For want of an archaeologist ...

I love it when I find a new example of a Bottleneck item - those purchases which are often comparatively low price but of critical importance.  Today's Times yielded one such example which I'm not sure many would have thought of: archaeologists!

UK politicians have made a lot of noise about the need for more housebuilding. In parallel, the HS2 is quite possibly the biggest, and most politically sensitive infrastructure project for some time, for example, it's 350 miles long - you can read more of my observations on its procurement here. The financial cost of each of these initiatives is enormous and logically delays will add to cost and have a negative impact on delivery of the business case.  Politicians accountable for delivery will understandably be a bit sensitive too.

However, before work can actually commence on site there is a requirement in the UK for an archaeological investigation.  The estimated demand for archaeologists means that an additional 25% of these 'Indiana Jones' types are required.

I'm sure you can see where this is going - what's the lead-time to get an archaeologist with the necessary skills trained, was the supply pipeline of archaeologists created in sufficient time, has enough attention been given to attract students to pursue archaeology, how much had been budgeted for the premium costs which may now need to be paid for this scarce resource, has the Home Office thought through the potential visa implications for non-EU citizens who may be required? You get the feel for the procurement, project and programme management risks?

Somebody tell me that this has all been previously risk assessed and mitigated. Do I sense an 'In The Thick of It' moment?  Perhaps. as they used to say of procurement, this is Archaeology's opportunity - but hopefully not at Procurement's expense.

Invisible ink used on the script of HS2 justification

It's very strange that a Government which advocates transparency wants to be very, very opaque. Wasn't the argument for transparency that the army of armchair auditors would be able to call their political masters to account and only those who had something to hide should fear transparency? I suppose you can understand the desire for opaqueness when it comes to the Department of Transport who suffered badly when the figures behind the West Coast rail franchise were exposed to scrutiny and unravelled? Understanding isn't the same as justification though.

Transparency delivers other benefits. The armchair auditors can be part of the risk management process providing constructive critique and highlighting risks which might otherwise have been overlooked.  Transparency also wins stakeholder confidence and helps with change management. Those benefits can't be realised if you opt for secrecy. Yet, in an age of Wikileaks and Edward Snowden does anyone seriously believe the Report will remain concealed?

However, the latest act in the HS2 farce is the decision yesterday, not to publish a report of the Major Projects Authority by invoking a bizarre workaround of the Freedom of Information Act. Withholding the report only feeds the beast of cynicism and further undermines confidence in the project. Not only that but it forgoes the benefits of transparency and makes it more difficult to argue that others should provide visibility of their decisions.

HS2 and risk of the cloak of invisibility

With all the questions raised so far about the business case for HS2, common sense would have said come clean as soon as possible. Those managing stakeholder engagement at HS2 just don't seem to recognise the need for clarity of the business case and effective stakeholder engagement.

The political and managerial leadership of HS2 may 'believe in' HS2 but they need to have clarity of the key messages and they need more integrity in communications.

Last night's Newsnight was yet another example of chaotic stakeholder engagement. Newsnight had clearly identified 'what hadn't been said' in the published KPMG report and had resorted to a Freedom of Information request for some answers. The FoI response provided a fuller story of the winners and losers. Then the HS2 CX fruitlessly tried to justify why Newsnight needed to resort to a FoI request.

Everyone knows there will be winners and losers with HS2, as with most business cases. The trouble comes when the emphasis is to 'accentuate the positive and eliminate the negative'. Stakeholders are rarely that gullible. Those who have most objections to change will always look for what is hidden and use that in their argument. I've been discussing these flaws in the HS2 approach for so long I'm sure some universities must now be using HS2 as an example of poor communications and stakeholder management. As this continues trust and confidence will be continue to be eroded and there's a risk that even those who will be winners will also start to become suspicious and cynical.

