Britain’s infrastructure is costing significantly more to put in place than in mainland Europe and this cannot be allowed to continue. Total costs must be reduced before government will be willing to provide certainty and continuity in its public sector spending.
This was the overwhelming conclusion of the latest group of industry leaders gathered by NCE last month for its second round table discussion on how to meet the government’s more for less agenda.
Asked to suggest up to ten factors that would help redress this imbalance, company bosses debated issues ranging from the “uniquely British” approach to planning and procurement to the cost efficiency of design repetition and construction innovation.
Compromise was not an option on the table. Leaders of 13 of Britain’s biggest and most influential construction companies and organisations rejected finger pointing and specific sector promotion in favour of a united determination that the current opportunity for a changed approach to infrastructure prioritisation could not be missed. Catalyst to the debate was Infrastructure UK (IUK) chief executive James Stewart. IUK is the Treasury advisory body tasked with both developing a long-terrm infrastructure investment plan and with reviewing the perceived high costs of Britain’s infrastructure projects.
He stressed he was in listening mode and still at the evidence gathering stage. “We are not looking at a project’s specific input costs, or saying that construction itself costs too much,” he explained. “But when you put infrastructure in the ground in this country the overall output costs tend to be far more expensive.”
His prime aim, he said, was not to “analyse to death” why UK projects cost significantly more, but to identify, by this autumn, five to ten things that can change.
“I am now pretty confident we can do this,” Stewart told the gathering. “I think the harder challenge is to put implementation plans in around those propositions and to make sure they actually work in practice.”
Support for his plan was unanimous, and was summed up by Balfour Beatty director for innovation and strategic capability Andrew Wolstenholme: “From now on clients in the public sector are going to find their budgets under huge pressure, while those in the private sector will want to focus on developing value for money,” he said. “Delivering infrastructure will require a really clear vision from clients to develop the brief with their consultants and designers; with contractors and specialist supply chains coming together to attempt to eliminate the waste.”
“Best value is only ever delivered if we work together and not push people into the corner,” he claimed. “People begin to innovate when the going gets tough; which it is about to get.”
“We all need a clear, simple brief that doesn’t change,” Wolstenholme continued. “And then we must procure and incentivise the supply chain to pull out the opportunities in a collaborative manner, not just push down the risk to lower tiers.”
IUK has already analysed a report that benchmarked civil engineering costs for the proposed High Speed 2 (HS2) rail link against similar projects in mainland Europe. This concluded that UK costs appeared to be twice those on the Continent.
“In the past we have been all too good at pointing fingers. When you break it down the problems run right the way through”
Simon Kirby, Network Rail
Network Rail director of investment projects Simon Kirby made no attempt to refute such analysis. “We could pull apart the specific work done on HS2 benchmarks, as it has flaws,” he said. “However, when you put all the benchmarked unit rates on such major projects together with planning and land purchase costs, there is an order of magnitude difference in the UK.”
“In the past we have all been too good at pointing fingers, with the problem always being someone else’s,” Kirby maintained. “When you break it down the problems run right the way through and we’ve got to get to the facts rather than the anecdotal evidence on which people’s perceptions are all too often based.”
Participants argued that actual construction costs could vary little across Europe, with Britain’s higher end-to-end costs heavily influenced by the widely varying compliance, specification and quality standards applied.
Stewart said cost differential warranted “a close look at the standards and legislation surrounding construction in the UK and also across Europe”.
A holistic analysis of total project delivery in the UK and overseas was the only secure comparison, argued the engineers.
“There seems a lot of focus on costs as opposed to value,” said Nigel Goodman, UK water director for CH2M Hill. “We should be looking at the overall programme more than just costs of individual elements and driving efficiencies from there.”
A “uniquely British” attitude to construction
Attitudes to planning can be the key, he said. “In France you know you are going to have the planning and backing to drive projects through.”
“But here we have uncertainty. Our stop-start attitude and ‘let’s have another look’ approach all adds disruption and cost.”
There was considerable discussion on Britain’s planning process. Wolstenholme, recalling his previous role as BAA construction director for Heathrow Terminal 5, rhetorically asked why it should cost more to build an airport terminal in the UK than anywhere else. He did not wait for an answer before explaining that, during T5’s four year public inquiry, two new terminals were delivered at Paris Charles de Gaulle airport, and a new runway at Amsterdam Schiphol.
He said that the process was inherent in Britain’s national DNA. “Whether we like it or not that is simply the way we do things in this country,” he said. “If we want to change that, we have to change our whole planning culture.
“The UK way of doing things is simply too expensive and leaves us less competitive as a country,” said Stewart.
“We are now in a climate in which we cannot afford what we want to build,” he argued. “And people are going to be more open to change than previously.”
