How does a major infrastructure project end up costing almost twice its previous estimate?
HS2 provides a powerful lesson in the financial consequences of inadequate commercial controls, scope management and contract administration.
In 2026, the National Audit Office reported that the estimated cost of completing HS2 had risen to between £87.7 billion and £102.7 billion, approximately double the 2020 estimate for Phase One.
The NAO identified scope changes, inefficient delivery and underestimated delivery times among the principal causes. It also reported that HS2 had lacked important delivery and contract management skills.
One particularly revealing finding was that HS2 hoped to avoid approximately £2 billion in future costs through commercial renegotiation and improved supplier incentives.
NAO press release
What went wrong?
The case highlights several issues familiar to experienced contract managers:
- Scope changes with major cost and programme implications.
- Weaknesses in commercial governance and contract management capability.
- Insufficient alignment between supplier incentives and project outcomes.
- Difficulties establishing reliable cost and completion forecasts.
- The need to renegotiate commercial arrangements after substantial commitments had already been made.
A signed contract does not guarantee cost certainty.
Effective contract management requires disciplined change control, early warning procedures, reliable cost forecasting, supplier performance monitoring and commercial negotiation throughout the contract life cycle. The HS2 experience demonstrates why commercial competence must continue well beyond contract award.
The “live” tutor-led WorldCC Contract Management Practitioner course 16 – 20 November 2026 helps professionals develop the skills needed to identify contractual risks, manage change, monitor supplier obligations and protect financial value. www.dpss.co.uk