Government must explain who is responsible for Crossrail failures says PAC

- Fixation on December 2018 delivery deadline led to warning signs being missed or ignored

- Unacceptable that DfT and Crossrail have not identified root causes of delays and cost increases

- DfT must urgently set out what consequences senior officials have faced for programme failures

REPORT SUMMARY

The Crossrail programme aims to deliver a new east-west railway through central London, providing passengers with new train services to improve connections on the existing transport network, reduce journey times and ease congestion.

It was supposed to set the standard for delivery of transport programmes, where the skills and knowledge gained from the programme could be exported around the world. Instead, yet again, costs have escalated and delivery dates have turned out to be over-optimistic. 

New train services were due to start in December 2018 but have been badly delayed. Until a revised opening schedule has been agreed, we are not convinced that new services will start to run in 2020 as now hoped, nor that the additional £2.8 billion of funding provided will be enough. 

The Department for Transport and Crossrail Limited are unable to fully explain how the programme has been allowed to unravel.

Crossrail Limited failed to properly report the position of the programme and risks. Key warning signs were missed or ignored, and Parliament and potential new passengers still do not know the root causes of the delays and significant cost overruns.

As the programme progressed, the Department, as a joint sponsor of the programme with Transport for London, failed to ensure that the governance arrangements it had put in place were robust.

We are becoming increasingly alarmed at the continual shortcomings our work has highlighted in the Department’s project management and oversight of the railways and we will continue to look closely at progress with this programme.

We are also concerned about the clarity of message we have received from the Department throughout the programme.

We have, previously, questioned the Department on the additional funding announced in July 2018 to cope with cost increases, only for further cost escalation and more funding to be agreed at a later date.

This is symptomatic of how the costs of this project have been allowed to spiral out of control whilst question marks remain around its completion and when new train services will start to run.

COMMENT FROM PAC CHAIR MEG HILLIER MP

“Passengers were led to believe they would be able use new Crossrail services through central London from the end of last year. Instead, they have been badly let down by significant delays and cost overruns.

“It is clear that the delivery deadline of December 2018 had been unrealistic for some time. But the Department for Transport, Transport for London and Crossrail Limited continued to put a positive face on the programme long after mounting evidence should have prompted changes.

“Wishful thinking is no basis for spending public money and there remain serious risks to delivering this programme, with a revised schedule and costings for completing the work still to be agreed. Some £2.8 billion of extra funding has been provided for Crossrail but even that may not be enough.

“It is unacceptable that Parliament and the public still do not know the root causes of the failures that beset this project. Nor will we accept the Department and Crossrail Limited’s description of these serious problems as ‘systems failures’.

“Accountability in the use of public money is of fundamental importance. The Department should write to us urgently to explain what it, Transport for London and Crossrail Limited are responsible and accountable for on this programme, and set out clearly what consequences there have been for well-rewarded officials whose costly failures are paid for by taxpayers.”

CONCLUSIONS AND RECOMMENDATIONS

The Department for Transport, Transport for London and Crossrail Limited’s fixation on a delivery deadline of December 2018 led to warning signs that the programme was in trouble being missed or ignored. A key, politically important, milestone for the programme was train services starting through the central section of the line in December 2018. The pressure on, and determination within, those delivering the programme to meet this deadline led to an overriding culture of over-optimism when the programme began to slip in 2016 and failings identified then were not addressed as they should have been. The Department told us that “risks were not adequately identified, assessed, mitigated and reported on by and within Crossrail Ltd”. Had these risks been addressed earlier then it is likely that the programme would not have veered so drastically off course. The Pudding Mill Lane explosion in late 2017 contributed to delays, but many elements of the programme, including the stations and signalling systems, were already a long way behind schedule. Even if the explosion had not happened, the programme would still have failed to deliver on time. The Department and Crossrail Limited failed to fully understand the cumulative effect of the risks that the programme was carrying. In May 2018, the Department’s representative embedded within Crossrail Limited was reporting significant risks that the programme would not be delivered on time, but this information was not sufficiently acted upon by the Department who remained convinced by assurances from Crossrail Limited that the programme was still on track. Given that the stations and signalling systems are still some way from being completed, and that at least a further year of work now appears to be required, we find it difficult to believe that it was not evident before the public announcement in August 2018 that the central section of the railway would not open on time.

Recommendation: The Department should write to the Committee within six months of this report to explain the steps it is taking to encourage a culture of openness and transparency internally and across its delivery bodies. This should include how it will ensure that project and programme teams reconsider and revisit completion dates for major programmes at key points through the programme lifecycle and engage early with the Department on challenges meeting agreed dates. 

The Department should also commit to updating the Committee at regular intervals and ensure that we are kept up-to-date with all key developments.

It is unacceptable that the Department and Crossrail Limited are unable to identify the root causes of the programme unravelling so quickly and so disastrously. A member of the Committee visited a Crossrail site in June 2018 and was told that the programme was on track. It was not until August 2018, four months before the central section was due to open, that there was any public recognition of the seriousness of the problems with the programme. Since then, it has become clear that the programme will be delayed by at least a year and forecast costs have potentially grown by nearly a fifth. There is an incongruity between how the programme can be described as performing so well and such significant issues emerging so quickly. The Department and Crossrail Limited’s explanation for this focuses on a failure to assess the cumulative risks that were emerging as the programme schedule was becoming more and more compressed due to delays. Crossrail Limited also accepted that at the time its management team did not have a good enough grip or understanding of the work that was still to be completed. However, the Department and Crossrail were unable to provide a convincing explanation of the root causes of the delays.

