en.Wedoany.com Reported - The UK National Audit Office (NAO) released a report on June 29 stating that HS2 Ltd has little time left to save costs through civil engineering after failing to successfully renegotiate contracts. The report said that since spring 2024, the management of the mega-project has been attempting to reshape contracts with joint ventures (JVs) building the London-to-Birmingham railway, but previous attempts have failed due to poor negotiating positions, a lack of clarity on incurred costs, and an inability to transfer risks.

Since April 2025, HS2 has adopted a new approach based on verified costs. HS2 and the JVs identified approximately £500 million in non-allowable costs, which were deemed outside the contract scope or lacking documentation, and HS2 has sought to recover these expenses from the JVs. Meanwhile, HS2 has established a centralized function to coordinate cost assurance activities. With more information, HS2 has again attempted to renegotiate contracts, aiming to save around £2 billion. The watchdog noted that one element of the negotiations is offering the JVs additional funding if they can complete work ahead of schedule and efficiently.

However, HS2 has missed its latest target of completing negotiations before the current fiscal year and now hopes to conclude them by autumn. The report stated: "Given the time remaining on the main civil engineering contracts, opportunities to avoid risks and save costs are rapidly diminishing." HS2 is also attempting to renegotiate contracts for Curzon Street station and Old Oak Common station. HS2 said that if targets cannot be met, it will strengthen contract management, increase delivery pressure, and improve controls.

In December 2024, HS2 CEO Mark Wild faced questioning from MP Sarah Olney before the House of Commons Public Accounts Committee, with Olney expressing doubt that contractors would accept any significant changes to signed contracts. Wild stated that contractors would accept changes because working on a project with lower overall risk than others is in their and their shareholders' interests. He described previous cost control efforts on the project as "a failure" and "unacceptable."

Overall, the NAO report acknowledged that HS2 and the Department for Transport (DfT) are "making progress" in resetting the mega-project but warned that "a significant amount of work remains to be done." The report called on the DfT and HS2 to review the reset timeline and assess whether the reset plan needs to continue beyond the current target date of spring 2027. NAO head Gareth Davies said that after facing historic difficulties, HS2 Ltd and the DfT have taken a thoughtful approach in the latest project reset, but previous issues highlight the importance of ensuring the project's future success, requiring fully reliable cost and schedule estimates, completed commercial negotiations, and appropriate capabilities before the reset is finalized.

HS2 estimates it will spend £153 million on the project reset. The Euston-to-Birmingham section is currently expected to be completed between 2040 and 2043, and the Old Oak Common-to-Birmingham section between 2036 and 2039. The project's cost is estimated to rise from the 2020 forecast range of £35 billion to £45 billion to between £87.7 billion and £102.7 billion.

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