£263m Overground extension hit by apparent 30% price hike


London mayor Boris Johnson has approved a £263m Overground extension to Barking Riverside, despite the cost apparently having shot up by around £60m or 30% in under two years.

In September 2014 a Barking and Dagenham Council board paper stated that the extension was ‘estimated to cost £190m’.

And in December 2014, the developer, housing association London & Quadrant (L&Q), said: ‘The cost of the railway extension is circa £200m and the funding gap now sits at £55m and it is hoped that the chancellor will confirm his support in the Autumn Statement on 3 December 2014.’


This £55m loan was made available by chancellor George Osborne, and in both January and December 2015 TfL said the cash meant that funding was ‘available to cover the full cost' of the scheme.

However latest figures from TfL for the project, which is designed to unlock around 11,000 homes, now put the estimated cost at £263m.

A senior construction source said: 'Inflation has been running high in the construction industry since around 2013 and prices could easily jump by around 10-15% in a few years, however this kind of rise can't be explained just by inflation.

'It is a very complicated job I imagine and I think this price rise might be blamed on scope creep or complications such as utility issues.'

Recent statements from TfL said the extension ‘is fully funded, with the majority of the £263m cost of the scheme being met by the developers, Barking Riverside Limited, a newly reformed joint venture between the GLA and L&Q, which is providing £172m of funding.' The remainder is being provided by TfL. 

TfL will now apply to the Government for a Transport and Works Act Order to begin construction of the 4.5km extension of the Gospel Oak to Barking line to east London’s largest housing development site.

Last week, it was announced that L&Q would be providing a £70m commercial loan for the extension, which Cllr Darren Rodwell, leader of Barking and Dagenham Council said would ‘complete the funding needed to extend the London Overground’.

However it is not clear whether this new money has merely covered a funding shortfall caused by the apparent steep rise in costs.

Both the Greater London Authority (GLA) and L&Q have said Mr Osborne's £55m loan though the Homes and Communities Agency’s Large Sites Infrastructure Fund is still available to them, after being confirmed in both the 2014 and 2015 Autumn statements.

As of yet, Transport Network has not received a figure from TfL for the cost of the scheme in January 2015, when the transport body said it was fully funded following the chancellor's £55m loan.

A spokesperson for TfL conceded that, although TfL had not previously published costs for the scheme, estimates had been revised during 2015.

And following the Autumn Statement at the end of last year, TfL announced again that the scheme was fully funded, despite the cost having risen to £263m by that time. 

The Gospel Oak to Barking section of London Overground, is being electrified by Network Rail, which is due to be completed in 2017. New four-carriage electric trains will run on the route from 2018, replacing the current two-carriage diesel trains, and will provide improved journey times.

If approval for the extension is given, construction would begin in late 2017 and train services would start in 2021.


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