A scathing report by the Public Accounts Committee (PAC) into Crossrail's failure has listed a catalogue of errors and made calls for major reviews of the Department for Transport's (DfT) processes.
London's Crossrail project is running at least two years late and funding for the programme has already increased by around £2.8bn to £17.6bn but 'the final cost still remains unknown' the PAC said.
Crossrail Ltd, which was created by the DfT to manage the scheme, is accused of major management failures by the PAC: however MPs also turned their ire on the Government.
DfT oversight was weak and the Department failed to learn lessons from its previous failings.
'It is now apparent that the Department did not understand what a fully integrated plan looks like, and therefore was unable to scrutinise the Crossrail Ltd executive effectively on the realism of its plans,' the report said.
It added that it was 'unacceptable that the Department devolved so much accountability for taxpayers’ money on this major programme' and called on the DfT to produce 'accountability systems statements for its major programmes' to ensure it has appropriate governance arrangements.
The report states that Crossrail Ltd 'failed to understand the complexity and risks involved in the programme, failed in its management of its main contractors and failed to integrate different strands of the programme successfully'.
The failings prompted the PAC to call for a full review of the DfT's commercial and contractual models.
Committee chair Meg Hillier MP said: 'Unfortunately, delay and being over-budget now appear to be par for the course for major rail projects.
'The Department for Transport is ultimately responsible for the use of taxpayers’ money on Crossrail; it still does not appear to have got a grip of the problems.'
Crossrail is expected to provide a much-needed 10% boost to London's rail capacity when it fully opens.
The central section between Canary Wharf and Paddington was supposed to have opened in December 2018 but Crossrail Ltd now expects it to open between October 2020 and March 2021.
Crossrail Ltd says that the full railway may not open until as late as 2022.
Faults and failings
Crossrail Ltd split the main works into 36 separate contracts, creating 'an increase in the number of dependencies between the work of different contractors and high levels of costly change to the programme'.
There is 'clear evidence that Crossrail Ltd did not manage these dependencies effectively' and there was no effective ‘controlling mind’, despite the fact that the programme partners, Bechtel and Transcend Ltd, were originally contracted by Crossrail Ltd to fulfil this role.
The PAC added that the DfT set up Crossrail Ltd in a way that 'left it with limited powers to step in and take action, including on executive remuneration, when the programme faltered'.
'We have witnessed cost increases and delays on major rail projects several times over the past few years and the Department still does not appear to have got a grip on the problem. Until the Department properly embeds the lessons learned from the programme, we remain sceptical about its ability to oversee major rail projects.'
Criticisms and recommendations:
'Given the scale and complexity of the remaining work, it is staggering that Crossrail Ltd continued to believe until as late as July 2018 that the central section of the railway would open in December 2018. This over-optimism which was prevalent throughout has proved hugely damaging to the programme.'
Recommendation: The Department and Crossrail Ltd should report to us every six months on:
• progress across the programme, including on the performance of contractors;
• how they are monitoring progress against the plan; and
• how they are countering the risk of optimism bias and assuring themselves that the revised schedule and cost to completion are robust
'Crossrail Ltd’s failure to manage effectively the high number of main contractors needed for the programme contributed to substantial cost increases and delays.'
Recommendation: The Department and its delivery bodies’ commercial teams should review their commercial and contractual models, including where risk sits, to gain assurance that commercial and contractual approaches protect value for money.
Crossrail Ltd continued to pay its executives bonuses, even as the programme was going off track - including the former chief executive being paid a bonus of £481,000 for performance in 2015-16 and £160,000 for 2016-17.
Recommendation: Before the end of the year, the Department should:
• carry out and publish the results of a full review of pay, including redundancy arrangements, at its delivery bodies; and
• set out how it will ensure that remuneration in its delivery bodies aligns with the overall success of projects, and how it will maintain appropriate control and oversight of executive remuneration.
Despite it being a key learning point from previous projects, the Department failed to ensure Crossrail Ltd gave enough attention to planning and integrating the programme.
Recommendation: In order to assure itself about how its delivery bodies are managing major rail projects and bringing them into passenger service, the Department should better understand what a fully integrated plan comprises. To do this, it should build on the work now being done by Crossrail Ltd.
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