NUPHOENIX

Case Study 1 – HS2

The High-Speed Link 2 (HS2) is a rail megaproject to connect London to Birmingham. Sponsored by the Department of Transport, the project is being constructed by HS2 Limited, under a quasi-EPC contract. The project was commenced in 2019 and revised planned completion 2033, However, currently due to the many uncertainties on the project no definite completion date is available.

HS2 Supply Chain
The problems associated with this project are well known as it has become one of the most controversial construction projects in the UK. Originally, the high-speed link was to be London – Birmingham – Leeds, but due to various reasons the section from Birmingham to Leeds was shelved. However, for the purpose of this case study, the emphasis with be on the HS2 supply chain issues.
In the early years of the project, the procurement strategy was notably deficient. The supply chain problems began with the effect of Brexit, the outbreak of COVID-19, and the outbreak of the war in the Ukraine. All of these events completely decimated the HS2 supply chain leading to severe labour and material shortages.

Uncontrolled Supply
Chain Notwithstanding these external impacts, HS2 has also been the victim of internal supply chain issues which, together with the external events, have led to significant cost overruns, and severe delays. The HS2 procurement policies in contracting its suppliers has been, to say the least, inept at keeping control of the spiralling budget. The suppliers it was far too easy to jump onto this so-called gravy train, the HS2 procurement management did not incentivise the suppliers’ contracts to deliver materials and equipment at lower prices.
HS2 has been unable to find the correct level of project management and procurement expertise internally and within the supply chain with the capability of managing a megaproject of this complexity. Project control measures were not put in place and as a consequence productivity suffered compounding the project delay.
HS2 failed to monitor its suppliers along the entire supply chain, this is demonstrated by one example where it was alleged that a labour supply company had committed fraud against HS2 and the British taxpayers. Had HS2 implemented a tighter control on its suppliers by integrating the supply chain, this may not have happened.

Incomplete Design
Another problem for the management of the supply chain was that the construction started well before the detailed design was completed and HS2 had finalised all the required planning consents along the route. Many changes had to be made to the design and the route which again increased the costs and compounded the delays.

Ineffective Risk Management
Finally, the single most damaging effect a fragmented supply chain has had on the project is the apportionment of risk between HS2 and it supply chain. There have been some 2000 companies involved in the HS2 supply chain, these companies have provided a great deal of different services however, they have never been held accountable for the cost or quality of their products. This huge number of dispersed suppliers has been totally unmanageable, because the project and procurement management where never in control of quality or cost.

Project Reset
Recently, the Department of Transport have ordered a so-called project re-set. Steps have been put in place to form a supply chain collaboration unit, working closer with the larger supply chain partners to manage demand and supply of key materials and equipment. Risk apportionment and monitoring unit between HS2 and the supply chain partners has been set up in order to become more adept in risk management. Greater collaboration with suppliers is also being championed with HS2, sharing information and innovation.
There has been a “definite shift” in the productivity of the High Speed 2 (HS2) project during the last year of programme reset and it is targeting completion of civils works in four years, according to HS2 Ltd construction delivery director Alan Morris. The programme to build the UK’s new high-speed rail line has repeatedly seen timescales slip and budgets blown in recent years, leading to the appointment of new HS2 Ltd CEO Mark Wild last year. In December 2024, the Department for Transport (DfT) confirmed that the project was undergoing a full programme reset under Wild’s guidance. This process aims to re-baseline HS2’s timeframe and budget in tandem with increasing productivity. (New Civil Engineer, Oct 25)