Recommendation: The Department should consider the root causes of cost increases and delays and should write to the Committee by June 2019 setting out how it has taken lessons learned into consideration and what impact this has had on its approach to the project.

We are disappointed at the Department’s and Crossrail Limited’s unacceptably laissez-faire attitude to costs potentially rising by nearly £3 billion. In response to escalating costs, in July 2018 the government announced an additional £0.59 billion of funding for the programme. After further cost increases and delays, in December 2018 the government announced £2.15 billion of additional funding, bringing the total budget to £17.6 billion (approximately a £2.8 billion, or 19%, increase on the £14.8 billion funding agreed in 2010). We are not satisfied by the Department’s vague response to our questioning on how it protected taxpayers’ money when overseeing delivery of the programme. The Department failed to identify what it had done proactively on this programme. Instead, the Department asserted that it aimed to consistently learn lessons from issues when they arise and apply those to new projects. The Department and Crossrail Limited still do not have a revised estimate of the programme’s cost.

Recommendation: In response to this report, the Department should set out how it considered the value for money for the taxpayer when agreeing to increased funding for the programme in 2018.

We are concerned that the value for money of the programme is at risk from further cost increases and delays. While originally due to open in December 2018, the central section of the railway has been delayed and a revised opening date has not yet been set. Since December 2018, Crossrail Limited has been re-sequencing the remaining works required for the central section of the railway, untangling a schedule that had become more and more compressed over time because of delays. It has not yet completed this work. Crossrail Limited is looking at completing the railway systems needed to run the trains on the line (such as the signalling systems and operational systems to control parts of the railway including platform doors) before completing the stations, which it acknowledges was not the optimal way of completing the programme. The Department and Crossrail Limited will not fully know how much the programme is now expected to cost until they have agreed a revised schedule to completion and have secured revised contracts with Crossrail Limited’s main contractors. We are therefore not convinced that the £2.8 billion of additional funding will be sufficient to see the programme through to completion. 

Recommendation: The Department must write to the Committee immediately after reaching agreement with Crossrail Limited to outline how it has assured itself that the revised schedule and cost to completion are robust. The Department should also detail how the £2.8 billion of extra funding should be allocated.

The Department and Crossrail Limited’s governance arrangements have been weak and characterised by a catalogue of failures to adequately oversee performance.The Department, as a joint sponsor of the programme with Transport for London, failed to ensure that the governance arrangements it put in place continued to be fit for purpose as the programme progressed. The Department acknowledges that it did not do enough in response to the recommendations in 2014 that governance arrangements should be changed to reflect the programme moving from construction to integrating the elements of the new railway, such as stations and signalling systems. The Department told us that the autonomy it and Transport for London gave to Crossrail Limited hindered their ability as sponsors to understand and challenge progress during the later stages of the programme. This, and Crossrail Limited’s failure to properly report the position of the programme and risks, meant that the Department did not understand the true position of the programme. The Department accepts that its governance arrangements were insufficient to properly capture the risks to the programme as it progressed and that it should have reviewed its governance arrangements several years ago. In the last year, the Department and Transport for London have replaced senior staff responsible for overseeing the programme and added new appointees to the Crossrail Limited Board that have relevant experience. We are not convinced by the Department’s assertion that it stepped up its challenge of the programme in 2018. Crossrail Limited told us that it is now working more closely with sponsors. However, we are concerned that the Department, Transport for London and Crossrail Limited have effectively given up on the previous contractual structure without any sense of clarity on what the new relationship is.

Recommendation: By July 2019, the Department must explain how it has changed its contractual relationship with Crossrail so that it can properly exercise oversight and hold Crossrail Limited to account for its performance managing the programme to completion.

Despite acknowledging that there were major failings in the programme, the Department and Crossrail Limited have been unwilling to accept their responsibilities for the significant delays and cost overruns of the programme. The Department is ultimately responsible for ensuring that the programme delivers value for money for the taxpayer and for the funding it provides to Crossrail Limited. Crossrail Limited’s Board is accountable to the Department and Transport for London for delivering the programme to time, quality and cost. Both the Department and Crossrail Limited identify the compressed delivery schedule and a failure to properly identify risks as the fundamental problem in the programme which led to unacceptable levels of cost increases and delays. They also accept that governance arrangements failed to adequately identify these risks. However, neither are willing to identify who should be held responsible for these failures, and simply assert that there are systems failures. We are entirely unconvinced by this rationale as the Department and Crossrail Limited were responsible for creating and managing the system that enabled these failures to occur. The Department accepts that there was an insufficient level of accountability regarding the amount of money that senior executives were paid within Crossrail Limited. Some of Crossrail Limited’s former executives are paid much more than senior executives in the Department’s arm’s-length bodies to deliver programmes or project of equal weight. These executives were paid to bring expertise into the programme and deliver an operational railway, but failed to do so.

Recommendation: The Department should, as a matter of urgency, write to the Committee clearly articulating what it, Transport for London and Crossrail Limited are responsible and accountable for in relation to Crossrail and what the consequences have been for those senior officials in positions of accountability and responsibility for failures on the programme. We expect this letter by the end of April 2019.