UK civils costs are 4th highest in Europe

Aaron Morby 12 years ago
Share

Civil engineering projects cost 20-25% more in the UK than schemes in countries like Ireland and France.

The initial research findings from the high-level probe into civil engineering by quango Infrastructure UK confirms big inefficiencies plague major civil engineering projects in this country.

The interim report also warns that the economic downturn risked a return to adversarial contracting because clients were fixed on a strong contractual to delivering major projects.

“This leads to perverse behaviour particularly in tough market conditions, where low prices achieved under competition may be increased at out-turn as a result of claims.”

The report also blames greater numbers of smaller contractors acting as main contractors compared to peers in Europe for a failure to develop appropriate skills in the civils industry.

So far the benchmarking study found only Nordic countries suffer from higher costs in Europe.

Now the review panel chaired by Arup’s Terry Hill will draw up a set of recommendations to cut outturn costs in a final report due at the end of the year.

These will see fresh measures aimed at increasing certainty of the investment pipeline, removing wasteful process and strengthening the capability of those involved in procurement and the supply chain.

The interim report said: “Whilst many of the factors identified by IUK have been recognised in previous studies, there has not been sufficient concerted effort by government and industry in the past to make the changes necessary to resolve them.

“The current fiscal environment and drive for efficiency provide an opportunity to ensure that, this time, the necessary actions will be taken.”

Reports on the costing of High Speed 2 and benchmarking studies conducted on roads scheme and metro systems unearthed further evidence of higher costs in the UK.

IUK said: “In some instances, higher relative capital costs in the UK can be attributed to greater intensity of use and enhanced design life of assets, together with geographical factors such as the UK’s greater density of population.

“However, these factors do not fully account for the differences in cost – the cost of labour, plant and raw material inputs, including public and private sector investments.”

Stop-start investment, the complex web of regulation, planning and standards compliance come in for heavy criticism, along with poor public sector commissioning and cost management.

IUK will now draw up a detailed action plan to deliver the identified cost saving benefits for UK infrastructure projects and renewals programmes.

Emerging measures for consideration

Increase certainty and continuity of pipeline for committed projects
  • Explore opportunities to extend investment programmes across regulatory review periods.
  • Enable other public sector and regulated commissioning bodies to commit to longer term programmes and set cost reduction targets.
  • Through alliancing and partnering agreements encourage greater investment by contractors in trade skills, innovation and supply chain development.
Create clearer distinctions between the roles of commissioner, client, funder, and delivery agents
  • Measures to implement effective leadership and governance so that key decisions vest through individuals or bodies capable of discharging their function as a ‘single controlling mind’.
  • Incentivise unified management of costs, risks and contingency between stakeholders.
Instil  greater discipline to commissioning
  • Encourage greater use of outcome based specification and the removal of unnecessary prescription of standards to encourage innovation.
  • Introduce greater objective challenge of the specification of requirements and budget costs.
  • Explore the benefits of separate management of contingency budgets outside of the promoter or delivery body, particularly on larger one-off infrastructure projects.
  • Improve the availability and transparency of asset condition and benchmark data, including cross-sector access to UK and international benchmarks.
  • Consider the opportunities to derive better value for money from a portfolio management approach to risk transfer, for example in contingency budgets, project insurance and cost indexation.
Develop smarter ways of using competition
  • Encourage the use of effective competition and procurement to realise cost savings through the whole supply chain and minimise wastage in the procurement process.
  • Develop mechanisms to encourage greater alignment of interest between contractors and clients in reducing costs.
  • Continue to encourage increased early contractor involvement.
  • Where appropriate, encourage further standardisation of contracts, including payment and incentive arrangements.
Reduce the direct costs of construction
  • Develop measures to improve productivity, for example through site project management, supervision and skills.
  • Encourage standardisation, the use of off-site fabrication and other means of improving efficiency.
  • Review the way in which standards and regulations are applied with a view to developing more efficient means of ensuring safe and high quality construction.
  • Support the development of better structured and incentivised partnering between supply chain providers.
  • Improve the standardisation and processes around change control under the current preferred standard forms for infrastructure and consider ways to avoid escalation of a ‘claims culture’.

