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West Link project is keeping within budget

The Swedish Transport Administration has conducted an updated cost assessment for the West Link project to make sure that it’s keeping within the adopted budget. According to the cost assessment there are no indications that the budget will be exceeded.

In conjunction with the work on the West Link railway plan, an updated cost assessment is being made in order to make sure that the West Link project is keeping within the adopted budget.

– As things stand today there is nothing that indicates that the budget of SEK 20 billion at the 2009 price level will be exceeded, says Bo Larsson, Project Director at the Swedish Transport Administration.

Fixed price level

When the budget for a project is established, it is done at a price level that is fixed at the particular time in question. Since the budget for the West Link project was adopted in 2009, it was set at the 2009 price level. This price level will be applied until project completion in order to follow up on the budget. By counting back to the price level for the established budget with the known index, we avoid speculating on future price changes. All Transport Administration projects are given a fixed price level. For example, the budget for the City Line in Stockholm is calculated back to 2007, the budget for the E4 Sundsvall back to 2009 and the budget for the East Link to 2013.

The cost assessment includes a risk reserve

The results of a basis calculation and a risk analysis in accordance with the successive principle have been weighed together to make the final assessment.

The basis calculation is a traditional costing in which every item and part of the West Link project construction is calculated. The calculation is presented in a variety of blocks in line with the Transport Administration's economy model. The subdivision into fixed blocks means that the project costs can be described in a uniform manner during follow-up and future calculations. (See block and costs in the right-hand column.)

There are many factors that have an impact on the costs of an infrastructure project. The project often runs for a long time, and during this period events and circumstances may occur that are difficult to predict. The changes in costs that are a result of general uncertainties and risks are to be covered by what is known as a risk reserve. The risk reserve is included as part of the project's budgeted cost and deals with uncertainties that could entail cost increases as well as cost reductions.

– The risk reserve is budgeted at SEK 2.3 billion. Here, changes and uncertainties are dealt with that could entail cost increases as well as changes and uncertainties that could lead to cost reductions, says Bo Larsson.