How much does it cost to build a railway?

Your questions answered

In our 2019 consultation, we consulted on five route options for the Central Section of East West Rail between Bedford and Cambridge. The consultation Technical Report provided indicative upfront capital costs for each option whilst also explaining that further technical work was in progress to enable these to be refined.

When the preferred route option – Route Option E – was announced in January 2020, we provided updated cost estimates based on the further work that had been undertaken. Again, these were for the indicative upfront capital costs for each route option.

We know this is an area which interests people and we have received a number of questions from members of the public about how the indicative cost estimates were generated, so we have published the relevant technical assessments and this note provides some further explanation as to how they fit together.

Network Rail 2A-2F Reports

Network Rail Bedford Midland Cost Drivers Briefing Paper

East West Rail Central Section Options - Cost Estimate Report

 

FAQs

    We worked with Network Rail for several years to develop and drive forward the new and upgraded railway between Oxford, Milton Keynes, Bedford and Cambridge. As part of this, Network Rail prepared a series of reports – referred to as Phase 2A to Phase 2E – which provided cost estimates as the emerging route options were refined.

    East West Rail is a nationally significant infrastructure project and the section between Bedford and Cambridge alone is approximately 50km long. For linear projects of this scale, it is not feasible to prepare full end-to-end designs for every single option. Instead, the route is divided into smaller 'segments', each of which will be used to generate indicative cost estimates, which can then be joined together to create an overall estimate for each end-to-end option. Some segments might be used as part of more than one end-to-end option.

    The indicative estimates for upfront capital costs for each route option in the 2019 consultation were derived from the Network Rail Phase 2E report. The segments used for each route option are summarised in the table below:

     

    Reference (2E) Route Reference
    A1 A
    A3Cam B
    E4 C
    SN4 D
    Cam2 E
       

    In these areas, the new railway between Bedford and Cambridge will be connecting onto the existing railway network. Consequently, the approach taken to these additional costs in preparing the indicative estimates of upfront capital costs was slightly different because the upgrade works in question are broadly the same no matter which route option is selected.

     Consequently, once the segments for the section between Bedford and Cambridge had been added together, we added a standard allowance of £0.34bn for upgrades to the Marston Vale Line.  We also deducted a standard allowance of £0.04bn from the totals for route options A, C and D to reflect that fact that – whilst the Phase 2E figures assumed that a new station would be built at Bassingbourn – this was not carried forward as an assumption for the baseline in the 2019 consultation itself.

    These cost estimates were generated in the same way as for the figures in the 2019 Technical Report; that is to say:

    1. Price each segment between Bedford and Cambridge;
    2. Combine the segments for each route option; and
    3. Add on the standard extra costs for the additional works common to all route options.

    As described above, the cost estimates used in the 2019 Technical Report were based on the Network Rail Phase 2E figures, but this formed part of a wider body of on-going work to refine the estimates. The refined estimates were set out in the Phase 2F report which was produced by Network Rail after the 2019 consultation and took account of additional information such as geotechnical analysis carried out to see how practical it would be to re-use excavated soil to construct embankments.

    As a result of the further work that Network Rail undertook, the upfront capital cost estimates for all of the route options were updated. Consequently, the order in which the options 'ranked' relative to the others also changed between the Phase 2E and Phase 2F reports.

    We also commissioned a separate set of cost estimates from a firm of independent external consultants – Atkins – to verify the refined Phase 2F figures. This second set of cost estimates – which considered each route option on a consistent basis using the same methodology – 'ranked' the route options in broadly the same order as the Phase 2F report, albeit the Atkins estimates were somewhat higher than the Network Rail Phase 2F estimates.

    In preparing their cost estimates, Atkins took a more conservative approach to considering flood plains, environmental factors and other constraints and did not include value engineering options. As a result, the overall total estimate for each Route Option was higher than in the Phase 2F report. Consequently, taking a prudent approach, we decided to use the more conservative Atkins figures as the basis for the indicative cost estimates published in the 2020 Preferred Route Option Report. As the order in which the Route Options 'ranked' in both the Atkins and Phase 2F reports is broadly consistent the choice to use the Atkins figures over the Phase 2F figures had no material bearing on the preferred route option selected.

    By using the higher figures, it also means that the risk of further increases in cost estimates at a later stage of project design or implementation is reduced.

     

    The table below summarises the relevant figures for each route option taken from page 8, Summary, of the EWR Cost Model Iss1.3:

    All figures £bn, 2019 rates

    Route
    Option
    Indicative upfront capital costs (2019)* Marston Vale Line Shepreth Junction MOD Bassingbourn Oxford Station TOTAL Preferred Route Option Report (2019)
    A 2.641 0.500 0.100 0.250 0.075 3.57 3.6
    B 3.210 0.500 0.100 0 0.075 3.89 3.9
    C 3.330 0.500 0.100 0.250 0.075 4.26 4.3
    D 3.085 0.500 0.100 0.250 0.075 4.01 4.0
    E 2.973 0.500 0.100 0 0.075 3.65 3.7

    By way of explanation:

    • column 1 lists the five route options – A to E;
    • column 2 gives the indicative upfront capital cost estimate for each route option between Bedford and Cambridge;
    • column 3 adds on the standard allowance for upgrade works to the Marston Vale Line – this is the same for all route options;
    • column 4 adds on another standard allowance for the new connection to the existing railway near Shepreth Branch Junction – this is the same for all route options;
    • column 5 includes a standard allowance for costs associated with the relocation of MOD Bassingbourn – this does not apply to route options B and E because they go via Cambourne instead of Bassingbourn;
    • column 6 adds on a further standard allowance for upgrade works to Oxford station – this is the same for all route options;
    • column 7 gives the total estimate for each route option (rounded to 2 decimal places); and
    • column 8 gives the costs estimates published int eh 2020 Preferred Route Option Report (which were rounded to 1 decimal place).

    This is correct. For convenience, the table below summarises the price base year for each document published by EWR:

    2019 Technical Report

    2010 prices

    2019 Consultation Document

    2015 prices

    2020 Preferred Route Option Report

    2010 and 2019 prices

    The reason why the cost estimates were converted into 2010 prices for the 2019 Technical Report and the 2020 Preferred Route Option report is because the Treasury guide for assessing the value for money of transport projects – sometimes called 'The Green Book' – requires us to use a standard base year of 2010 to ensure that the figures are directly comparable.  For example, comparing costs in 2015 prices with benefits in 2010 prices would be misleading because it doesn't take account of inflation.

    The process of converting prices from one base year to another is called 'indexation'. The same indexation method was used to convert the cost estimate for each route option.

    When comparing figures it is important to ensure that comparisons are made in the same price base.