Infrastructure
Cost review
The Government published on 21 December 2010 the report of an investigation into how to reduce the costs of delivery of civil engineering works for major infrastructure projects.
The report identified a number of drivers for the higher cost of construction in the UK compared to other EU countries and supports the view that higher costs for UK infrastructure are mainly generated in the early project formulation and pre-construction phases. The Infrastructure Cost review aims to address client organisation and supply chain issues that are barriers to innovation and sustainability of the supply chain and significant drivers for higher cost. Efficiency improvements could lower the costs of delivery and realise potential benefits of £2-3 billion per annum.
A number of specific areas where the Government is working with industry taking action to deliver these benefits have been identified, and a work programme for implementation was published in March 2011.
Infrastructure Procurement Routemap
The Government has published a guidance note and application toolkit to support public and private sector infrastructure providers improve their ability to deliver their projects and programmes.
Developed in collaboration with industry and academia, the ’Infrastructure Procurement Routemap: a guide to improving delivery capability’ sets out best practice using case studies, for example Crossrail. Alongside the report the Government is publishing, for consultation, a draft application guide and will develop this ‘toolkit’ over time to enable infrastructure providers to assess and improve their capability to delivery successful project outcomes.
The Commercial Secretary, Lord Deighton said:
“I welcome the publication of the ‘Infrastructure Procurement Routemap’. This important work provides the private and public sector with the tools to assess capability at delivering complex infrastructure projects. Our goal is to ensure that programmes are delivered efficiently and represent the best value for money. This will also be reflected in my upcoming infrastructure delivery reviews.”
The consultation, which ends on the 22 April 2013, will involve continued development with industry and the opportunity to participate in a series of regionally based roadshows. Further details will be advertised through trade press and industry representative bodies.
- Infrastructure procurement routemap: a guide to improving delivery capability (PDF 908KB)
- Press notice: Government launches new guide to infrastructure delivery
Report: Specifying successful standards
The Autumn Statement 2011 announced Terry Hill (Chair of the Arup Board of Trustees) would lead and industry standards group in the infrastructure sector to examine the simplification of procurement specifications and the removal of unnecessary technical standards. On 9 July 2012, the Industry Standards Group published its report to government, Specifying Successful Standards.
Terry Hill and the group will now work with government and infrastructure providers to implement the recommendations and actions identified in the report.
Smoothing Investment Cycles in the Water Sector
On 23 July 2012, the Government published a report Smoothing Investment Cycles in the Water Sector.
The effects of cyclical investment are most acutely felt in the water sector but are also observed in rail, electricity, gas and roads investment. The Government is seeking to understand the causes of cyclicality in the delivery of the UK’s infrastructure and to take action to mitigate its impact - reducing cost to the taxpayer and consumers; and promoting growth and sustainability in the supply chain.
In meeting this commitment the Government has published its analysis and recommendations to resolve the longstanding issues of cyclicality in the water sector. The report has been produced by Infrastructure UK (part of HM Treasury) in collaboration with Ofwat and the water industry.
The report sets out a number of recommendations to improve certainty, productivity and value for money; and to reduce the regular round of significant redundancies in the sector. If the recommendations are implemented in full they could reduce the average customer water and sewage bills by 2% per cent, saving £6.50 on average annual bills; saving the water industry £600m every five years; and prevent up 40,000 job losses over the next five years. Government, the regulators, water companies and the industry will all need to take action and view risks differently if money and jobs are to be saved.
This autumn Ofwat will publish its “Future Price Limits” consultation which will examine how these recommendations can be adopted, and set out the future process for price reviews.
- Smoothing investment cycles in the water sector (PDF 620KB)
- Press notice: Government calls for action to address damaging impacts of cyclicality in the water sector
The documents above are available in Adobe Acrobat Portable Document Format (PDF). You can download the software free of charge from the Adobe website. For alternative ways to read PDF documents and further information on website accessibility, visit the HM Treasury accessibility page.
Contact us
You can contact the IUK cost review team via email at infrastructurecost@hmtreasury.gsi.gov.uk.
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Infrastructure cost review
