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EC Harris - Heathrow NWR Critique Gatwick Airport Limited Response to Airports Commission Consultation Appendix 31 EC Harris - Heathrow NWR Critique GATWICK AIRPORT LIMITED HEATHROW NORTH WEST RUNWAY CRITIQUE PROGRAMME & COST REVIEW REPORT LEGALLY PRIVILEGED & STRICTLY CONFIDENTIAL JANUARY 2015 Legally Privileged & Strictly Confidential Intentionally left blank © 2014 EC Harris LLP Legally Privileged & Strictly Confidential CONTACTS PAUL WILLIS GLOBAL HEAD OF AVIATION EC HARRIS LLP 34 YORK WAY LONDON N1 9AB TELEPHONE : +44 (0) 207 832 2273 UK MOBILE : +44 (0) 7826 535 496 EMAIL : PAUL .WILLIS @ECHARRIS .COM www.echarris.com An ARCADIS Company EC Harris LLP is part of the ARCADIS Group of Companies © 2014 EC Harris LLP Legally Privileged & Strictly Confidential Intentionally left blank © 2014 EC Harris LLP Legally Privileged & Strictly Confidential CONTENTS 1. Executive Summary ..................................................................... 1 1.1 Overview ..................................................................................... 1 1.1.1 CAPEX Shortfall ......................................................................... 2 1.1.2 Programme Risks & Timetable Delays ....................................... 5 2. Key Findings & Issues................................................................. 9 2.1 Introduction ................................................................................. 9 2.2 Heathrow NWR Scheme Description .......................................... 9 2.3 Land use Planning .................................................................... 10 2.4 Statement of Environmental Effects.......................................... 11 2.5 DCO Process ............................................................................ 12 2.5.1 Overview ................................................................................... 12 2.5.2 National Policy Statement ......................................................... 13 2.5.3 EIA & ES Preparation ............................................................... 14 2.5.4 DCO Application Timetables ..................................................... 15 2.5.5 SWLW SPA & Ramsar Site ...................................................... 18 2.5.6 Water Resources & Flood Risk ................................................. 20 2.5.7 Landfill Sites ............................................................................. 21 2.5.8 Lakeside EfW Plant .................................................................. 22 2.5.9 Metropolitan Green Belt ............................................................ 25 2.5.10 Other Permits ........................................................................... 25 2.5.11 Airspace .................................................................................... 26 2.6 Enabling & Environmental Mitigation Works ............................. 28 2.7 Summary of Key Planning Issues ............................................. 29 2.8 Construction Works .................................................................. 31 2.8.1 Site Construction Works ........................................................... 31 2.9 Construction Programme .......................................................... 35 2.9.1 HAL’s Technical Submission .................................................... 35 2.9.2 Quantitative Programme Risk Review ...................................... 36 2.9.3 Airfield ....................................................................................... 38 2.9.4 Off-Airport Support Facilities ..................................................... 38 2.9.5 Surface Access ......................................................................... 40 2.9.6 Utilities ...................................................................................... 41 2.9.7 Summary of Key Construction Issues ....................................... 41 3. Summary & Conclusions .......................................................... 45 Appendix A Heathrow NWR Quantitative Programme Risk Review ..................................................................... 