An industry-government charter, a Joint Programme Management Board, and a published forward investment programme will contribute to reducing infrastructure construction costs by up to £3bn, the government said today.
New industry champions and new competition and procurement models were also central to the plans set out today in a government report by Infrastructure UK (IUK).
The IUK report set out a detailed Implementation Plan for activity through 2011 and beyond, to realise savings identified in the Infrastructure Cost Report of December 2010 and reduce construction costs by £2bn to £3bn each year.
The key elements of the Implementation Plan are:
- A charter between the construction industry and Government that sets out the behaviours expected in future relationships.
- A Joint Programme Management Board to be chaired by Paul Morrell, the Government’s Chief Construction Adviser, which will ensure that the activities are implemented consistently with measures across the wider public sector.
- Improve the ability of industry to plan effectively, by government publishing a two-year rolling forward programme for investment every quarter from autumn 2011.
- Encourage greater innovation by introducing new models of competition and procurement.
- Increase industry confidence by developing more effective governance for public sector projects and programmes.
- Reduce waste, for example by establishing a common set of principles for the management of contingency budgets.
- Improve value for money by establishing a data group between the public sector and industry practitioners to develop the extended use of cost benchmarking in infrastructure delivery.
Industry leaders have been identified to act as champions for key components of the plan.
These include industry champions Network Rail director of investment projects Simon Kirby, chief scientific advisor professor Brian Collins and Bam Nuttall chief executive Steve Fox who, overseen by ICE president Peter Hansford, are taking up the baton handed over by Arup chairman Terry Hill, who led the cost review study.
These industry champions will be focal points for academia and industry professional and trade bodies, the government said.
“Wider commitment to reform”
The government said implementing the measures will contribute to its “wider commitment to reform the way in which it procures public sector construction and infrastructure to reduce costs by up to 20%”.
The charter will be published by by the end of May, setting out the priorities and key components for reform and behavioural change in client and supply chain practice, including improved transparency and certainty, grouping projects into more efficient longer-term programmes, allowing for earlier and integrated supply chain involvement in innovation, and seeking the best whole life outcome rather than the lowest cost.
The Joint Programme Management Board will report annually on progress against these objectives.
The Joint Programme Management Board will report annually on progress against these objectives, with the first report to be published in March 2012.
The government will then report at the end of the programme in 2014 on the progress made in bringing about these behavioural changes.
Over the next 12 months, Infrastructure UK and the Cabinet Office Efficiency and Reform Group will publish guidance on the selection of effective procurement models and contracting options for different categories of infrastructure projects
Pursuing alternative approaches
Under its plans to smooth out the impact of stop-start investment, for example by optimising work planning periods with funding cycles and enabling grouping of projects into longer-term programmes, the government will “start by pursuing alternative approaches” in the water industry, with the Department for the Environment, Food and Rural Affairs (Defra) and water regulator Ofwat, as part of the wider regulatory review of the water industry.
It will also report on alternative approaches in collaboration with the Highways Agency roads and Environment Agency flood defence programmes.
“Investment in the UK’s infrastructure is running at about £40bn a year. We must ensure that we use public funding more efficiently.”
Lord Sassoon , commercial secretary
The Implementation Plan comprises six interlinked workstreams − visibility of forward programme, stronger governance, improved commissioning, smarter competition, industry integration and infrastructure data − building on the themes identified in the December report.
The government will be publishing further detailed measures relating to wider public sector construction and procurement before the end of May 2011. Infrastructure UK will continue to lead the implementation plan.
Commercial secretary to the Treasury Lord Sassoon said: “Investment in the UK’s infrastructure is running at about £40bn a year. We must ensure that we use public funding more efficiently and the Infrastructure Cost Review has identified savings of up to £3bn a year.
“This report provides detailed measures that will unlock these savings, redefining the way in which Government, regulated utilities and the construction industry do business together.”
Costain managing director Darren James welcomed the report. “The actions in this plan represent an excellent opportunity for the whole construction industry to improve the efficiency in delivering infrastructure projects and to develop more effective relationships throughout all levels of the supply chain,” he said.