A STARK warning has been issued on the danger of the cost of the Luton Dunstable Busway overrunning, after contractor costs were revealed to have risen by £11 million.
Luton Borough Council officers in charge of the scheme say they are still confident it can be delivered for its original £89.25 million price tag.
But the cost of the design and construction of busway, by contractor BAM Nuttall, has risen to £62 million from the original £51 million forecast at the tender stage.
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Problems encountered so far include delays caused by snow and frost in February, April’s exceptional rainfall, Japanese knotweed and poor ground conditions.
Gas pipes, water mains, Virgin Media cables, BT ducts and buried retaining walls have also added to delays, with a gas pipe in Station Road, Dunstable, turning out to be on the opposite side of the road to that shown on drawings.
In a report due to go before a committee next Thursday (June 7), council officers warn that cost overruns on major projects such as the busway could have a “huge negative financial impact” on the council.
They say the number of major capital schemes the council has taken on at the same time – including the new aquatic centre, improvements at Junction 10a of the M1 and the town centre transport scheme – presents a significant financial risk should costs on a combination of them overrun.
They added: “The level of risk has increased as a result of the current state of public finances and the indications that government support is likely to reduce in future.”
There is still a shortfall of £4.3 million on the £8.92 million – 10 per cent – contribution from Luton Borough Council to the costs of the scheme.
And the authority has been told not to bank on income from bus operators using the busway, due to the current financial challenges facing bus companies.
The Luton News reported in September that the council would not charge bus operators for using the busway, but may consider doing so in the future.
Luton Borough Council and Central Bedfordshire Council are protected against overruns on the contractor’s costs by arrangements that means its risk is capped at 4.75 per cent of BAM Nuttall’s ‘target cost’, which is currently £55 million, meaning the councils would be liable for £2.6 million.
A spokesman for Luton Borough Council said: “The Luton Dunstable Busway team is continually monitoring project costs to ensure best value for money.
“While construction costs have increased, there has also been a reduction in the estimated costs of land and compensation.
“By dramatically reducing journey times, the busway is not only tackling congestion across the conurbation but also playing a key role in the ongoing work to regenerate Luton and improve access for all to jobs, healthcare, education and leisure.”
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