{"id":523018,"date":"2025-06-19T09:30:21","date_gmt":"2025-06-19T08:30:21","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=523018"},"modified":"2025-06-19T09:58:31","modified_gmt":"2025-06-19T08:58:31","slug":"tier-ones-to-be-reviewed-after-hs2-stretched-market-beyond-capability","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/civils\/tier-ones-to-be-reviewed-after-hs2-stretched-market-beyond-capability-19-06-2025\/","title":{"rendered":"Tier ones to be reviewed after HS2 &#8216;stretched market beyond capability&#8217;"},"content":{"rendered":"<p>A review into the HS2 project has found it stretched the supply market beyond its capacity and warned the UK&#8217;s construction capability is not \u201cfit for purpose\u201d to meet the government\u2019s infrastructure ambitions.<\/p>\n<p>The <em>Major Transport Projects Governance and Assurance Review<\/em>\u00a0by consultant James Stewart, <a href=\"https:\/\/assets.publishing.service.gov.uk\/media\/685291bf2b367fdd44c15e2b\/dft-major-transport-projects-governance-assurance-review.pdf\">published<\/a> on Wednesday (18 June), found \u201cshortcomings\u201d in the structure of the UK civils market.<\/p>\n<p>Following the review, the government has now announced the National Infrastructure and Service Transformation Authority (NISTA) will investigate how more capacity can be encouraged at tier one level.<\/p>\n<hr \/>\n<h3><a href=\"https:\/\/www.constructionnews.co.uk\/civils\/tldr-how-will-civils-contractors-be-impacted-by-the-stewart-review-19-06-2025\/\">Read Construction News&#8217; AI summary of how the review will impact civils contractors<\/a><\/h3>\n<hr \/>\n<p>\u201cThis review demonstrates that HS2 stretched the civils supply market beyond its capacity,\u201d Stewart said.<\/p>\n<p>\u201cIt also shows that the structure of the UK construction market, with tier one suppliers commonly relying heavily on outsourced design and subcontracting to tier two and three, has shortcomings.<\/p>\n<p>\u201cIf we are to deliver the infrastructure that the government aspires to deliver, then we need a construction capability that is fit for purpose for future demand.\u201d<\/p>\n<p>He called on NISTA to review the construction sector to create a demand-led assessment of what is required, assess how to encourage more capacity at tier one level, and examine the relationship between design and construction.<\/p>\n<p>The government has accepted all the review\u2019s recommendations, and is due to unveil a 10-year infrastructure strategy imminently.<\/p>\n<p><a href=\"https:\/\/www.constructionnews.co.uk\/civils\/hs2\/hs2-contracts-set-to-reward-contractors-achieving-savings-18-06-2025\/\">In a statement on HS2 earlier on Wednesday<\/a>, transport secretary Heidi Alexander described the project as a \u201clitany of failure\u201d and announced a reformed contracting strategy.<\/p>\n<p>This will now include incentives for firms to identify and implement efficiency savings, which she said was in line with the Stewart report\u2019s strategy on cost control.<\/p>\n<p>The review noted that the failure of the project\u2019s Main Works Civils Contracts (MWCCs) to deliver reliable outcomes were \u201cby far the most significant contributors to the overall cost increases\u201d.<\/p>\n<p>Stewart noted that the MWCCs had pay incentives linked to schedule rather than cost and the joint ventures delivering the project were given more money if they spent more on the project.<\/p>\n<p>\u201cIf you take the argument that schedule is a big driver of cost, I do not see why a cost incentive doesn\u2019t incentivise the management of schedule,\u201d he said.<\/p>\n<p>An entire chapter on his findings on the MWCCs has been redacted due to \u201ccommercial confidentiality\u201d.<\/p>\n<p>Elsewhere, he said that many failures with the main contracts could be traced back to a failure to change or delay the procurement approach between stage one contract awards in 2017 and stage two in 2020.<\/p>\n<p>This was despite contract values increasing significantly and market capacity reducing in the period, while much of the project had still not been finalised.<\/p>\n<p>Meanwhile, he said, the MWCCs were too large to manage effectively because they utilised nearly the entire UK supply chain.<\/p>\n<p>\u201cBy maxing out capacity, HS2 Ltd has had little ability to manoeuvre within contracts when costs have escalated, or schedule has not been met,\u201d he said.<\/p>\n<p>He said that future projects should structure contracts \u201cwith regard to available market capacity and risk appetite and, where necessary, change the phasing of a project to ensure that there is flexibility in the market to absorb risk or change\u201d.<\/p>\n<p>Work packages need to be devised based on the size of the project, the capacity and capability of the supply chain and the capability of the commercial and delivery teams to manage the project, he added.<\/p>\n<p>Other recommendations include reviewing the way historic prices are used in infrastructure projects, as the quoting of HS2\u2019s baseline in 2019 figures years later were misleading.<\/p>\n<p>The budget for phase one of the project has changed from \u00a321.9bn in 2011 prices in 2013\/14, to \u00a345bn in 2019 prices in 2020\/21, to a latest estimate of between \u00a349bn-\u00a357bn in 2019 prices.<\/p>\n<p>A new baseline is being developed, after being ordered by chief executive Mark Wild in December, and is due for publication next year.<\/p>\n<p>Alexander told Parliament on Wednesday that she wanted the megaproject delivered safely \u201cat the lowest reasonable cost, even if this takes longer\u201d and that Wild\u2019s work estimating the new budget had already identified it would be delayed beyond 2033.<\/p>\n<p>She committed to completing the line from London to Birmingham.<\/p>\n<p>The High Speed Rail Group, which represents companies working on the megaproject, said in a statement that the project had \u201clong required a fundamental reset\u201d.<\/p>\n<p>\u201cThe supply chain remains fully committed to supporting HS2 Ltd in delivering the project with greater efficiency and improved productivity. Work is already underway to ensure it is delivered as cost-effectively as possible going forward,\u201d it said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A review into the HS2 project has found it stretched the supply market beyond its capacity and warned the UK&#8217;s construction capability is not \u201cfit for purpose\u201d to meet the government\u2019s infrastructure ambitions. The Major Transport Projects Governance and Assurance Review\u00a0by consultant James Stewart, published on Wednesday (18 June), found \u201cshortcomings\u201d in the structure of &#8230;<\/p>\n","protected":false},"author":43915,"featured_media":464445,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[549,565,39314],"tags":[],"class_list":["post-523018","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-civils","category-government","category-hs2"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.7 (Yoast SEO v26.7) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tier ones to be reviewed after HS2 &#039;stretched market beyond capability&#039; | Construction News<\/title>\n<meta name=\"description\" content=\"A review into the HS2 project has found it stretched the supply market beyond 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