With tunnelling only just begun, the company delivering London’s "super sewer" has said costs are mounting beyond expectations due to a spate of "engineering challenges".
The contingency fund has already been raided, said Bazalgette, the holding company for the Thames Tideway tunnel scheme.
It said it has identified "several cost pressures in the programme" and is putting pressure on contractors to find cost savings, reports Construction Manager.
Total project costs for the six months to 30 September 2018 were £325.3m, bringing the total cumulative cost so far to £1.48bn.
That is just over 35% of the project’s total budget of £4.2bn, and tunnelling only began earlier this month, with the project not due to be finished until 2023.
Running 25km under the River Thames, the so-called "super sewer" will update London’s 150-year-old sewerage system to prevent raw sewage entering the river. It will stretch from Acton in the capital’s west, through central London, to Beckton Sewage Treatment Works in the east.
It is the second major UK infrastructure project to be hit by cost problems this autumn after Crossrail announced it would overrun by nearly a year.
The most significant of the Tideway engineering challenges are at Blackfriars (pictured), on the cofferdam projects at King Edward Memorial Park in Shadwell, and at the Albert Embankment, plus on construction of shafts across the eastern area sites.
The company said: "Following significant progress on the project and now having mobilised on 20 of our 21 sites, Tideway has identified several cost pressures in the programme. Taken together with general cost pressure across the programme, this has substantially eroded available contingency.
"To mitigate the cost pressures Tideway has begun to implement cost saving measures in partnership with our contractors and remains focussed on achieving the baseline target. These cost saving measures include working with our MWCs (main works contractors) to eliminate overlap, taking measures to increase productivity, undertaking value engineering and delivering overhead savings."
Bazalgette said it was "too early to conclude the extent to which these measures will mitigate the cost pressures", and it would provide a further update in its March annual report.
A spokesperson for Tideway said: "There have been a number of complex engineering challenges and risks to overcome in the early stages of the project. With these behind us and having put in place several measures to reduce cost, our budget is intact.
"Tunnelling for the project started last week from our site in Battersea and we are set to complete the project on schedule and to budget."
The tunnel was given planning permission in 2014, with preliminary works getting under way in 2016, and tunnelling starting earlier this month.
Work is split among three consortiums comprising some of Europe’s largest contractors.
The western package from Acton to Fulham is being delivered by a joint venture of Bam Nuttall, Morgan Sindall and Balfour Beatty.
The central region from Fulham to Blackfriars is being delivered by Ferrovial Agroman UK and Laing O’Rourke Construction.
In the east, from from Bermondsey to Stratford, construction is being undertaken by Costain, Vinci Construction Grands Projets, and Bachy Soletanche.
A system integration contract has been awarded to infrastructure support service provider, Amey.
Image: The Blackfriars Bridge Foreshore site on the north bank of the Thames is among those where Tideway has encountered challenges (Bazalgette Tunnel Limited)