Why are things so expensive?

[Viper]

NR absolutely need to make use of external consultants all the time as they don't have the ability to provide every requirement of a project in house; NR aren't a construction company. Even before you start building you need feasibility studies, ground condition reports, ecology studies etc. Then you need all the different levels of design, then finally the construction.

A lot of aspects will be procured via frameworks which have been competed and have ceiling rates, to control costs. Each requirement then needs to be competed for (depending on many different criteria) which then gives you another element of ensuring value for money.

Sure, a railway project is likely to cost more than a high street project due to the additional engineering/assurance requirements, but there are plenty of requirements which can, and are, provided by non-rail contractors as well.

 

[eldomtom2]

This isn't true though is it? Certainly elements can be standardised, and this increasingly is the case now with modular buildings, although some of the highly-standardised new stations look absolutely horrendous and aren't at all enjoyable things to use or look at, such as Thanet Parkway.

But that's not due to the concept of standardised stations...

Now sure you could say "But they should have that capability in house" - and then no doubt you'd be the first to complain about employing huge numbers of staff who are poorly-utilised...

As I've said in this thread, others have stated that lacking in-house capability is a key driver of high costs.

 

[DarloRich]

(a whole large house can be built for £250k),

Paging @Bald Rick

It is hard to build a house for £250k when you need to build it in lane 3 of the M25 with the M25 open to traffic at all times.

 

[birchesgreen]

Paging @Bald Rick

It is hard to build a house for £250k when you need to build it in lane 3 of the M25 with the M25 open to traffic at all times.

Sutton Park line isn't exactly Clapham Junction.

 

[DarloRich]

Sutton Park line isn't exactly Clapham Junction.

no, but the same principles still apply if the line is open.

 

[birchesgreen]

no, but the same principles still apply if the line is open.

Its the sort of line you could close for a few days at a time without a huge amount of disruption, at least compared to a lot of others.

 

[DarloRich]

Its the sort of line you could close for a few days at a time without a huge amount of disruption, at least compared to a lot of others.

ok - that still isn't free though. The cost/penalties or implications for the network must have been unacceptable for it not to be closed.

 

[The Planner]

Its the sort of line you could close for a few days at a time without a huge amount of disruption, at least compared to a lot of others.

You still have to align all the other possessions, including the standard opportunities, and shift them about if needs be. Its not as easy as you think with the Sutton Park, there are several freight flows you cannot easily divert. You need to keep the Trent Valley open as well as other routes.

 

[eldomtom2]

ok - that still isn't free though. The cost/penalties or implications for the network must have been unacceptable for it not to be closed.

The problem is that the current system clearly isn't working. You can't shrug your shoulders and say "that's how it is" to everything as costs continue to rise.

 

[birchesgreen]

You still have to align all the other possessions, including the standard opportunities, and shift them about if needs be. Its not as easy as you think with the Sutton Park, there are several freight flows you cannot easily divert. You need to keep the Trent Valley open as well as other routes.

Well I didn't say it was easy, i said (or implied anyway) it was easier.

 

[DarloRich]

The problem is that the current system clearly isn't working. You can't shrug your shoulders and say "that's how it is" to everything as costs continue to rise.

I am not. I am simply saying that's the situation on the ground. However, by the same token you cant just say things aren't working, shrug your shoulders and walk away muttering.

What would you do to change it? What is your alternative position?

As as PS I will say that things are expensive. Skills, tools and experience don't come cheap. The quotes for getting a new shower fitted in my house are outrageous. The costs for scaffold when I got my roof fixed were VAST and I commissioned the cheapest firm I could find. I have a two bed terrace on a quiet street not a mansion!

 

[eldomtom2]

I am not. I am simply saying that's the situation on the ground. However, by the same token you cant just say things aren't working, shrug your shoulders and walk away muttering.

What would you do to change it? What is your alternative position?

Obviously I am not an expert, but as you will note I previously posted an academic study in this thread who's findings may be a starting point for discussion.

As as PS I will say that things are expensive. Skills, tools and experience don't come cheap. The quotes for getting a new shower fitted in my house are outrageous. The costs for scaffold when I got my roof fixed were VAST and I commissioned the cheapest firm I could find. I have a two bed terrace on a quiet street not a mansion!

"Things are expensive" is a copout. Why is railway construction more expensive in the UK compared to other European countries?

 

[Starmill]

But that's not due to the concept of standardised stations...

It certainly is in part.

As I've said in this thread, others have stated that lacking in-house capability is a key driver of high costs.

What others? On what evidence?

The problem is that the current system clearly isn't working. You can't shrug your shoulders and say "that's how it is" to everything as costs continue to rise.

Nobody's doing that. Network Rail have great room for improvement. Indeed they're actually bringing more staff on the payroll actively in various parts of the business where they think in-house now has the scale to be cheaper.

But realistically a lot that room will only be realised through economies of scale. Such scale isn't possible when you're not given a bigger capital budget. For the next control period I'd argue that maintenance and renewals are in dire need of economies of scale and that clearly some central government funding should be diverted towards that. Inevitably this would mean deferrals to some enhancements because you can't just keep growing both, and it's much more important to get the railway you have working more efficiently than adding new capabilities to it is.

It's simplistic and wrong to just go "boo hoo lawyers and consultants" in the same way it's simplistic and wrong to just go "boo hoo health and safety law".

 

[43066]

Well unless the consultants regualrly starve to death, they are still poorly utilised, its just that the payments are concealed in inflated at-point-of-use fees rather than being transparent.

This reads as if it’s been written by someone who has no understanding of what consultants actually do, or why they’re necessary.

 

[HSTEd]

This reads as if it’s been written by some who has no understanding of what consultants actually do, and why they’re necessary.

