The second report on the three-year Infrastructure Cost Review highlights big strides forward by rail, highways and water industries which have worked with the supply chain to slash costs.

But it also warns the other key infrastructure sectors are making more limited progress in radically transforming the way the UK delivers infrastructure.

A central part of the findings of the report come from a survey of leading chief executives in the supply chain to gauge progress being made overhauling procurement for efficiency gains.

The Infrastructure Cost Review Report, published in December 2010, identified the
opportunity to make efficiency savings on infrastructure spending of at least 15 per cent by 2015, worth £2bn – £3bn per annum.

The second update found that High Speed 2 has identified potential efficiency opportunities of over £1bn during the review year.

There has also been big progress implementing Government cost review principles across other Top 40 projects such as the Thames Tideway Tunnel, flood and coastal defence, the strategic roads programme and Transport for London investment.

Key savings

• In-year efficiencies for 2012/13 from the Highways Agency and Environment Agency total over £290m on sample projects worth £1.16bn – a saving of 25%
• Latest illustrative ‘cost benchmarks’ for renewals expenditure by Network Rail that demonstrate a 4.9% reduction in the unit costs between 2010/11 and 2011/12.
• Identification of HS2 Phase 1 efficiency opportunities of over £1bn.

Results of independent survey of industry CEOs to gauge how industry client behaviours are improving.

Most respondents in all sectors reported that the procurement process is still favouring lowest capital cost over whole life value. Waste, energy and communications sectors have not done enough to improve procurement processes as far as their supply chain is concerned

Both the highways and rail sectors were reported as demonstrating improved governance through grouping similar infrastructure projects as part of a longer term programme to improve efficiency.

Rail sector is making significant headway in providing certainty to the supply chain, with highways and water improving to a lesser extent.

Commercial Secretary to the Treasury, Lord Deighton said: “As the next wave of projects come forward for delivery it is more important than ever that we find ways to reduce costs and get the most from each pound of taxpayer or consumer money, and the Cost Review work has shown there are big savings to be made.

“It is vital that Government and industry continue to work together to ensure a lasting legacy from this programme, to continue to bear down on the cost of building the infrastructure vital to sustained UK growth.

“I want to ensure that going forward we have much better visibility of the performance of these projects and a means to continually measure and monitor performance”.

The report underlined that visibility of the infrastructure pipeline, longer-term investment planning and a programme based approach were vital to establishing more effective delivery environments.

This will be a key focus of the final year of the programme, along with establishing effective arrangements to maintain its legacy so that benefits can be sustained and developed in years to come.