15 The Agency, taking account of the initial result of trials for hard shoulder running and acting on legal advice, did not pursue potentially cheaper variant bids for this technique. Private finance projects usually define the outputs required allowing flexibility over the solution. The Agency, in its 2005 procurement advertisement, had specified only widening. It considered it was unable to ask for bids on hard shoulder running until it had obtained robust trial data and identified appropriate operating and engineering standards. In 2007, one of the bidders wanted to submit a hard shoulder running option. The Agency was initially interested in exploring this option with all bidders, but decided not to. Its decision was based on: legal advice that such a change risked exposing the Agency to legal challenge; and results from the initial trials of hard shoulder running on the M42 which the Agency considered did not give compelling evidence for using hard shoulder running.
16 The initial trials indicated that there would be a loss of benefits from hard shoulder running, compared to widening, although there was variation in these results. Using the technique at 60 miles per hour would secure 80 per cent of the benefits of widening, but at 50 miles per hour only 35 per cent. The Agency did not have a detailed assessment of the benefits that would arise when using the technique on the M25 sections that it was widening. It doubted, however, the technical suitability of hard shoulder running for one of the two sections which had high traffic flows. The Agency reached a similar conclusion in 2008 when the new Secretary of State requested reassurance from the Agency that motorway widening remained the best solution. This assessment also took into account calculations (which we consider cautious) that this new approach would not deliver cost benefits and concern about the adverse consequences of aborting the procurement.
17 In July 2008, seven years after it had announced its intention to trial hard shoulder running, the Agency was finally satisfied with the general benefits and savings potential of this approach which it is now putting into use. In 2009, shortly before letting the widening contract, a programme of hard shoulder running became part of the Department's policy for managing motorways and major trunk roads. The value of this work under way or planned on ten major roads is £3.7 billion. Although the Agency kept under review the possibility of using the approach for the two sections of the M25 targeted for widening, the Agency continued to doubt that the approach was technically suitable for one of these sections. The Agency now plans to use the approach to relieve congestion and improve journey time reliability on two other sections of the M25.
18 We consider that, through a faster assessment of the costs and benefits of hard shoulder running and a more flexible procurement approach, the Agency could have adapted its project to give serious consideration to the technique. The Agency was never in a position to consider seriously hard shoulder running as an alternative to its planned widening of the M25. To have seriously considered hard shoulder running during the procurement, the Agency would have needed to: complete earlier its general assessment of hard shoulder running; consider the cost and benefits of using it on the M25; and keep its options open longer. Even in late 2008 and early 2009, when the Agency had satisfied itself on the general benefits and savings of hard shoulder running, we believe it should have given greater consideration to hard shoulder running in its final decision to let the widening contract.
19 The Agency did not thoroughly assess the savings that an acceptable conventionally procured hard shoulder running solution could provide, savings we estimate as potentially ranging from £400 million to £1.1 billion. This range of possible savings compared to the privately financed widening of the M25 represents 12-32 per cent of the widening contract price. Savings would have been available through lower construction and financing costs. The top end of our savings scale is reached if the Agency's lowest estimate of conventionally procured operation and maintenance costs is reduced by £400 million to match the costs expected by Connect Plus (Appendix 3). The Agency considers that these efficiencies in operation and maintenance costs could not have been achieved through short term conventional contracts.