UK infrastructure projects need better cost-saving principles

19 June 2013

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19 June 2013 | Marino Donati

“Substantial progress” has been made in establishing cost-saving principles in some large UK infrastructure projects, including High Speed 2 (HS2), but others in energy, waste and telecoms are lagging behind, according to a government report.

The Treasury'ssecond annual report from its Infrastructure cost review has identified progress in establishing its efficiency-saving principles across a range of the government’s top-40 big projects, including identifying £1 billion of efficiency opportunities with the first phase of HS2.

However, the report, which includes a survey of infrastructure stakeholders, found evidence that while the government’s cost review principles are being implemented in rail, highways and water infrastructure projects, there was limited progress in energy, waste and telecoms.

The initial Infrastructure Cost Review Report in 2010 identified the opportunity to make efficiency savings on the required investment across infrastructure sectors of at least 15 per cent by 2015, worth £2 billion to £3 billion a year.

The latest report says other projects where progress has been made include the Thames Tideway Tunnel, flood and coastal defence and the Transport for London investment programme.

As priorities for the review’s final year (2013/14) the Infrastructure Client Working Group will do more work to establish best practice for client and supplier performance management.

In addition, the establishment of a Major Infrastructure Tracking team in Infrastructure UK will make renewed efforts to improve the capture and sharing of data covering both performance and what’s in the pipeline.

In the autumn, the government will publish revisions to the ‘Procurement Routemap’ consultation, which launched in January. This aims to create a coherent approach to assessing and improving sponsor, client and supply chain capability and integration. 

Other projected key savings in the report include:

• Efficiencies for 2012/13 from the Highways Agency and Environment Agency totalling more than £290 million on measured expenditure of £1.165 billion, a saving of 25 per cent.

• Latest cost benchmarks for renewals expenditure by Network Rail that demonstrate a 4.9 per cent reduction in the unit costs between 2010/11 and 2011/12

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