49 © 2014 EC Harris LLP Legally Privileged & Strictly Confidential Intentionally left blank © 2014 EC Harris LLP Legally Privileged & Strictly Confidential SECTION 01 EXECUTIVE SUMMARY © 2014 EC Harris LLP Legally Privileged & Strictly Confidential Intentionally left blank © 2014 EC Harris LLP Legally Privileged & Strictly Confidential 1. EXECUTIVE SUMMARY 1.1 OVERVIEW ▪ Heathrow’s NWR scheme programme could take at This report highlights a number of key concerns around the delivery least four years longer to programme and cost estimate for the Heathrow Airport North West Runway deliver than HAL has (NWR) scheme proposed by Heathrow Airport Limited (HAL) to the UK stated, extending out to Airports Commission (herein the “Commission”) being chaired by Sir Howard April 2029 . Davies. ▪ The CAPEX is underestimated by up to This report and the views expressed by EC Harris in this document are based £5.6bn . The estimated on the information presented as part of the Commission’s analysis, findings total cost is more likely to and data that is available in the public domain. be around £21.2bn or £26.5bn when adding the There are compelling reasons to doubt whether a new third runway at Commission’s OB . Heathrow can be delivered at all, but that is not the purpose of this report. ▪ Broken down, the £5.6bn This report starts with the assumption that a new third runway could be of additional CAPEX is delivered and then estimates, using industry best practice, to determine how attributed to: long this would take and at what cost. To that end, the primary focus of this ▪ £3bn for post runway report is to scrutinise the key programme and cost allowances that have been opening scope proposed by HAL in their Technical Submission (Taking Britain Further, omissions; Volumes 1-3) to the Commission in May 2014. In our opinion, these ▪ £1.3bn for third party allowances are questionable and require further justification and explanation funding omissions; by HAL. ▪ £0.8bn for up to four years of programme The delivery timetable submitted by HAL is optimistic by up to four years with delays; and the cost estimate inflated by up to £5.6bn. In support of this claim, we ▪ £0.5bn of highlight three elements that will be the source of major delays and challenge compensation to the HAL’s ability to meet its current stated delivery programme: operators of relocated ‘off-airport’ support ▪ The extent of remediation required to treat leaching and migrating facilities. contaminants from a large number of active/historic landfill sites that will ▪ The annual capital spend be disturbed, alongside the level of ground stabilisation required to required to achieve HAL’s enable construction of the new runway; stated runway opening in ▪ The re-provision of critical airport support facilities located off the airport, 2025 is not thought to be as well as the Lakeside Energy from Waste (EfW) plant which provides realistic and has never an important local and regional waste management capability; and been previously achieved ▪ The extent of highway and river diversion works, and associated by Heathrow during the environmental mitigation and compensatory measures required to enable development of either T5 the construction of the new runway. or T2. ▪ A minimum two year On review of the evidence presented in HAL’s Technical Submission (May period would be required 2014) documents to the Commission, there is zero probability of achieving the to secure DCO consent . stated 2025 runway opening date. The earliest date in which the new runway P a g e | 1 © 2014 EC Harris LLP Legally Privileged & Strictly Confidential could be realistically opened, based on a forecast P80 ‘industry norm’ confidence level, is April 2029, at an estimated cost of £21.2bn. When taking account of the Commission’s Optimum Bias (OB) the estimated cost further inflates to £26.5bn. To substantiate this view our report has principally focused on two key areas: ▪ CAPEX Shortfall; and ▪ Programme Risks and Timetable Delays. 1.1.1 CAPEX SHORTFALL The CAPEX could be underestimated by up to £5.6bn as a result of the potential delays to construction, the omission of Terminal 2 (T2) future expansion to support forecast demand and the exclusion of third party funding that will be required to finance elements of the NWR scheme. This is illustrated in Figure 1. Figure 1 - The cost composition of the NWR Programme Both the Heathrow Airport Extended Northern Runway (ENR) and Heathrow Airport NWR schemes show limited or no capacity enhancement CAPEX post runway opening, to match traffic growth forecasts and passenger demand. This will adversely impact and increase the overall passenger charge. Conversely, Gatwick has taken account of this capacity growth in its Second Runway (2R) submission (May 2014) to the Commission. Figure 2 (see page 3) illustrates the CAPEX profiles of each of the three short-listed schemes. P a g e | 2 © 2014 EC Harris LLP Legally Privileged & Strictly Confidential Figure 2 - HAL NWR, Heathrow ENR, and Gatwick 2R Schemes CAPEX In order for the Commission to accurately evaluate and compare the individual merits of each of three short-listed schemes to decide which could best contribute to addressing the future airport capacity needs of London and the P a g e | 3 © 2014 EC Harris LLP Legally Privileged & Strictly Confidential South East, further evidence will be required to explain exactly how the development of the NWR scheme will deliver all
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