Author Topic: International Comparisons of Infrastructure Costs  (Read 194 times)

petagny

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International Comparisons of Infrastructure Costs
« on: October 10, 2011, 08:04:37 GMT »
A recent study by Infrastructure UK found that the costs of providing infrastructure in the UK were significantly higher than for comparator countries:

‘The UK is an expensive place in which to build infrastructure. The weight of evidence confirms that costs are higher than in other European countries and demonstrates that, irrespective of its comparative position, there are significant opportunities to reduce costs in the delivery of infrastructure...

‘Top-down analysis of benchmarks across sectors where comparative data were available, including high speed rail, roads, onshore wind and tunnelling all indicated higher relative outturn costs in the UK, ranging from a factor of 10 per cent to over 100 per cent difference.’

Interestingly, the study identified that 'higher costs are mainly generated in the early project formulation and pre-construction phases. The main contributing factors are:
* 'Stop-start investment programmes and the lack of a visible and continuous pipeline of forward work;
* Lack of clarity and direction, particularly in the public sector, over key decisions at inception and during design. Projects are started before the design is sufficiently complete.
* The roles of client, funder and delivery agent become blurred in many public sector governance structures;
* The management of large infrastructure projects and programmes within a quoted budget, rather than aiming at lowest cost for the required performance. If the budget includes contingencies, the higher total becomes the available budget;
* Over-specification and the tendency, more prevalent in some sectors than others, to apply unnecessary standards, and use bespoke solutions when off-the-shelf designs would suffice;
* Interpretation and use of competition processes not always being effective in producing lowest outturn costs, with public sector clients in particular being more risk averse to the cost and time implications of potential legal challenges
* Companies in the supply chain typically investing tactically for the next project, rather than strategically for the market as a whole; and
* Lack of targeted investment by industry in key skills and capability limiting the drive to improve productivity performance.'

By addressing some of these problems there is '..a clear opportunity to realise savings of at least 15 percent, which can deliver sustainable benefits of £2 to 3 billion per annum. This is £20 to £30 billion over the next decade.'
« Last Edit: October 10, 2011, 08:11:43 GMT by petagny »

petagny

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Re: International Comparisons of Infrastructure Costs
« Reply #1 on: October 10, 2011, 08:26:38 GMT »
Following on from my previous post, the attached is a comparative study of infrastructure costs in Sub-Saharan African countries. It compares costs for similar activities in roads, water & sanitation and electricity and identifies significant variations in costs across countries. Unfortunately, the samples were not large enough to reach a firm conclusion on the reasons for variations and further work is recommended.

Scale of the works is demonstrated to be important though: for example, the unit construction costs of roads less than 50km in length was significantly higher than for roads over 50km in length.

The study does explore the phenomenon of cost over-runs (compared to the engineer's estimate) and concludes that the single strongest explanatory factor is absence of competition during bidding.

The World Bank's ROCKS database of road costs is another useful source. I would be very interested to hear about other comparative studies known to Board Members.

petagny

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Re: International Comparisons of Infrastructure Costs
« Reply #2 on: October 11, 2011, 07:37:16 GMT »
This is the link to the World Bank's Road Costs Knowledge System (ROCKS) database.

http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTTRANSPORT/EXTROADSHIGHWAYS/0,,contentMDK:20485235~menuPK:1097394~pagePK:148956~piPK:216618~theSitePK:338661~isCURL:Y,00.html

The latest update of the database seems to be December 2008.

petagny

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Re: International Comparisons of Infrastructure Costs
« Reply #3 on: June 21, 2012, 17:33:34 GMT »
Continuing this enthralling conversation with myself, here's a potentially useful source of information on comparing construction costs in different parts of the world.

Napodano

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Re: International Comparisons of Infrastructure Costs
« Reply #4 on: June 22, 2012, 08:19:27 GMT »
Dear Petagny,

this topic may not have a conversation ongoing but what you are posting in terms of your knowledge and the reference to key documents is advancing the true spirit of the PFM Board, which is founded in sharing.

Thank you on behalf of all the comunity.

 

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