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Analysis: Why government's work pipelines worth billions will benefit industry

A total of 453 schemes or specific projects were set out in the publication of the government’s £36 billion funded construction pipeline.

An infrastructure pipeline of 505 schemes, including communications, utilities and transport projects, was also published in a move that was warmly welcomed by the industry following a campaign for better information on public sector spending.

The plans, which set out detail on public and private contracts, were published alongside the National Infrastructure Plan 2 and include details of costs, construction start dates and client details. Each project is also given a ‘traffic light’ rating of its progress to date.

Civil Engineering Contractors Association director of external affairs Alasdair Reisner says CECA’s first step will be to ensure its members know what the pipeline is and look at it.

Feedback sought

It will then ask its members for feedback on the proposed workload, which it will submit to the government in the new year.

The Construction Products Association already met Treasury officials this week to discuss the impact of the forward pipelines.

The Strategic Forum for Construction, the joint industry group, also announced this week that it will start work on an ‘instant growth’ package to boost short and medium-term work.

Mr Reisner says: “There is an issue now about making sure industry knows [the pipelines] are there. We will be seeking their views if there are any oversights or errors. We will be keeping a robust eye on how and when this pipeline is updated.”

Contractors will benefit from having all the construction schemes set out in one document, so business development directors can estimate the percentage of future projects they might win and base their resources and forward plans around work targets in each sector, Mr Reisner said.

Construction pipeline highlights

Flood:

Schemes listed include nine worth more than £50 million and 11 capital projects with construction start times ranging from with a total of £670m to be spent over the next three years including Thames Barrier and associated gates works due to start in March 2012.

Health:

A total of 92 ProCure 21 and another 51 Procure 21+projects are listed, with 71 already under construction and a further 72 under pre-construction. The projects are worth £1.48bn over the next three years. A total of 14 PFI or NHS Local Improvement Finance Trust projects worth more than £1bn over the next three years are also included in the list.

Housing and Regeneration:

Almost 50 schemes are listed worth a total of £4.2bn over three years, with the Decent Homes backlog accounting for 46 projects. A total of 37 schemes have earliest construction dates listed in 2012.

Justice:

Five courts projects worth £240m to 2015 are listed and nine prisons worth £575m until 2014 are included.

Transport:

A total of 71 schemes worth £15bn over the next four years are listed including seven local authority PFI projects currently in procurement worth a total of £1bn. The list includes committed Highways Agency schemes both pre- and post-spending review 2010 including 15 committed starts worth £1.4bn over four years.

Waste:

A total of 23 PFI and 15 PPP schemes are listed worth £4bn over four years are listed including waste management contracts due to start next year in Yorkshir, Suffolk and Merseyside.

MoD:

Defence Infrastructure Organisation projects worth £2.4bn over four years. These include a £141m relocation project in the West Midlands due to start construction in 2013.

Education:

Devolved formula capital grants and devolved budget for additional basic need maintenance worth £4.6bn are listed.

Industry campaign

Before the publication of NIP2, construction industry bodies met Treasury officials to cite reasons for publishing in-depth forward work pipelines.

These included support for industry forecasting, the ability of suppliers to invest intelligently in plant and equipment, and a way for companies to ensure bid teams were in place and adequately resourced for work.

Bardon Contracting commercial director Andrew Bradshaw says that while the pipelines are welcome in providing a one-stop shop for government contracts, businesses such as his would continue to use OJEU notices and relationships with key contractors and clients when seeking new business opportunities.

“NIP2 and the work pipelines are great in that they give us a forward view to look at our expansion plans, our investments and provide an all-round forward plan for the business,” he says.

“It’s a welcome announcement but it can’t stop here. This needs to become a UK plc vision now, and not one that is just changed between governments.

“It is also just a slice of what is needed. We need to see increased spending coming from local authorities and we want to see more detail around managed motorways and road widening.”

Relationship potential

Mr Bradshaw says the pipelines will be an opportunity for the company to develop relationships with both tier one contractors
and clients.

He adds: “We have established relationships with the likes of Balfour Beatty, Costain and the Highways Agency, but we will look to get involved as early as possible in schemes.

“We can’t go for everything [on the pipelines] but it is one of the tools that will help us with where we want to go as a business.”

However, Thomas Vale chief executive Tony Hyde says that, while it is good to see construction becoming a government priority, the pipelines are less likely to provide solace for regional contractors and SMEs.

“Next year is going to be very tough for all companies who will need to keep controlling costs and particularly SMEs will question whether their end is being looked after,” he says.

“I also think that housing is still being overlooked as an area in which you can create jobs very quickly.”

Mr Hyde says one way regional contractors could benefit from the work pipelines would be to form consortia to bid for major infrastructure projects announced under NIP2 and compete with tier one contractors.

The industry will now respond to the funded construction pipeline before it is updated in the spring. The list of infrastructure projects is due to be updated annually.


‘We want feedback on pipeline’ says Treasury

The government wants the construction industry to provide feedback on the new pipelines of work as it looks to update the funded construction pipeline in the spring.

Speaking at a Treasury briefing attended by Construction News, Infrastructure UK chief executive Geoffrey Spence said: “We will update the plans by each sector and we want to make it as useful as possible, so we need some feedback from the construction industry on this.”

Treasury commercial secretary Lord Sassoon added: “These plans will set the agenda for decades to come and we will report on the National Infrastructure Plan on an annual basis to give the construction industry the transparency they have been looking for.”

Lord Sassoon added that there was a difficulty finding projects that could be turned around quickly, but that £5bn for the next three years had been found from departmental savings, announced in the autumn statement last week. A further £5bn will be allocated under the next spending review.

“Infrastructure is now centre stage [in government plans] and that is where it is going to remain,” he said.

“We are breaking new ground here and this is a step forward in terms of transparency. If there were more savings we would love to commit more but we have used all the money we have saved and we don’t apologise or understate this.”

He confirmed that funding announcements will take place shortly for more local transport projects to get the go-ahead, as the government looks to keep infrastructure spending on the agenda until the end of the year.

 

 

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