Late last year the Treasury’s Infrastructure UK (IUK) division confirmed what everybody has known for ages – that UK civil engineering projects are much more expensive than European ones.
Plenty of reasons were given –many aimed at government – but it also made clear that the industry must do much more particularly when it comes to innovation.
“This is not the first study to highlight the excessively high costs of constructing infrastructure in the UK,” says Treasury commercial secretary Lord Sassoon in the foreword to last December’s Infrastructure Cost Review, the long-awaited IUK document tackling the cost of UK civil engineering.
“There should be little surprise that this study confirms that very substantial savings are achievable – at least 15%, or an estimated £2bn to £3bn annually, on the costs of building and maintaining the UK’s infrastructure,” he adds.
Surprise? No. Shame? Not much of that. Action? Precious little.
Concerns are already growing that the supposedly seminal report is gathering dust (See news).
Last week, IUK gathered 100 or more industry leaders to get feedback on the report’s main findings and help it produce an action plan for publication alongside the 23 March Budget.
Ahead of the event, those attending were asked to state which of the report’s findings they saw as a priority.
The survey findings, revealed on the day, were predictably conservative, especially where it came to addressing the need to innovate to cut project costs.
While 74% of those attending said a steady pipeline of work from government was vital – and no-one is arguing that that is important – just 48% saw encouraging greater innovation and early stage input from the supply chain as a priority.
Similarly, extending planning and funding cycles was seen as important by 71% of delegates, yet having designs and specifications that provide for innovation was rated as important by just 51%.
Ministers must be pulling their hair out. As IUK head of public sector markets Stephen Dance told the audience last week: “I agree a lot of this is client and government driven. But that is not all it is, and I hope the industry will accept that and change.”
Arup chairman Terry Hill, who led the investigation’s steering board, suggested the industry take a “leap of faith” by committing to change and in doing so convincing government to give the industry the certainty of work it craves.
“Once again it’s the British industry talking to itself.”
John Goodall, former director of technical affairs of the European Construction Industry Federation (FIEC)
The time to make that leap is approaching fast. Because it is clear that despite a five month investigation featuring 300 organisations, 120 interviews and yielding two reports running to a total of 144 pages, we still don’t really know how European firms do it cheaper.
All of which might lead government to the obvious answer – give the work to the Europeans.
In fact, the indications are, the government has already come to that conclusion. Crossrail’s two main tunnelling contracts have gone to consortiums led by Spanish contractors Dragados and Ferrovial. Britain’s biggest local highways maintenance PFI in Birmingham is being delivered by Spanish-owned Amey.
The second biggest, Portsmouth, is being delivered by French-owned Colas.
Amey and Colas have both told NCE in recent weeks that their success is in part down to the innovation that flows from their European parents. Colas in particular is leaning on its French parent’s expertise in innovative highways surfacing (NCE 20 January).
European observers are certainly in no doubt that the UK lacks the motivation to innovate.
Navel gazing and the wrong form of contracts were getting the blame at the IUK event.
“Once again it’s the British industry talking to itself,” John Goodall, former director of technical affairs of the European Construction Industry Federation (FIEC) told the meeting.
“In my 15 years involved in technical and procurement matters I haven’t really noticed a single nation that has spent so much time discussing these issues.
“While it’s refreshing to see at long last acknowledgement that there is a problem, what I still haven’t heard is anyone ask ‘why is there a problem? Why are we different to anybody else?’
But there are clear parallels here with another once great British industry – the car industry. There, in the 1980s, a collective heads-in-the-sand mentality saw more innovative, more efficient European and Asian car giants steal market share and bring the British industry to its knees.
With more and more government contracts going abroad, the construction industry is dangerously heading on a similar path.
Is it not time to make that leap of faith?