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Stuttgart 21 called into question again

01 Jan 2013

GERMANY: Deutsche Bahn’s controversial Stuttgart 21 project to replace its present terminus with a through underground station is under threat once more, because of a steep rise in costs. In a report handed to DB’s Supervisory Board on December 12, the official cost of the scheme is shown as increasing from €4·5bn to €5·6bn.

Prepared by Dr Volker Kefer, DB Board Member for Technology, Systems, Services & Infrastructure, the report says that there is also a risk of ‘external factors’ forcing the cost up by a further €1·1bn to reach a total of €6·7bn. DB is expected to decide shortly whether to continue with the scheme, but for the moment it favours sticking with the project as abandoning it would cost at least €2bn, none of which could be recovered. Precisely when the Supervisory Board will give its ruling is not certain, but the scale of the project and the dramatic rise in costs suggest a swift announcement.

Even before the referendum held by the Land of Baden-Württemberg on November 27 2011 in which 59% of voters backed the project, there were signs that costs were rising inexorably. In its subsequent reappraisal of the scheme, DB examined the potential for cost savings and better operational performance. Its unwelcome conclusion was that essential works not previously costed would add €610m to the bill, while various savings are now seen as unattainable, pushing up the total by another €490m. DB is proposing a revised budget of €5 626m to cover the increase.

Resolving the situation is made more difficult by local politics. The parties in the Baden-Württemberg parliament that had backed the scheme are no longer in power, and a new mayor has taken office in Stuttgart. Continued opposition by local residents means that some backers of the project are now opposing it, which complicates management of the project by the five partners — DB, the federal government, Baden-Württemberg, the Verband Region Stuttgart and the city authorities.

The ‘external factors’ relate to additional costs occasioned by long delays in the approvals procedure and to planning changes made to meet the demands of regional bodies such as better access to the airport. Whether DB can persuade its partners to continue is debatable, given that the city and the Land have refused to countenance paying any more than their share set out in the original funding agreement. Federal Transport Minister Peter Ramsauer says that the project is too far advanced to be dropped, but he has also ruled out further federal funding.

DB finds itself accused of not being able to estimate costs reliably or to have deliberately held down cost figures in order to influence voting in the referendum. However, speculation that DB is seeking to distance itself from the project is dismissed as ‘entirely unfounded’.

The board has suggested that DB accords the project high priority internally and sets up a dedicated project management company to work with DB Station & Service and DB Netz and see it through to completion. This, it suggests, would accelerate internal procedures, improve relationships with DB’s partners and simplify contact with the various authorities.

There are reports that the board may in the meantime seek a legal opinion on the potential personal liability of its members for possible losses incurred. This would beg the question as to whether DB’s liability insurance would cover eventual claims from third parties.

DB’s admission that Stuttgart 21 is now much more expensive will put even more pressure on the project team. It will also give ammunition to the scheme’s opponents.