Infrastructure plan details £3bn savings target

Grant Prior 12 years ago

Ideas on how to cut the construction cost of infrastructure projects by up to £3bn a year were launched by the Government today.

Experts at Infrastructure UK (IUK) have revealed a detailed Implementation Plan to reduce costs of civil engineering works in the water, waste, transport, energy and telecommunications sectors.

The Implementation Plan sets out a detailed programme of activity through 2011 and beyond to realise the savings which were first identified in the Infrastructure Cost Report of December 2010.

The key elements of the Implementation Plan are:

A charter between the construction industry and Government that sets out the behaviours expected in future relationships.

Detailed measures that build on those announced by the Chancellor in Budget 2011 and Plan for Growth last week which will:

o improve the ability of industry to plan effectively, by Government publishing a rolling forward programme for investment;

o encourage greater innovation by introducing new models of competition and procurement;

o increase industry confidence by developing more effective governance for public sector projects and programmes;

o reduce waste, for example by establishing a common set of principles for the management of contingency budgets; and

o improve value for money by establishing a data group between the public sector and industry practitioners to develop the extended use of cost benchmarking in infrastructure delivery.

A Joint Programme Management Board chaired by Paul Morrell, the Government’s Chief Construction Adviser, will implement the plan.

The infrastructure cost cuts will contribute to the Government’s wider commitment to reform the way in which it procures public sector construction and infrastructure to reduce costs by up to 20%.

Further detailed measures relating to wider public sector construction and procurement will be published before the end of May 2011.

Infrastructure UK is already working with the Highways Agency, High Speed 2, the Environment Agency and with private sector companies in the water industry to help embed new practice in forthcoming major programmes.

Lord Sassoon, Commercial Secretary to the Treasury, said: “Investment in the UK’s infrastructure is running at about £40 billion a year.

“We must ensure that we use public funding more efficiently and the Infrastructure Cost Review has identified savings of up to £3 billion a year.

“This report provides detailed measures that will unlock these savings, redefining the way in which Government, regulated utilities and the construction industry do business together.”

The report was welcomed by key contractors. Darren James, Managing Director of Costain said: “We look forward, together with our industry colleagues, to working with Government to deliver the benefits from the wide ranging improvement objectives set out in this report.

“The actions in this plan represent an excellent opportunity for the whole construction industry to improve the efficiency in delivering infrastructure projects and to develop more effective relationships throughout all levels of the supply chain.”

Rosemary Beales, Civil Engineering Contractors Association national director, said: “There are a lot of good ideas contained within the Implementation Plan, in particular the move to develop a visible long-term project pipeline and the plans to alter and extend regulatory cycles.

“Both these changes can offer contractors the certainty to plan and invest in skills and materials for the future, without the stop-start investment that has often prevented them from doing so in the past, driving up costs for industry, and prices for government.

“Involving contractors earlier in the procurement process will also allow them to utilise their expertise in the field to help to cut out overheads and lower costs and prices.”

She added: “However, much of the plan at this stage is based on aspiration and intention, and only when progress toward these immediate goals is reported on next year, will it be possible to tell if the government is truly committed to helping industry deliver the savings that can undoubtedly be made.”

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