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.'