HS2 recruits butcher, baker & candlestick maker for business justification

I trust you were all riveted by The Times letters today which included a letter from freight company leaders. This appears just the latest attempt at creating the ever increasing HS2 business justification - recently it had become about capacity and regeneration too. I hope I am not breaching any copyright laws by quoting from the letter:

Building HS2 will free up much needed capacity on the West Coast Mainline which is a vital freight artery. That is good news, not just for us as freight companies, but for consumers. It could remove up to 500,000 lorries a year from our motorways. With fuel and road costs predicted to increase the costs of running lorries by 36% by 2040, additional rail capacity will ensure that food and drink continues to reach our supermarket shelves, at affordable prices. It will also, crucially, allow our exports, such as automotive components, to continue to reach European markets.

I have taken the liberty of emphasising some of the clues of how desperately weak this business seems to be - grand statements which lack certainty and also fail to consider that there may be alternatives. HS2 may not free up the West Coast Mainline. HS2 may not remove 500,000 lorries from our motorways and perhaps the lorries could be removed in a different way. The prediction of a 36% increase in the cost of running lorries by 2040 assumes an absence of innovation and any change in fuel taxes. The statement of affordable prices is a nonsense if you parallel that with the reality that currently many just can't afford weekly food bills at the present time. Then to cap it all we think that the market wouldn't be able to deal  with getting automotive parts to Europe.

In a nutshell, this latest intervention highlights the lack clarity on what problem HS2 is trying to solve and that we don't seem to understand why the HS2 investment is being made.

Could this whole HS2 debacle, linked with the rail franchise fiasco, be a Michael Gove orchestrated conspiracy to add business studies to the core curriculum?  

Wobbles on HS2 business case

It is expected that tomorrow George Osborne will embark on a

different journey planner to justify HS2. The core business justification is expected to shift from reduced travel time to capacity and regeneration.

Set this against the backdrop of MPs recent confidence of having their collective voices heard over military intervention in Syria and you may say this shift of emphasis is very brave - it could actually be stoking the fire for those against the whole project.

I have discussed HS2 many times but it has struck me, from early on, that there is a need to get the basics right in communicating HS2 benefits. I'm not so sure that a good communications strategy for a procurement of this size is to be unclear what the key benefits are.

From a procurement perspective, the key question around HS2, and any other major spend, should be 'what is the problem we are trying to solve?' The answer to that question should then lead to options being generated to solve the problem. Only then can the options be appraised. If the problem to be solved is capacity and regeneration it is highly likely that you would generate different solutions than if the problem to be solved is shifting people and things faster throughout the country.

If HS2 is to get on the right track, my suggestion is that we need to build consensus on what is the problem which needs to be solved - it is a mistake to start from the position of saying "HS2 is the solution, now what is the problem?".

What does capping HS2 spend mean?

There's a peculiar paradox with HS2 - while the proposed costs just keep on taking from the public purse, for a blogger the whole saga just keeps giving.

I first highlighted problems in the approach away back in January and there's been a steady stream coming down the track since then. We also had the high profile reporting of the Institute of Economic Affairs expectation that the real cost is likely to be £80bn, even though Steve Ashcroft had blogged to that effect early in July. This week there appears to have been confusion among key stakeholders what the budget comprises: the Transport Secretary says £42.6bn, the Chief Executive charged with the implementation says there's an extra £7.5bn for rolling stock, and the Treasury are reported to be working on a figure of £70bn.

Now we have learnt, amid nervousness in the Labour ranks, the Shadow Transport Secretary wants to cap the spend at £50bn. What does that mean and what are the implications?

1. There needs to be clarity what the budget is supposed to cover. While there is clearly confusion already regarding the budget, if Labour propose to cap at £50bn, then what is counted within the £50bn needs to be made clear, otherwise if they come into government, they risk being castigated when the first pound over £50bn is paid.
2. What is the agreed categorisation and split between capital/revenue costs? If that isn't clear there is a danger of reallocation to mask overspend.
3. Are the consequential costs of expert opinions, compensation to those adversely impacted, the costs of legal challenges, etc., also to be met from the £50bn allocation?
4. What are the likely consequences of spending £50bn and then saying 'no more'? Will £50bn be viewed as sunk/wasted?
5. If the budget is to be capped at £50bn, what is the most appropriate way to sequence the investment to ensure, if the plug is pulled, that the maximum benefit can be achieved from the £50bn spent and how will that scrutiny be provided?

