Comment: End of the line for Metronet?

It's been an action-packed few weeks for anyone involved with Metronet, and as CJ went to press on Monday, its future was looking more than a little uncertain.

Just months into the contract, the initial writing appeared on the wall, when London Underground (LU) accused Metronet of failing to perform to acceptable levels. Metronet countered by claiming substantial cost overruns. And now, after a protracted wrangle, the PPP regulator has announced that it will only award £121m of the initial £551m Metronet was seeking. A clear signal to Metronet's bankers that the regulator is very likely to give a similar reception to the other £1.5bn of claims Metronet was planning to seek.

It's all too easy to get involved in the blame game. Metronet said Transport for London (TfL) and LU asked for higher quality work and more expensive upgrades, while TfL hit back by saying that the overspend was down to mismanagement and a failure to control costs.

As in most arguments, there will be faults on both sides. But the arbiter has been critical of Metronet, saying that its costs could have been lower had it "delivered in an efficient and economic way". For its owners, Metronet has been a PR and financial disaster. Balfour Beatty, Thames Water, Atkins, EDF and Bombardier must rue the day they became involved.

From the very start, running this PPP has been a hugely political issue. But despite Mayor Ken Livingstone's hatred of the scheme, Tube Lines appears to have made things work well. So how can it have gone so wrong for Metronet?

There will be lessons to be learned on both sides, and it also demonstrates that PPP arrangements aren't just a licence to print money - especially when you are dealing with ageing infrastructure and a demanding client.

The people who will come out of this worst, though, are Metronet's supply chain. For them, this whole sorry tale will have been a deeply uncomfortable, stressful time. Anything that helps to resolve issues and put things on a more certain footing will be more than welcome.

Emma Penny, editor, Contract Journal, 18 July 2007, p2