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The Treasury loves to prune, but at what price growth?

Antony Oliver

This week’s Infrastructure Cost Review annual report by Treasury body Infrastructure UK once again highlights the scale and importance of activity and spending now underway across the nation’s infrastructure sectors.

We are only at the start of this three-year plan to cut 15% from the annual £20bn infrastructure spend, but already, across the scope of public and private sector project delivery, lessons are being learnt and previously unthought-of conversations are happening.

The plethora of case studies, lifting examples from projects such as Crossrail and London Underground’s Bank station upgrade, show that progress is being made to “put in place the mechanisms through which real reductions in the costs of delivering economic infrastructure can be achieved and sustained,” as the Treasury puts it.

And to read that clients have already identified £1.5bn in savings from the recently announced government infrastructure pipeline of 40 targeted projects is impressive. Which, of course, worries me. Is it really that easy?

Well of course it isn’t. Because as the Treasury report points out, the challenge of cutting the cost of UK infrastructure is immense and will require a significant remapping of both client and supply chain behaviour.

It will require substantial reform of risk management processes and behaviours, the planning and management of the flow of projects to the market, technical standards and supply chain engagement. As the report points out, success will require a major rebasing of the entire delivery process, from conception right through to asset management. And a start is being made.

My worry is that for all of this success, while we embrace the process of these vital reforms, we don’t forget to also keep one eye on delivering the desired outcomes. Not the watered down and sensible outcomes that come about following the application of homogeneous processes, but the bold and creative ones that come from good engineering.

Take the London 2012 Olympics. Is, for example, the Velodrome a better venue than the Aquatic Centre just because it is cheaper?

Take Sheffield’s recent decision to hand its road management to Amey. Does the council’s increase in roads spending make the deal poor value, or will the long-term outcomes justify the expenditure?

My point is that while we must be rigorous about examining how much we spend, we must ensure that planning and politics is streamlined, that risk is properly priced, that projects are not over-specified and that the industry works as one to boost performance.

But we must also not forget that we are creating a lasting legacy, and one which will drive economic growth for decades.

Infrastructure is an investment not just a cost. It is an enabler of economic activity and a generator of wealth for the long-term. To simply focus on how to squeeze ever more for ever less, risks missing this point.

  • Antony Oliver is NCE’s editor

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