It is quite easy to make a statement of capping expenditure but I fear this could come back to haunt the Shadow Transport Secretary.

My own personal prediction is that we have not heard the last of HS2 procurement, by a long shot.

HS2 Contingencies

It's six months since I first highlighted concerns with HS2.

In the latest twist it has been announced HS2 may cost £42.6bn as opposed to the original £33bn - let's remember that we're still in the early stages of this project.

But what struck me as strange was George Osborne's interesting explanation of the £14.6bn contingency sum on Sky News:

"... one of the reasons why the cost has gone up is we're actually building in more contingency to make sure that we don't actually overrun. We've got a proper budget from the start that way we know we can afford" (27 June 2013).

If the chancellor is correct and we had a proper budget from the start (or is this the start?), what was the original £33bn?

Is the contingency a slush fund or a contingency fund? A contingency is to cover costs which could not reasonably been foreseen. It isn't intended to cover increases due to changes in specifications, clients intentions, costs of materials, contract omissions, or new regulations.

It would be really useful to understand what this 'contingency' of £14bn is allowed to cover and what it won't? It will also be interesting to understand how it will be managed? Can we now assume the Treasury have said, "the absolute maximum HS2 will cost is £42.6bn"? If that's the case, who will be held accountable for overruns? I suppose another way of looking at it would be, who involved in making these commitments will be around in 2032?

Missing the point on HS2

If you turned on any of the TV or radio news programmes, picked up a newspaper or scanned Twitter this morning, it is almost impossible that you missed the NAO's anticipated shortfall on the proposed HS2 train link. It is not surprising that the business case doesn't stack up - even I have been questioning some of the more basic assumptions which were in the public domain. However, for the public procurement community there are more significant issues:

1. Why, after the rail franchise fiasco and the subsequent route and branch review of evaluation methodologies, were there errors in the calculations which had not been identified through internal QA?
2. In the current environment of government 'transparency' in 'all things procurement' why was the business justification not more clearly set out?
3. Why did a gateway review not pick-up and lead to the resolution of the issues identified by the NAO?

HS2 still needs to get all aboard

Only last week I applauded the publication of Making the Games - lessons learnt from the Olympics. Will we learn? Can we learn? 

Well we've now learnt of some of the early ingredients going into the mix for HS2 procurement and it does not strike me that we are looking at a recipe for success: 

• A lack of political agreement in any party let alone cross party agreement;
• Some politicians, even at this early stage, branding it an "enormous waste of money" while the Chancellor calls it "an engine for growth";
• An estimated cost increase of almost £2bn in the past year;
• The brief already beginning to change, including, the addition of a station at Manchester Airport;
• A lack of winning the hearts and minds of key stakeholders on economic benefits;
• Allegations of 'insider' knowledge which led to personal benefits while others lose;
• Projections based on a 67 year whole life cost - heaven only knows what changes will take in transportation in the next 20 years never mind the next 67?
• Legal challenges which have the potential to add years to the project.

Current projections are that the project should cost £34.5bn and be completed in 2034 - may be worth taking a note of that baseline figure and placing a bet on the actual figure and when the project will actually be signed off as completed.   

I remain completely agnostic as to whether or not HS2 is a good idea but have discussed before the need for accentuating the positive as part of a communications strategy, unfortunately the volume needs to be turned up and a bit more clarity on the business case. 

Although it is not too late to get the fundamentals in place, It doesn't look as if we've a good foundation for success yet. 

What we now need is some bravery in saying "get the basics right" otherwise we have a long slow journey ahead with little notion of the ETA or fare.