Well what consultants do is make money for the people who own the consultancy.
They are often necessary to provide specialied engineering expertise that the people who hire them lack.

Unfortunately it is increasingly common for consultants to be used as an attempt to off-board risk (or blame for risk!) and project management from the public sector, resulting in hugely inflated costs.
This effect is especially prevalent in my own industry (the nuclear industry).

 

[Starmill]

"Things are expensive" is a copout. Why is railway construction more expensive in the UK compared to other European countries?

Same reasons it's more expensive in the US than the UK.

 

[HSTEd]

Plainly. But Network Rail aren't TOCs, they don't just fritter money away on things because that's how they've always done it. They make use of consultants where it's cheaper to do so than use in-house specialists. Why do you have a such a problem with that?

Frittering away money due to an institutional desire to avoid innovation is hardly a phenomenon contained to the TOCs in the modern railway!

 

[Starmill]

Well what consultants do is make money for the people who own the consultancy.

Nobody's disagreeing with that though are they?

I'll let you into a little secret. One of the people who makes money from selling their consultancy services is... Network Rail!

Frittering away money due to an institutional desire to avoid innovation is hardly a phenomenon contained to the TOCs in the modern railway!

You've got no evidence there's an "institutional desire to avoid innovation". It's just a soundbite you've made up to try and make yourself sound clever.

 

[43066]

Unfortunately it is increasingly common for consultants to be used as an attempt to off-board risk and project management from the public sector, resulting in hugely inflated costs.

How do you know it’s resulting in “hugely inflated costs”? It might well be more expensive to retain the expertise in house, and therefore prove cheaper to outsource certain projects.

 

[HSTEd]

Nobody's disagreeing with that though are they?

No, but the corollory of this statement is that consultants are never to be fully trusted.
If the most efficient way for the consultancy to make money is not the solution with the best value for the taxpayer, sucks to be the taxpayer.

Consultants are always inferior to in house personnel in this respect, because at least the latter aren't actively incentivised to go against the public interest.

I'll let you into a little secret. One of the people who makes money from selling their consultancy services is... Network Rail!

Is that relevant?

 

[Starmill]

No, but the corollory of this statement is that consultants are never to be fully trusted.

What a weird thing to say. They can be trusted to deliver what you pay them to deliver. Otherwise they'd go bankrupt very quickly.

Is that relevant?

Clearly it is because it shows the public sector often benefits from the market mechanism you're saying is bad for "taxpayers" - both TfL and Network Rail have exported consultancy services profitably.

 

[HSTEd]

What a weird thing to say. They can be trusted to deliver what you pay them to deliver. Otherwise they'd go bankrupt very quickly.

They can be trusted to appear to deliver what you pay them to deliver.
Unfortunately meaningful oversight of their work is extremely difficult - because if you had the expertise to truly understand their work you probably wouldn't have needed them in the first place!

Clearly it is because it shows the public sector often benefits from the market mechanism you're saying is bad for "taxpayers" - both TfL and Network Rail have exported consultancy services profitably.

It is bad, for the taxpayers who are paying.
Those just aren't British taxpayers in that case.

 

[43066]

No, but the corollory of this statement is that consultants are never to be fully trusted.

So you don’t trust any profit making organisation to deliver the services it offers? That seems like a most bizzare viewpoint.

 

[HSTEd]

So you don’t trust any profit making organisation to deliver the services it offers? That seems like a most bizzare viewpoint.

Ultimately any profit-making organisation exists to make profit, not to deliver services.
If delivering faulty services is calculated to make money more efficiently, they will do that.

The only duty such an organisation holds is to its shareholders.

As an example of this in action see the Pinto ("unsafe at any speed") scandal.

 

[Starmill]

It is bad, for the taxpayers who are paying.
Those just aren't British taxpayers in that case.

You're fundamentally wrong about this, and I think it's because your experience has been coloured negatively by the work you do on nuclear energy etc. I don't think we can continue to debate it here because it's taking over the thread, but you're clearly not familiar with the groups of consultants whom Network Rail, and the other British and Irish infrastructure authorities, frequently refer to for their specialist work. I'll leave it there.

If delivering faulty services is calculated to make money more efficiently, they will do that.

You've got absolutely zero evidence of a consultant providing faulty specialist services (deliberately or otherwise) to Network Rail or another rail infrastructure operator. None at all. You're just making things up.

 

[43066]

Ultimately the profit-making organisation exists to make profit, not to deliver services.

But any such organisation only makes a profit by delivering services. If it fails to do so, or fails to deliver services of sufficient quality, it will go bust in short order.

The only duty the organisation holds is to its shareholders.

Not true. It also owes contractual obligations to those paying for its services.

 

[Starmill]

The only duty the organisation holds is to its shareholders.

Erm, no they don't? They have a duty to follow the law!

 

[Bald Rick]

to answer the OP…. the estimate includes a lot more than just the station, and will include inflation to when the project is complete.

One issue is that we pay people in construction a lot of money. I‘m being quoted well over £500/day for a plumber, for example.

Id be surprised if ‘consultants‘ - which will include the designers, planners, environmental management, etc etc will be more than 10% of the total.

I‘d also like to who would build a ‘whole large house’ for £250k.

 

[43066]

One issue is that we pay people in construction a lot of money. I‘m being quoted well over £500/day for a plumber, for example.

Same here for a decorator, albeit that includes materials, and isn’t just labour.

Ultimately we’ve become too used to paying too little for many services in this country, in no small part due to the bottomless pit of cheap labour created by free movement, that has now come to an end.

 

[Deepgreen]

On top of all this, it is widely known that working as railway contractor in the UK allows cost estimating and charging according to whim. Despite this, so many projects still come in hugely over budget.