Costs going like a runaway train...
THE costs of major new rail projects across Scotland have spiralled by tens of millions of pounds, with some planned routes poised to become the most expensive, mile for mile, in the whole of Britain, The Scotsman has learned.
Three projects designed to improve the network are in danger of running up to 90 million over budget and could become the "rail equivalent of the Holyrood building project", sources have warned.
The price hikes are forecast for the opening of lines to Alloa, the Borders and Glasgow Airport.
It is understood poor management and lack of planning are responsible for the latest cost escalations. Some initiatives have suffered by being presided over by small local authorities, with a Scottish Government quango being forced to step into the fray.
Stewart Stevenson, the transport minister, has said he is "disappointed and concerned" with at least one project, while Transport Scotland, the government agency, has pledged to review costs across the board.
Rail watchdogs have called on the government to establish a review of why the projects have run over budget and to act upon any recommendations to ensure sufficient safeguards are put in place.
Of the three initiatives, the one most at risk of incurring vastly increased costs is the Stirling-Alloa-Kincardine line: it is likely to cost three times its original estimate and open nearly two and a half years late.
Its cost is believed to have risen to about 95 million - that is some 10 million more than in June and well above the figure of 65-70 million being quoted a year ago.
Sources have told The Scotsman it could now hit 100 million, making the 13-mile route one of Britain's most expensive, mile for mile. One said: "This scheme is in danger of becoming the rail equivalent of the Holyrood building project."
Another claimed the original costs had been deliberately kept low to make the scheme appear more attractive.
The Waverley line between Edinburgh and Borders is also understood to have suffered significant cost increases, which could push the bill from the current 175.5 million to nearly 200 million.
Mr Stevenson has already said there is a unspecified funding gap in the project and that the planned opening in five years time was unachievable.
Transport Scotland is taking over both the Alloa and Waverley line projects from the local authorities involved.
The third project to face cost hikes is the Glasgow Airport rail link, where the current cost estimate of 170-210 million is at risk of increasing by 50 million. This is thought to relate to extra land and property costs.
Colin Howden, director of TRANSform Scotland, the campaign for sustainable transport, expressed frustration with the delays to the Alloa scheme, in particular, but said major road improvement initiatives had suffered from even greater cost increases.
Robert Samson, the Scottish spokesman for Passenger Focus, the independent rail watchdog, said that, once the projects were completed, the government should carry out a review of why budgets and completion dates had been allowed to slip, and then put in place safeguards to prevent their reoccurrence.
"With the costs and finishing dates rising, the government must prevent such things happening in the future and ensure the processes are robust," he said.
It is the Alloa line which is the most beset by difficulties. The project was hampered in that it was led by Clackmannanshire, Scotland's smallest council, and other bodies, such as the tram developer Transport Initiatives Edinburgh, were drafted in to help out.
The latest cost increases follow outrage from the SNP over the previous rise, which Keith Brown, the Ochil MSP, described as "appalling". He said: "That figure and the delay that has been caused by poor management of the contract should have those in the previous [Scottish] Executive who were responsible hanging their heads in shame."
Mr Stevenson said he was "disappointed and concerned" that the project was running late and over budget.
The minister has reaffirmed the previous administration's commitment to the Waverley scheme, namely contributing 115 million, quoted at 2002 prices, which is expected to be the equivalent of 159 million when the line is built. However, he has stressed that the Scottish Government's continuing support depended on conditions such as costs being contained and risks being managed. The rest of the cost would be shared by local authorities, enterprise agencies and developers.
Des McNulty, the shadow transport minister, told MSPs last week: "I have spoken at some length to people dealing with the Waverley railway project, who express severe doubts about whether the project can be delivered with the current funding package."
However, Christine Grahame, an SNP MSP for the South of Scotland, put a brave face on the situation.
She said "There has been an element of scaremongering going on over the costs, but I remain optimistic, despite the failings of the previous Liberal and Labour administration that the project will go ahead."
Transport Scotland said it was reviewing the costs of the Alloa and Waverley projects, while the cost of the Glasgow Airport line had still to be determined.
A spokeswoman said the agency had taken over project management of the Alloa line and an audit was under way. She went on: "The audit will report during September and will identify an anticipated final cost for the project."
She said Transport Scotland had launched a "due diligence exercise" as part of taking control of the Waverley project, and that process was expected to be completed by the end of this month.
Counting the cost as projects descend into financial farce
HERE we go again. Just when the long-suffering public thought that it had seen, in the shape of the Miralles-formed Holyrood building, the last of the great spending overruns, here come a whole lot more.
Taxpayers will be baffled, not to say frustrated and angry, that the pattern seems to be repeated over and over again.
First, an estimate, perhaps given by a politician anxious to avoid scaring off the voters - as was the case with the proposed Scottish Parliament. Then, as the date for the beginning of the project nears, a new estimate. And, as it progresses, the estimates climb ever higher. How can this possibly continue to happen? And is it just a Scottish or, indeed, British phenomenon?
The answer to the first question is something that Audit Scotland, the public spending watchdog, is currently investigating.
Called the "major capital projects review", the investigation is looking at the 7.8 billion of infrastructure spending commissioned by the then-Scottish Executive, now the Scottish Government, between 2004-5 and 2007-8.
The findings have yet to be published, but in setting out its remit, Audit Scotland laid out the kinds of problems which have been encountered in the past.
The watchdog states: "Under successive administrations, a number of large public-sector capital projects did not meet time, cost and quality targets.
"This was due to a range of problems in project management, including the need to choose the right procurement route; the dangers of proceeding without a fixed design; lack of strong cost control and the need for a single point of decision-making."
Pretty clear. And there are some recent examples of this.
Audit Scotland's overview of transport projects, published in 2006, found that of six major road and rail projects completed between February 2003 and November 2005 the tendered construction costs exceeded estimated tender costs by up to 30 per cent.
Actual construction costs exceeded the pre-tender estimated cost by up to 33 per cent. There has been some good news more recently. Audit Scotland was asked by the Scottish Government to look at the Edinburgh tram scheme and the Edinburgh Airport Rail Link (EARL).
Their report, published in June, concluded that the tram project was "relatively well advanced and arrangements to manage it looked sound". However, there was more uncertainty about EARL which "highlighted some particular concerns about its governance and procurement aspects".
As to the second question, there is plenty of evidence that the problems of cost overruns is not uniquely Scottish or even British, but happen the world over.
The now famous Sydney Opera House, for example, ended up at 15 times the estimated cost. Closer to home, the British Library was allowed to go almost 450 million over budget and 15 years behind schedule.
But these are modern projects. Cost overruns are not new. The cost of Charles Barry's gothic Houses of Parliament, at Westminster, caused a 19th century scandal when it overran its budget by 200 per cent.
That, however, was still modest compared to the Scottish Parliament building at Holyrood, which came with an original estimated cost of 40 million. The final bill was 414 million.
In short, building major infrastructure projects is not simple and is, it appears, almost bound to involve significant escalations in costs.
SNP ministers, who are about to embark on perhaps the biggest project of modern times in Scotland - building a new Forth crossing - and who were highly critical of cost overruns when they were in opposition should be warned.
The new Scottish Government plans to keep on spending to improve Scotland's infrastructure. We must hope that they will, finally, learn some lessons from the past and do what they predecessors have not managed. Keep control.
But don't count on it.
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