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Ministers told: end stop-start funding

Industry figures have insisted that ending the cyclical nature of investment in infrastructure is the key to slashing the cost of civils projects.

Infrastructure UK last week published preliminary findings of its Treasury-commissioned review into the cost of delivery of civil engineering works for major infrastructure projects.

The report called on the government to address “stop-start investment”, warning that lack of certainty of budget commitments “reduces efficiency, suppresses innovation and has a negative impact on industry’s appetite to invest in the UK”.

Alasdair Reisner, head of industry affairs at the Civil Engineering Contractors Association, said: “Ceca has campaigned long and hard on stop-start investment and the nettle is finally being grasped.

“Without a clear investment programme, the industry can’t plan ahead properly. This is hugely important and will drive enormous efficiencies.”

Andy Rowley, commercial director at Tarmac National Contracting, also called for steady investment to help suppliers bring down the cost of projects.

He said: “Tackling the culture of stop-start investment as highlighted by Infrastructure UK is vital and there is real scope to improve the industry’s budgetary planning to ensure that funds are released throughout the year.”

The report also highlighted the “fragmented supply chain” as a prime cause of the inefficiencies causing projects to cost 60 per cent more than the EU average.

It said various suppliers existed as separate companies engaged through sub-contracts rather than being vertically integrated. It recommended the development of better structures and “incentivised partnering” between supply chain members.

Mr Reisner said there was only so much the government could do. “The industry will have to address this itself. All the government can do is look at levers to try to create a more efficient market.”

The report also warned that the UK construction market’s competitive process can lead to “perverse behaviour” where contractors feel compelled to offer low prices, only for them to turn into increased costs as a result of claims.

Mr Reisner insisted that having a range of firms bidding on projects can be beneficial as they can offer different competencies, but agreed that better budget preparation from public sector clients could only be helpful.

“It’s not as if contractors are rapaciously ripping off their clients,” he said. “Addressing this will help take away the reputation that the industry has for not delivering on time and on budget.”

The government last week released the UK’s first infrastructure plan, signalling a shift in the focus of investment towards maintenance and the smarter use of assets.

It said investment in new or replacement infrastructure “should only be considered where it is a part of a clear long-term strategy, is affordable and where maintenance or small scale investment will not meet future need”.