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Friday, December 18, 2009

Will Tube Lines hand back Tube contract?

Yesterday the Rail Arbiter favoured the London Underground and said that Tube Lines' estimate to complete line upgrades was higher than it should be. Chris Bolt
said "I have reviewed carefully the submissions from Tube Lines and London Underground, and taken expert advice. On the basis of my analysis, I consider that a company operating in an overall efficient and economic manner and in accordance with Good Industry Practice – the test in the PPP Agreement – could deliver its obligations at a substantially lower cost than projected by Tube Lines, though not as cheaply as suggested by London Underground."

Tube Services at Risk

He's come in with a middling figure of £4.4 billion, whereas Tube Lines wanted £5.75 billion and London Underground believed they should do it for £4.0 billion.

This is only a draft decision though and Tube Lines sound like they might prepared to walk away from the contract. In a press release on their site, they said that the arbiter agrees that London Underground are a "difficult client" to work with.

Currently they say it will be difficult to complete the work at lower figure proposed. Dean Finch, Tube Lines' Chief Executive said "The Arbiter has acknowledged even at this level that LU has a stark choice to make - either to do less work or raise additional finance. However, this document is a draft and we have a further six weeks to make representations which we will do robustly."

Engineering Work by kpmarek

So what will happen if the arbiter sticks at £4.4 billion? What if London Underground still say they're not prepared to pay more than £4 billion? Is Boris going to wade in and demand that it's completed at that price? Will Tube Lines seriously walk away from the contract? If so what does that mean for us commuters? Even more delays to the Jubilee Line work? Any improvements on the Northern Line by 2012? Questions, questions, questions.


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