Taking the high speed rail 2 (HS2) link project to completion will require dedication and strict governance, explains Will McWilliams.
Following the positive announcement for the high speed 2 rail link from London to Birmingham, Manchester and Leeds, it was inevitable that it would be accompanied by proposed changes to how the project will be managed and implemented.
The publication of the Oakervee Review on 11 February and the go-ahead announcement highlighted the many challenges that still lie ahead in successfully delivering the project. Not least, ensuring the costs are controlled and minimised, and appropriate governance arrangements are in place to deal with the complexity and changing nature of a long-term project the size of HS2.
Assembling the appropriate governance model will be key in the successful delivery. Thankfully, there are examples of large projects that had similar challenges for us to learn from.
The increasing challenge of high speed rail 2
It was recognised in the Oakervee Review that HS2’s governance arrangements “need to be reconsidered and strengthened to reflect the project’s complexity and scale as it moves to the next phase of development1”. “The overall governance of the HS2 project within government needs to be strengthened to contribute, support and assist HS2 Ltd rather than be a burden2.”
As part of the government’s announcement, new delivery arrangements are to be put in place that would result in HS2 Ltd being re-organised into three separate elements:
1 Phase 1 and 2a from London to Birmingham and Crewe
2 Phase 2b being the top of the ‘Y’ to Manchester and Leeds
3 The construction of the station at Euston
Given that each of these will have their own management team and run as separate parts of the overall project, additional internal and external interfaces will be introduced. This includes the existing railway and a potential national rail body, highlighted as a lead option in the Williams Rail Review3. This is in addition to the co-ordination required to ensure the high speed rail 2 link is planned as part of the national rail network, including new infrastructure investments in the midlands and the north.
All this will make the governance even more challenging. The new dedicated minister that will be appointed to oversee the development of the project will need to be mindful that the benefits are the sum of its parts.
Governance is critical to control the evolving HS2 mega-project
The HS2 project will take 30 years from its inception in 2009 through to the anticipated completion in 20404. Over this time, the project will go through different phases with different priorities, risks and focuses, with the government desiring tight control over costs.
A governance framework is needed to allow the anticipated economic benefits of the project to be delivered, but what should its focus be? There have been many recent examples of a framework developed around existing structures and processes becoming inflexible and not focused on the benefits that should be delivered. The issues surrounding all of these projects originated with a lack of focus on the business case and the benefits being delivered.
A governance framework driven by the business case
The HS2 project will be considered successful if the economic benefits envisaged are delivered and the costs of doing so have been controlled. While HS2 is unique in its size and complexity, it is not unique in the elements defining success, and as such, lessons should be learned from other large projects.
One such project that experienced some of the challenges that HS2 is experiencing is the West Coast Mainline (WCML) upgrade5, which had an original budget of £2.5 billion in 1998 that increased to £14.5 billion by May 2002. The Strategic Rail Authority (SRA) was asked to take control, and with Network Rail, turned the project around and delivered it at a lower cost than the latter forecast.
The business case played a critical part in the turnaround. Once re-issued in 2004 by the SRA, it was kept constant and used as a base against which to track the project. The final cost being approximately £9 billion6.
The business case provides a consistent point of reference
With the longevity of HS2 and the inevitable change over time in people and delivery bodies involved and changing phases of the project, both with the construction and operation, any governance framework will need to be flexible and able to handle changes to the project. To do this, a constant point of reference is needed. The business case provides that reference point and the governance framework should be driven by the economic benefits and not the other way around.
Unfortunately, in many major projects, the business case is seen as a hurdle over which to jump with a collective sigh of relief from the project team once it has been approved, after which it then gathers dust in the project library. All too often, a governance framework is developed almost in isolation from a project and based on the structure in place at the time.
As shown in our study of governance practices of the FTSE 350 companies over a 10-year period to 20177, strong corporate governance provides the conditions to add value by driving decisions and the focus of resources towards delivering the benefits envisaged.
The right team and the right culture will deliver
Of course, governance goes beyond just a framework. It’s people who deliver projects and people at all levels that make it a success. The government’s service design manual recognises this within its governance principles for agile service delivery8.
People will inevitably come and go as the project evolves and different skill sets and capabilities are needed, but the culture of an organisation should endure. Embedding a culture aligned with strategic goals has huge benefits, but getting there takes time and commitment9 and if the culture within an organisation is wrong then the project is at risk.
To find out more about the role of business cases and driving benefits through governance frameworks, contact Will McWilliams.