs of its major road projects; is managing a property portfolio it should not possess from expensive offices it should not be using; has only a limited idea what some of its staff are actually doing and has failed to build a constructive dialogue with local communities over road planning’.
The HA told the committee the outturn cost on completed schemes was on average 5.6% over the original planned cost but MPs were disturbed by a prediction of an overrun of almost 20% on uncompleted schemes that entered its targeted programme of improvements before April 2003.
Since that date, estimates have included allowances for inflation and ‘optimism bias’ (of 3-65% depending on the quality of the risk assessment and scheme complexity). The report adjusts TPI entry costs for this, and warns: ‘It appears the agency’s control over costs has deteriorated and we believe the final outturn cost overrun on these 42 schemes may be significantly higher still.’
MPs were told that works costs accounted for two thirds of the escalation, yet only half of these schemes are underway. If the pattern continues, a further £823M will be incurred, leading to an overrun of 50%. ‘Such an increase would be an irresponsible and unacceptable waste of public money,’ the report states.
The NAO report is due this autumn and was prompted by the DfT’s admission in December 2005 that cost increases on local major road schemes averaged 45%, and 67% on pre-2003 TPI schemes.
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