Construction Inflation

Today I found myself going through the big book of costs at work and was interested to come across the pricing for the previous Bond Street station upgrade, this was from the 1995 attempt at CrossRail not the current one. It was a similar scheme (bigger ticket halls, better access, CrossRail connection, etc) but the price was a surprise.

2010 LUL Estimate – £300 million. To be fair only half of that is construction cost, the rest is TfLs management overheads and contingency. All that paper work doesn’t write itself you know. So lets say £150 million on construction.

1995 Estimate – £70 million.  Which is spectacularly lower, push that number through an RPI inflater and it pops out at £100 million in today’s money, far lower. Allowing for construction being mainly (but not all) manpower a real wage calculation says £118  million, again far lower.

Why the big difference, after all the job hasn’t got harder or significantly changed in scope? I’ve no real answer but my guess is part extra health and safety requirements, stricter environmental and traffic limits (no more dozens of skips in the streets for instance) and a big chunk of above average pay rises for construction and engineering workers.

The best part? This is before the Olympic/CrossRail cost inflation really starts to bite, nasty rumour has it that a good chunk of the Bond Street £300 million figure is contingency for above inflation rises in construction costs (most long term contracts have an agreed inflation figure in them, if things get pricer faster than that the client pays the extra).
One final piece of underground news, everyone has clammed up on the runaway engineering train, nothing has yet leaked out to the industry grapevine. Unless anyone breaks the LUL Ometra we may have to wait a year or so for the official investigation from the sloth like RAIB (Rail Accident Investigation Branch or, as most railwaymen call it – Read About It Belatedly).

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