HS2 price increase

[MSS]

Originally Posted by macafee2

How can this be?
Surly companies bid to do the job for a price?
If the price is allowed to go up and up then there is no incentive to get the price right in the first place.

With so many unemployed and in prison don't we have a workforce?
Chain gangs and working for your unemployment money? We also have those that have to do community service.

Is bidding below the actual price a deliberate ploy, are back handers being taken?

macafee2

I am going to break my self-imposed withdrawal from this forum section in order to give the answer that your question, the basis of which is fundamentally flawed IMHO, deserves.

Firstly, whether a company bids a price/timescale against a requirement is dependent on the basis of the contract. It is all to do with uncertainty and risk and where the associated impacts are to be absorbed contractually. To use the terminology of a famous American, all major programmes have known knowns, known unknowns and unkown unknowns. These define the risk profile of the programme. Fixed price contracts can only really deal with the known knowns as the timescale and cost of these can be estimated with a degree of certainty. The timescales and costs associated with the other two categories cannot be estimated for obvious reasons. If a bid process requires fixed-price and timescale bids, the bidders have no option but to include maximally pessimistic timescales and prices in their bids for the unknowns thus making the whole process unviable.

HS2 is following best practice for large programmes in that there is the government's high-level estimate of the likely overall cost but individual contracts are placed as the unknowns turn into knowns. As this happens, the overall high-level estimate is regularly updated. I can guarantee that the estimates will change again many times before the HS2 programme is completed.

Had a single fixed price/timescale HS2 contract been placed at the outset, I would guess that the estimated cost would have been 2-3 times the current estimate in order for the bidders to manage the cost of the unknowns. Fixed price/timescale contracts just do not work for large/complex programmes.

Let's deal with some of the points that have come up in response to the OP.

1. Changing requirements - a major programme is unlikely to produce a useful outcome unless its requirements evolved (under strict change control) during the course of the programme. Take the requirements for the self-protection platforms on a new warship design. This would probably be a programme of circa 10-year duration but no one really knows in detail the offensive capabilities that the Russians and the Chinese will be fielding on their anti-ship weapons in 2-3 years time let alone when the ship build is nearly complete 10 years down the line. The requirements have to evolve as time progresses. The maturity of a programme's leadeship framework is best indicated by how it manages changes to requirements.

2. MOD programmes and associated over-charging. Let's take the example of the water-proof switch that has been cited. A switch offering this capability from a DIY chain and costing £5 carries the risk that if faulty a house could burn down and perhaps 1 or 2 occupants die. Cost of the house say £250k plus the claim for the occupants. If a ship catches fire whilst out at sea, the cost could be £1billion plus say 100 deaths. The testing and qualification that such a switch would undergo before being fitted in a ship and the post-fitting qualification would take weeks of work. Then there is the cost of teh associated insurance to cover the risk should the worst occur. You can hopefully see a picture emerging.

This is similar to purchasing a SMPS for the processor element of a core node in a telecomms network. For a home PC, the cost of the SMPS would be £50 to £100 depending on the spec. For a core node, it would be £5k to £10k. It's all to do with the impact of failure and associated cost - imagine even a broadband edge node going down during the Olympics due to SMP failure.

3. Whether the UK needs programmes such as HS2 - I would say we need more of these mega programmes in order to put the population to productive work instead of paying large percentage of the population for being on the dole or worse still becoming professional critics.

The UK runs all its major government programmes in accordance with the government's (formerly championed by OGC) MSP methodology. This is good enough that it is used on most non-government infrastructure programmes e.g. UK's major telecomms infrastructure programmes and has been adopted across the world. I would recommend a read of the MSP manual to gain appreciation of best practice in estimation strategies for major programmes etc. Better still, get trained and then take the exams and years of programme delivery to become an accredited practitioner (like moi ).

Link to methodology publications. https://www.gov.uk/government/public...nment-commerce

IMO our problems are not with perceived cost overruns and delays (they are actually updates to estimates) to major programmes, but the perceptions created by armchair experts who critique and criticise everything without having an in-depth understanding of anything of practical value.

Finally, here is a list of some major programmes that were considered by the critics and auditors to be over budget, delayed and representing poor value for money.

F15 fighter

B1 Bomber

Sukhoi Su27/30/35 fighter

AMRAAM missile

Eurofighter

They have all gone on to achieve "best in world" and "most effective weapon of its type and time" status.

[macafee2]

mss, you spent a lot of time on that

how many job are unfulfilled and how may eligible people are on the "dole"
You think all these projects will clear the dole queue, lol, no it wont.
Where do you get the money from to keep financing these projects?


macafee2

[MSS]

Originally Posted by macafee2

mss, you spent a lot of time on that

how many job are unfulfilled and how may eligible people are on the "dole"
You think all these projects will clear the dole queue, lol, no it wont.
Where do you get the money from to keep financing these projects?


macafee2

Source of money - the same place we get the money to pay people whilst doing nothing productive. In the UK, there is little difference in the cost to the taxpayer of someone who is unemployed and on benefits vs another in employment and paid a living wage. The difference is that one delivers a positive benefit thus reducing the effective cost to the country whereas the other does not.

As for the rest, we could easily take all the unemployed technicians, engineers and scientists out of unemployed status and into employment.

To argue that it will not clear the dole queue is absurd. If the state funded mega projects reduce the unemployment numbers by 10% - by taking people out of unemployment and into employed status that pays a living wage, surely it is worth doing?

