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Metronet is embroiled in a dispute with London Underground over cost overruns that are expected to reach between 拢750m and 拢1.2bn by 2010. It is trying to thrash out ways to avoid such overruns in the future.

A senior source close to Metronet said: 鈥淢etronet could reduce the scope of work to make it an affordable and fundable package.鈥�

He added that 鈥淢etronet could become insolvent鈥�, but said at the moment the company was committed to making the station refurbishment programme work.

The dispute centres on Metronet鈥檚 claims that the cost overruns were caused by a huge increase in the scope of work on station upgrades compared with London Underground鈥檚 original brief.

Options for scaling back the work include refurbishing only areas visited by the public.

For example, Baker Street station, which is to undergo a 拢100m upgrade, includes about 400 backroom offices. The idea would be to upgrade only those offices that face public areas.

We are looking at ways to constrain costs on future station upgrades.

Metronet spokesperson

An official spokesperson for Metronet said: 鈥淲e鈥檙e looking at ways to constrain costs on future station upgrades. Those discussions are continuing.鈥�

However, a London Underground spokesperson said: 鈥淲e wouldn鈥檛 accept any descoping. This is a long-term process.鈥�

On the issue of the cost overruns, he added: 鈥淟ondon Underground is adamant that it will not be paying any of those costs. Any cost overruns are due to Metronet鈥檚 inefficiency and poor management and planning.鈥�

Metronet is expected to call an extraordinary review by August.

Under this process, an independent arbiter would take up to a year to examine evidence from Metronet and London Underground before deciding who should pay what.