A3.3 | Delivering better capability will involve risks, and associated costs that may be borne partly by LUL

The delivery of better capability across the life of the contracts will depend on whether the Infracos manage successfully the risks involved in completing the line upgrades and renewals. One such risk is the intention to move to new transmission based signalling systems on each of the Jubilee, Northern and Piccadilly lines. An ambitious technological advance involving the adoption of moving block signalling proved not to be possible for the earlier, pre-PPP Jubilee Line Extension project and contributed to the £1.4 billion of cost overruns (at outturn prices), or 67 per cent more than the original cost estimate, and time delays on the project of almost 2 years. Tube Lines acknowledge the need to manage the risks of introducing new technologies and if it can demonstrate that it has behaved "economically and efficiently" then additional costs to deliver over a threshold will be borne by LUL.

Figure 6 shows how key risks are allocated under the contracts. Infraco liabilities are capped if they experience significant cost overruns while operating "economically and efficiently" - see Section C1 for more on this.