The High Speed 2 (HS2) project in the south of England has seen increased costs.
- Skanska, part of a joint venture on the project, will receive an additional £50m.
- Inflation and scope changes have been cited as reasons for cost adjustments.
- The HS2 contract, previously valued at £3.8bn, has required further financial input.
- Tunnelling work under HS2 faces uncertainties, especially around the Euston station project.
In recent developments, the cost of the High Speed 2 (HS2) project in the south of England has surged as Skanska, in collaboration with Costain and Strabag, announced a £50 million increase in funding. Skanska, holding a 34 per cent stake in the joint venture, cited changes to the scope of works as the primary reason for this financial revision. Despite this disclosure, HS2 has refrained from revealing the entirety of the additional funds allocated to the joint venture, attributing part of the rise to inflation.
The original contract for the southern section of HS2’s main civils works was valued at £3.8 billion. In July 2023, this project had already seen an increment of £305.3 million due to revised work scopes. As explained in Skanska’s recent statement, the financial award has been determined based on planned and agreed contract modifications.
Additional costs are being drawn from HS2’s contingency fund, a measure underscored by inflation adjustments and compensation events. This rise in expenditure highlights substantial engineering challenges, as the project involves significant tunnelling work through London to Birmingham. Notably, the Northolt Tunnel in west London recently saw the launch of its fourth tunnel-boring machine.
However, progress remains uncertain, particularly concerning the section between Old Oak Common and Euston. The development at Euston station, initially paused due to escalating costs, is now proceeding with a financing model heavily reliant on private sector investments. This fiscal unpredictability was echoed by Sir Jon Thompson, HS2’s interim chief executive, who earlier estimated actual costs to exceed former official projections by £8 billion to £10 billion in 2019 valuations.
In parallel, the leadership of HS2 prepares for transition as Mark Wild, a former Crossrail executive, has been appointed as the new chief executive. His experience is anticipated to guide the project through its fiscal and operational complexities, although his exact start date remains unconfirmed.
The HS2 project continues to navigate financial hurdles, calling for strategic oversight to manage ongoing challenges.
