Infrastructure projects could save £3bn in UK

21 December 2010
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21 December 2010 | Lindsay Clark

The Treasury believes it can save around £3 billion on infrastructure investment – and improving procurement processes is part of the answer.

A report by Infrastructure UK (IUK) sets out a blueprint to save money on the National Infrastructure Plan 2010 – a £200 billion, five-year investment programme.

The report, based on a survey with industry leaders, outlines how costs of building and maintaining energy, transport, waste and flood defence infrastructure projects can be reduced by at least 15 per cent. With between £15 and £20 billion being spent each year, this equates to savings of between £2-3 billion a year.

Terry Hill, chairman of the InvestigationSteering Group, a member of IUK’s Advisory Council and leader of Arup’s Global Transport market, said: “Evidence from the investigation suggests a high degree of consensus that efficiency improvements can be achieved, and that the infrastructure construction industry will respond positively to client-side improvements in planning, commissioning and procurement of projects and programmes. Clients will respond in turn to improvements in the industry by becoming more efficient and transparent.”

The survey ranked “client leadership, poor design/specification and overly complicated procurement practice”as the top three most significant areas for reducing costs.

It found that the UK’s interpretation and use of competition processes, particularly in the public sector, is not always effective in producing lowest outturn costs.

Public sector clients are more risk averse to the cost and time implications of potential challenges, and processes are overly complex and too much of a “box-ticking” exercise, the report said.

It also found ways of making savings. Comparisons of early contractor involvement on Highways Agency projects demonstrate lower prices and up to 50 per cent shorter construction times. However, competition law and interpretation of procurement rules can inhibit the effective use of early contractor involvement, it said.

The need for integration of the whole supply chain was a common theme among those interviewed.

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