Transport for London

TfL entered 2021/22 facing unprecedented financial pressures. The global coronavirus pandemic brutally exposed the vulnerability of TfL’s current funding model, specifically, its high dependence on fares revenue. The pandemic’s impact on ridership, coupled with delayed and uncertain government funding, led to TfL  setting out a Financial Sustainability Plan in 2021. IIPAG were requested to support the delivery of this Plan, reassessing both the Investment Programme and the key decisions required to enable financial sustainability by the end of 2023/24. The key challenges included:   

• Funding Uncertainty: ongoing negotiations with the UK government about long-term funding, creating short-term financial horizon planning;
• Reduced Capital Budget: critically reviewing annual and whole-life budgets, and the need to balance significant reductions in TfL’s capital investment;
• Project Prioritisation: analysing qualitative and quantitative information to guide investment decisions, including project deferrals or cancellations;
• Cost Efficiency: maximising value for money where optimal whole-life cost solutions couldn’t be achieved, including impacts on Estimated Final Costs;
• Maintaining Reliability: ensuring the safety and reliability of existing deteriorating assets within the funding available.

In this challenging environment, the IIPAG’s role became even more critical, as objective assessments of projects and sub-programmes would help to simplify the complex funding environment into a series of tangible activities and decisions. Key activities undertaken during 2021/22 included:

• Project Reviewer: Rigorous reviews of major project business cases and progress reports, scrutinising costs, benefits, and risks.
• Critical Advisor: providing independent, trusted counsel on prioritisation, considering strategic alignment, economic benefit, and deliverability.
• Investment Analyser: identifying opportunities for cost efficiencies and value engineering across the capital programme.
• Risk Assessor: evaluating and advising on risk management strategies, particularly in relation to funding uncertainty and project delays.
• Performance Monitor: objectively monitoring the performance of the capital programme against agreed targets and milestones.

We provided input into various workstreams and reviews throughout 2021/22, and into 2022/23. These included:

• Procurement and Commercial Improvement Programme
• Programme Management Office
• Treatment of Risk
• Asset Information
• London Underground Fleet

These reviews enabled a light to be shone on industry leading performance, whilst also highlighting some key areas for improvement that would strengthen the required response to the fiscal constraints. These included:

• Normalising management information, providing consistent scalable datasets to facilitate agile decisions in a rapidly changing financial landscape;
• Enhancing engagement with customers and stakeholders, such that there was shared understanding of the funding and delivery dilemmas;
• Strengthening capabilities and resources, including system safety, structural assessment and specialist competencies applicable to asset life extension.
• Limit over-programming, with a diverse construction ready workbank, inclusive of investigations, surveys and designs, linked to funding availability.
• Develop a portfolio approach for risk management, aligned to governance, organisational and finance structures, to support adaptable delivery planning.

Our input during 2021/22 and into 2022/23 played a vital role in supporting IIPAG and TfL through a period of unprecedented financial challenge. By providing independent oversight, robust governance and strategic advice, IIPAG helped the TfL Board navigate difficult decisions and maintain essential services.

This work set the foundation for TfL to achieve its Financial Sustainability Plan, enabling it to be self-sufficient for its day-to-day operating costs without extraordinary funding from Government by 2023-24. The lessons learned from this period continue to inform TfL’s approach to capital investment assurance.