“Some sacred cows will have to go,” he said. “We need to identify them and come up with plans for change. And not just in the public sector, but also in the private sector, where 70% of infrastructure spend is commissioned.
“We need to be more transparent about all the contributing costs of delivering infrastructure such as over bureaucratic processes, planning and design.”
“If what we have done in terms of compliance was costed, I suspect the bureaucracy would be frightened by its own bureaucracy”
Clinton Leeks, Crossrail
Crossrail corporate affairs director Clinton Leeks pointed out that, to avoid his project’s possible five year planning inquiry, his team had instead spent over three years in parliament taking on 3,500 parliamentary commitments. “It’s swings and roundabouts,” he said. “The sheer thickness of the veneer of what we have done in terms of compliance, reporting and auditing is huge and, if it was costed, I suspect the bureaucracy could be frightened by its own bureaucracy.”
Matthew Farrow, head of energy, transport and planning at business lobby group CBI, described this “UK premium” as a systemic issue. He said CBI construction members could win overseas contracts which showed good cost control, yet, in the UK, they seemed caught up in bureaucracy.
“The whole planning issue is a factor, and the feast to famine approach to national infrastructure budgets can add to long term costs,” he concluded. “Compliance is essential but we must make sure that the standards are appropriate.”
Grontmij UK managing director Lawrence Hughes, offered an example of Europe’s stability. “They don’t change the rules,” he said, describing a typical roads contract in mainland Europe where his company would be responsible for everything from basic construction to full utilities supply, all installed at the same time.
Repetition versus innovation
One of the few issues to invade the round table’s consensus was the debate between design and construction repetition compared with innovation.
“Most of what we as a client are doing is all about repetition, and we want the supply chain to accept that. We don’t want them to redesign things,” argued Highways Agency financial services director Steve Dauncey.
“We want a single product and we will specify it. We have trouble with our consulting engineer colleagues accepting that we have got a good idea of what we want,” he said. “It’s really about sharing that best practice, engaging with the supply chain and delivering standard products. It is not about double guessing as there is a danger in interference and over-engineering.”
“We want to deliver processes and programmes in a way that gives your industry certainty whilst delivering agreed outcomes,” Dauncey maintained.
But Construction Industry Council chairman Gordon Masterton said that “game changing ideas”, rather than repetitive design from the past, should be among the main recommendations put to IUK.
He cited the early 2000’s prison building programme where consultants were encouraged not to replicate existing public prison design standards but instead to start with clean sheet thinking. The results, he claimed, were vast efficiencies in cost, effectiveness and value.
He also noted the Highways Agency’s bridge standardisation policy of the late 1970s which he claimed was a “sausage machine” process that failed because the standard designs became outdated and poor value.
“It’s about sharing best practice. It is not about double-guessing, as there is a danger in interference and over-engineering”
Steve Dauncey, Highways Agency
“But there is also a serious risk in the seduction of change for its own sake - we need a constructive tension between innovation and standardisation,” he claimed. “In these tough times we should not be trying to change too quickly or dramatically, if we can change the game just by getting better at what we know how to do.”
He was supported by Scott Wilson director of energy development Richard Coackley. He compared the UK’s several nuclear power station designs with France’s single option.
As the UK is now using international contractors, equipped with probably the best energy technology, then Britain should, he claimed, avoid further innovation and just go with tested designs.
Expressing the supply chain view, John Patch, director of piling specialist Roger Bullivant, was demonstrably the most forceful. Assuming that the whole design and construction team, including specialist contractors, were actually talking to the client, up to 10% overall construction costs could be saved through targeted repetition, he claimed.
Looking for a McJob?
Patch outlined his company’s foundations contracts for dozens of new McDonald’s restaurants during a major expansion programme. By offering a single price for the foundations of each of the three basic sizes of restaurant, regardless of ground conditions and loading criteria - and encouraging detailed discussion between client, designer and even oven supplier - Bullivant’s approach, Patch claimed, contributed to a 60% reduction in overall construction time.
He maintained that major savings could be achieved through more practical application of safety factors during construction. Citing piling contracts in south eastern England, he claimed that piling factors of safety 50% more onerous than needed were being applied by designers who feared insufficient site investigation or lack of confidence in both the design and construction process.
“I think we are more risk averse in the UK than anywhere else,” he said, blaming in part high insurance premiums. And any attempt by his company to introduce construction innovation was met with nervousness and rejection by clients.
“We are failing to educate young people coming into our industry in the best, most cost efficient, techniques of design and procurement,” Patch claimed.
JOIN THE DEBATE
NCE’s Infrastructure Show at Birmingham’s NEC, between 18 and 20 October, will focus on the how the construction industry can offer government more for less.
For further information visit www.best-show.co.uk or contact Rob Lozowski 020 7728 4513 or firstname.lastname@example.org