A feature of our findings has been the lack of a common agenda between the various public sector bodies involved, and between public and private sector. The interests of these bodies need to be better aligned. We make two specific recommendations:
C DfT was exposed to risk but lacked direct ways of gaining assurance over the management of this risk.
In the permanent solution for Metronet's business, DfT should work with the Mayor of London and TfL to ensure that there are effective controls to contain costs within agreed limits and to maximise the value for money of the grant funding it provides. Effective independent scrutiny and evaluation of London Underground's management of major infrastructure projects, on behalf of both TfL and DfT, could provide greater assurance on value for money.
D London Underground had limited ability to manage the contract in a way that prevented costs from escalating. It sought to undertake rigorous cost analysis as far as possible, but could have drawn more on the Arbiter as a source of information and cost assurance. As the party responsible for managing performance under the contracts, London Underground should have sufficiently detailed information available to it to confirm that work is affordable, within the limits of the grant, and that the taxpayer is receiving value for money. But under the contracts, London Underground needed to ask the Arbiter formally when it needed more detailed cost and performance information. The Arbiter should, within the statutory framework, work with London Underground to provide assurance on whether the work performed is affordable and value for money. This assurance could be achieved by the type of high-level benchmarking exercises undertaken by the Arbiter to compare the performance of PPP suppliers with other companies carrying out similar activities. This top-down assurance should then be supplemented by more detailed analysis of individual components of cost where this would enable better management of the contract by London Underground.