Addendum: Yes - I did spend some time on my post #22 above. I felt it appropriate to highlight that whilst expertise in say carving candle holders, advising people on how to manage their finances whilst on the dole, take on small businesses to screw a few hunderd £ out of them or indeed be a buyer dealing with £20k contracts are worthwhile careers, they do not necessarily equip a person to carry out critical analysis on the "value for money" delivered by major infrastructure programmes.

I shall leave it there for the debate to continue.

[macafee2]

Originally Posted by mss

Source of money - the same place we get the money to pay people whilst doing nothing productive. In the UK, there is little difference in the cost to the taxpayer of someone who is unemployed and on benefits vs another in employment and paid a living wage. The difference is that one delivers a positive benefit thus reducing the effective cost to the country whereas the other does not.

As for the rest, we could easily take all the unemployed technicians, engineers and scientists out of unemployed status and into employment.

To argue that it will not clear the dole queue is absurd. If the state funded mega projects reduce the unemployment numbers by 10% - by taking people out of unemployment and into employed status that pays a living wage, surely it is worth doing?

Addendum: Yes - I did spend some time on my post #22 above. I felt it appropriate to highlight that whilst expertise in say carving candle holders, advising people on how to manage their finances whilst on the dole, take on small businesses to screw a few hunderd £ out of them or indeed be a buyer dealing with £20k contracts are worthwhile careers, they do not necessarily equip a person to carry out critical analysis on the "value for money" delivered by major infrastructure programmes.

I shall leave it there for the debate to continue.

I get to the point with your posts that all I want to do is toy with you.
Your post supports what I said, it wont clear the dole, thank you.
Why call it obscured then say only 10% which supports what I said??????
Sorry, being dyslexic I did not see where you answered the question about how many jobs are unfulfilled, could you repeat the answer?



macafee2

[trebor]

[75RogP]

Originally Posted by mss

Source of money - the same place we get the money to pay people whilst doing nothing productive. In the UK, there is little difference in the cost to the taxpayer of someone who is unemployed and on benefits vs another in employment and paid a living wage. The difference is that one delivers a positive benefit thus reducing the effective cost to the country whereas the other does not.

As for the rest, we could easily take all the unemployed technicians, engineers and scientists out of unemployed status and into employment.

To argue that it will not clear the dole queue is absurd. If the state funded mega projects reduce the unemployment numbers by 10% - by taking people out of unemployment and into employed status that pays a living wage, surely it is worth doing?

Addendum: Yes - I did spend some time on my post #22 above. I felt it appropriate to highlight that whilst expertise in say carving candle holders, advising people on how to manage their finances whilst on the dole, take on small businesses to screw a few hunderd £ out of them or indeed be a buyer dealing with £20k contracts are worthwhile careers, they do not necessarily equip a person to carry out critical analysis on the "value for money" delivered by major infrastructure programmes.

I shall leave it there for the debate to continue.

That is an absolute insult to candle holder carvers!!! My career was never as worthwhile as that.

[mileshawk56]

Maninder. your point is the the contractor can at any time increase the money they want because what? they got their sums wrong? they didn't bother to use the best information to get them right? they knew they could rely on some strange Kafkaesque protocol to pull the wool over the customers eyes? Im afraid the reason is they knew they could get away with it because they and others had done so in the past and it was taxpayers money. It is not logic at work just gooblygook. Chris S.

[wraymond]

The system relies on the ignorance of the buyer and the expertise of the seller, not dissimilar to the motor trade.

Politicians are usually from backgrounds of personally non-competitive administrative sinecures and then inured environments where the only experience gained is one of avoidance of blame or responsibility.

Invariably they are periodically removed from their positions into sideways bolt-holes. They then often find directorships in the very industries they have previously 'advised'.

Not that I'm in any way cynical of course, but their venal servitude rarely ends with penal servitude. I've known several socially and remain (can one still use that word?) suspicious of that patronising and terminally fixed smiling gaze thro' shuttered lids. The undead.

[MSS]

Originally Posted by mileshawk56

Maninder. your point is the the contractor can at any time increase the money they want because what? they got their sums wrong? they didn't bother to use the best information to get them right? they knew they could rely on some strange Kafkaesque protocol to pull the wool over the customers eyes? Im afraid the reason is they knew they could get away with it because they and others had done so in the past and it was taxpayers money. It is not logic at work just gooblygook. Chris S.

Christopher, the point is that whilst people talk about "the contractor", there isn't one. HS2 Ltd is a public body set up by the government to deliver the HS2 programme. It is a company limited by guarantee and effectively another government department. HS2 Ltd run the HS2 programme with responsibility for planning and execution as well as budget accountability. They award contracts as the need arises and I believe by the time the programme is completed over 200 individual contracts will have been awarded. So, ultimately, the responsibility for any and all aspects of the programme rests with a government body as opposed to a "contractor".

You could argue whether this is the best governance model, and I would argue that it is the only viable model for a programme the scale and complexity of HS2.

[AndyN01]

The folks who actually know what they are talking about aka designers, engineers, technicians, etc. etc, are simply ignored by the folks at the top of the tree making the decisions.

How could that ever happen? Surely the tree tops couldn't possibly be so lacking in common sense (aka stupid ) as to ignore what the people who actually do the job day in, day out, for decades - could they

Now that wouldn't happen in, say, an actual business where duff decisions cost money and possibly the company itself - could it .

You know, something like car production.

Andy