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Future Engineers: Continuity and value

Selling the value of investment in roads should be the new mantra for engineers, with the government backing the industry in ways almost unprecedented in modern times. 

With £15bn committed to the Strategic Road Network and a further £5.8bn to local authority roads, the government is certainly backing highways investment. 

But there is scope to eke out even more cash, for even more investment, if the public and other stakeholders can be won over. 

And that’s important given the state of the much of the highway network. The one-off cost of repairing all roads would be £12bn, up from £10.5bn in 2012, according to the 2014 Asphalt Industry Alliance ALARM survey, an annual survey of council highways bosses in England and Wales. 

“Like it or loathe it the most popular way of getting round the country is by road – because it works. So let’s promote that.” 

David Craik, Colas 

The survey also found that 18% of English roads are now classed as being in poor condition with the figure rising to 19% in London. 

Highways

The government recognises this, and the importance of the Strategic Road Network in supporting the economy by moving people and freight reliably and safely. 

Investment

That is why it is investing the £15bn; and it’s also why the Highways Agency is being reformed as a government-owned arm’s length company, or go-co, and renamed Highways England. While the cash can never be guaranteed, with the new company set up and charged with delivery, backing down will be much harder to do. 

“We have seen road building programmes come out before, then seen a change of government, and then seen the road programmes collapse,” observes Colas chief executive and Civil Engineering Contractors Association Southern Region chairman Lee Rushbrooke. 

“But Highways Agency becoming a go-co as Highways England gives it a lot more authority; a lot more surety of spending. 

“Having the go-co will give the country a supporter of roads.” 

“It has almost been unfashionable to say roads are a good thing,” adds Colas highways director David Craik. 

“A properly planned new road or improvement to an existing road provides significant benefits to our society, but protests against these projects dominate the issue. With a planned and funded long term strategy, the projects can be provided with the support they require to succeed. The rail industry has a really good voice and I believe the go-co will give the Strategic Road Network a real good voice that it has not had.”

That good voice will be needed with some of the schemes now being taken forward for delivery, including the A303 Stonehenge tunnel and the A27 Arundel bypass. 

Ambition

Successful delivery of these schemes will pave the way for ever more ambitious ones. There are plans for a Trans-Pennine Tunnel and a dual carriageway linking Oxford and Cambridge. The onus really is on engineers to deliver and also celebrate what they are delivering. Says Craik: “Like it or loathe it the most popular way of getting round the country is by road – because it works. So let’s promote that.” 

It is also important to look down to local level and promote the value of investment there. “Increasing motorway lanes and improving A-roads alone won’t ease congestion but will only speed up cars between growing delays and traffic jams on local roads,” says Local Government Association transport spokesman Peter Box . 

“With the government predicting a 43% increase in local traffic by 2040, this will only get worse.” 

The LGA has been calling for the government to inject a further £1bn a year into local roads maintenance by re-investing two pence per litre of existing fuel duty. Recent national polling has found 83% of the public backs the plan. 

But that cash is closely guarded by the Treasury: fuel duty has been 57.95p per litre since March 2011 and contributes more than £33bn a year to the chancellor’s coffers. 

Craik thinks alternative funding solutions are the answer. 

“Local authorities can borrow money far cheaper than we can. We need to get our act together on asset management planning, prove that investment up front now will save money later. Again it comes back to having a voice and a reasoned argument – and the numbers that prove your case.” 

It’s not as if local authorities don’t borrow: total local authority borrowing has increased by 26% from £67.2bn to £84.7bn in the five years to March 2014. The biggest borrowers? The Greater London Authority and Transport for London, who have borrowed £8.2bn over that period, with quite a substantial chunk used to fund transport projects such as Crossrail.

At a more local roads level Craik cites the example of Blackpool City Council which recently used prudential borrowing to invest £30M to revitalise its road network and bring about savings of over £100M over 25 years (see box). 

“It’s an example of bringing PFI/ DBFO knowledge to bear but without the PFI funding stigma,” explains Craik. “Use that knowledge to develop your own funding profile,” he urges. It means engineers need to get out and promote their solutions, and also build convincing business cases around them. 

The Welsh Government is taking that route. Over the last three financial years, it has enabled local authorities to borrow an additional £172M of capital funding through the Local Government Borrowing Initiative to improve the local road network. 

Value for money

Local authorities must submit detailed business cases and asset management plans to demonstrate value for money, and the government wants work funded from this initiative to be based on best practice asset management and to last at least 20 years. 

Central government seems to have caught on. The 2014 National Infrastructure Plan (NIP), published earlier this month, confirmed regional roads cash allocations for the next parliament together with bold reforms to local capital maintenance funding. 

The NIP revealed that more than £1bn will be taken from the traditional needs based formula of local highways capital maintenance funding and divided between a £580M asset management incentive fund and a £575M challenge fund for large one-off maintenance and renewal projects. 

It is a bold new way of delivering highway maintenance, and needs bold engineers to make it happen.

“Revenue budgets are going to get cut, cut, and cut,” states Craik. “The industry is going to have to go down the road of investing first to get a return later. It is a challenge for the industry, but we need to invest in asset understanding.”

And by doing that the outcomes could be rather different. “Developing technology to fill potholes is responding to the wrong need,” says Craik. “We need to be developing technology that improves asset life. That’s where the Highways Agency is going and it’s where everyone else needs to go,” he says. 

This article was produced in association with Colas.

Blackpool approach

Blackpool Council has carried a major four-year project called Project30 to address its highways and footways maintenance backlog and to generate significant medium to long term savings. 

As Blackpool Council’s largest asset, with a valuation in excess of £500M, the highways and footways network is crucial to the functioning of the town. It is an expensive asset to maintain and Blackpool Council had, in common with many other local authorities, underinvested in maintenance over many years. The result was a gradual but accelerating deterioration of the network. 

It was difficult to make a business case that would convince elected members to make significant investment in this area against competing demands from other services. What was needed was a means of arriving at sound financial figures based on accurate statements of highway and footway conditions and the cost of their treatment. 

The council’s solution was to work with its technology partner Gaist to introduce a new method of recording, managing assessing the condition of its highway assets and treatments needed. 

As a result of this work Blackpool Council was able to accurately determine the costs of any remedial treatments required. 

The quality of this condition/ treatment assessment data created a high confidence level in the results, which supported a robust business case for the initial investment in the four-year treatment plan known as Project30. 

The benefits are savings of over £100M over 25 years, the avoidance of major reconstruction projects and the associated reliance upon increasingly-expensive oil-based products such as bitumen. Maintenance is also becoming proactive as opposed to reactive. 

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