London Underground PPP: treatment of overspends

PPP Arbiter guidance (76 pages, PDF) on the application of the "efficient and economic" test for capital expenditure overruns at a possible extraordinary review of the fee payable by London Underground to the Metronet infrastructure companies.

The paper emphasises information requirements. Metronet has identified seven sample investment projects to illustrate the guidance. The PPP Arbiter's conclusion is that the analysis needs to be undertaken at a programme level rather than for individual projects, and that:

Given that any Metronet reference for Extraordinary Review in the current Review Period is likely to involve a review of all aspects of its programme, rather than one-off factors affecting specific costs, the Arbiter considers that the information requirements will be considerable.

Filed under PPP Arbiter, Price controls, Public transport.

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