Latest news

Moving in to new markets paying off for McLaren

Contractor carving out new niche as leading player in heavy refurbs
1 day ago

Plan to add retentions record to payment reporting law

Government consults on tougher reporting to include disputed invoices and retention policies
2 days ago

Morgan Sindall wins £88m Beckton DLR depot upgrade

Delayed work to start on Docklands Light Railway train maintenance depot in East London
2 days ago

Hare and Severfield win £250m Sellafield deal

Country's two biggest steelwork contractors secure 17-year framework
2 days ago

Max Steward returns to head up ISG’s Agility fit-out arm

Former ISG project director returns after three years to take up MD role
2 days ago

McLaren wins massive Portland House refurb

Construction to start this year on £380m revamp of 28-storey building in central London
2 days ago

Green light for £275m HS2 Midlands nerve centre

Trio of contractors battling it out to win huge new depot near Birmingham
2 days ago

Winners named for Government £10bn offsite framework

29 firms secure places on mega framework for schools, healthcare, defence and justice jobs
3 days ago

ISG, Amey and Costain now industry’s quickest payers – list

Average payment times from main contractors slip by a day
3 days ago

Staff at Outco Surfacing start looking for new jobs

Administration notice filed two years after acquisition of NMC Group
3 days ago

£4.75m building work provision tips Higgins into the red

Partnerships business counts cost of changes to building safety rules
3 days ago

John F Hunt snaps up London temporary works design firm

Demolition contractor buys geotechnical and structural engineering design specialist RKD Consultant
3 days ago

Vital Energi lands £13m package at Plumstead regen site

Specialist will start on site this summer helping to transform the former home of Arsenal FC
3 days ago

Galliford Try to start £14m Scunthorpe Market scheme

Firm will build NHS staff accommodation and offices in two phases
3 days ago

Vast £500m British Library expansion go-ahead

London Mayor still needs to give final nod to 800,000 sq ft extension at St Pancras site in London
4 days ago

Wates names new chief executive

Cork-born Eoghan O’Lionaird to join later this month
4 days ago

Keltbray director joins Barhale as North East chief

Mark Wood heads operations in Yorkshire and North East England
4 days ago

Major London City building green deep retrofit approved

St Bride’s Tavern near Fleet Street will be demolished for the building expansion
4 days ago

Gilbert Ash lands starring role in £38m Welsh theatre revamp

Contractor to start work this year on Theatr Clwyd upgrade
4 days ago

Property clients to ramp up spending on decarbonising

Survey reveals nearly half of property chiefs plan to speed up spending on net-zero programmes over next twelve months
4 days ago

Average self employed labour rates top £1,000 a week

Average weekly earnings reach high for skilled trades
5 days ago

BAM wins £49m Harrogate Convention Centre revamp

Local council hopes to sanction work start this autumn
5 days ago

Renaker to top-out Manchester with 71-storey skyscraper

Developer lifts the lid on planned five-building cluster for phase 3 of Great Jackson Street development
5 days ago

Costain bridge lift delayed by ground conditions

National Highways chiefs postpone planned lifting operation
5 days ago

Nexus sells utilities and EV contracting arms for £78m

Group to now focus on remaining business at south east housing civils contractor Tamdown
5 days ago

Speller Metcalfe lands lead role on £40m Tamworth revamp

Town centre to be transformed under ambitious plans
5 days ago

Scaffold boss banned over covid loan abuse

Eleven-year director ban after misuse of £50,000 loan
5 days ago

Gove issues six weeks ultimatum to sign building safety contract

Developers told to sign Government contract issued today or be banned from building homes
6 days ago

Firm fined £120,000 for lifting two builders in a telehandler bucket

Rochdale builder Hoyle Developments fined after repeated safety breaches
1 week ago

Hunt quashes reports HS2 will stop at Old Oak Common

Chancellor says no "conceivable circumstance" where HS2 would not terminate in Central London
1 week ago

Contractor services