Delays and cost overruns on Crossrail have led to doubts about government’s delivery of major infrastructure projects, according to the Construction Products Association (CPA).
As a result of Crossrail’s opening being pushed back by a year, the CPA’s infrastructure forecasts have been revised down since the Summer 2018 forecast. Infrastructure output is forecast to increase 0.8% in 2018, down from the 3.2% increase previously predicted in the Summer forecasts.
The report says that doubts remain over projects such as High Speed 2 (HS2), Hinkley Point C and Thames Tideway, following the delay to Crossrail.
“Government delivery of major infrastructure projects remains a key concern and the £600M cost overrun and nine-month delay to Crossrail announced in July and August respectively will only heighten concerns regarding delivery of HS2 and main works at Hinkley Point C from next year,” the report reads.
“As a result, the CPA’s infrastructure forecasts have been revised down since the Summer 2018 forecast and the CPA now anticipates that infrastructure output will grow by 8.7% in 2019 and 7.7% in 2020.
“The issues suffered by Crossrail are likely to mean activity on the project continues throughout this year and over the whole of 2019. However, it also raises questions regarding whether the industry will see HS2 work as quickly as initially anticipated when the first key contracts were signed in 2017.”
Despite the concerns, the CPA says the infrastructure sector remains a primary driver of growth for the whole construction industry, with output forecast to hit a historic high of £23bn by 2020.
“Looking ahead, output growth is forecast to accelerate to 8.7% in 2019 and 7.7% in 2020, driven by main works starting on large-scale infrastructure projects in the rail, water and sewerage and electricity sub-sectors such as HS2, the Thames Tideway Tunnel and Hinkley Point C. However, as highlighted in previous CPA forecasts, there remain concerns over delivery to time and budget,” the CPA latest forecast adds.
“However, it is the delivery of these infrastructure announcements that will be key. By the end of the forecast period, infrastructure output is projected to total £23bn, £3.5bn (18%) higher than in 2017 and the highest level on record.”
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