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Government says 'fragmented supply chain' pushes up UK infrastructure costs

Stop-start investment and a fragmented supply chain are two of the key reasons UK infrastructure costs are higher than most European countries, the government has said.

In an update on the Infrastructure UK cost review released by the Treasury today, the government identified seven areas of waste that needed to be tackled in order to ensure foreign investment could be injected into the National Infrastructure Plan. The update identifies:

  • Stop-start investment – A lack of certainty of budget commitment to programme investment reduces efficiency, suppresses innovation and has a negative impact on industry’s appetite to invest in the UK.
  • Standards and regulation compliance – In the UK there is a complex web of planning, consents, regulation, process and standards, which absorb time and add considerably to cost.
  • Poor commissioning - Poor practice in commissioning is a major cause of inefficiencies in the specification, design, procurement and construction phases. 
  • Ineffective cost management - The processes of budget preparation, approval and management do not provide effective incentives to minimise the outturn costs.
  • Fragmented supply chain - The private sector construction industry for infrastructure in the UK is not structured to optimise efficiencies and maximise productivity through the supply chain.
  • Contractual approach - The UK generally adopts a more contractual approach to infrastructure projects and programmes compared to other countries, which can lead to perverse behaviour particularly in tough market conditions, where low prices achieved under competition may be increased at outturn as a result of claims.
  • These factors are all compounded by the lack of readily available data on UK infrastructure costs and asset condition. 

The investigation will be reported by the end of 2010.

Civil Engineering Contractors Association (CECA) national director, Rosemary Beales, said: “The interim findings of the cost of civil engineering survey appear to be very encouraging, endorsing a number of long standing targets for change.

“IUK have taken on board the points that stop/start investment and lack of certainty is highly inefficient and that clarity reduces costs has been acknowledged.

“Extending this principle to the roads programme and other areas of publically funded infrastructure should be a central proposal in the final report which we hope will be carried through into real reform.”

See the full updated review here.