UK infrastructure is at risk of becoming the “poor cousin” of international firms because it is using methods and materials that are stuck in the past, ICE president and National Infrastructure Commission member Sir John Armitt said this week.
Higher costs, lower productivity and a lack of investment in research and innovation were all likely to limit what the UK could afford in terms of infrastructure investment and put the country’s businesses at a disadvantage when bidding for work, he said.
Armitt was speaking at the Next Generation Infrastructure event at the ICE organised by Mott MacDonald and Build Offsite to explore how the sector could evolve to be more efficient.
Pointing to the superior value and approach offered by overseas construction companies, he warned that UK industry faces a “very significant challenge” in remaining competitive.
“Look at the joint ventures bidding for HS2. They are stuffed with European contractors working, admittedly, with those from the UK,” he said. “The UK is going to have to provide the innovation and different approach that will be required in the future, otherwise we are going to be the poor cousins in the sector.”
New technologies, new materials and new ways of working had to be embraced to make infrastructure affordable and acceptable to the public, stated Armitt.
“People assume that the work of the National Infrastructure Commission is going to be about projects. Yes, that is so to a certain extent. But our remit is also wider” he explained. “Do we need new infrastructure or can we get more from what we have as we know we are always going to get resistance for the new, whether it’s housing, rail or motorway? The challenge for us is to use our ability to communicate the issues to the public and not be surprised when they resist.”
Another challenge for the commission, probably the biggest of them all, is affordability, he said.
“The public are the people who pay at the end of the day. Whether it is through taxes, point of use or savings such as investments in pension funds, the money for infrastructure all comes from the public which makes it politically contentious,” added Armitt.
The potential volume of work is enormous but a lot won’t be delivered as the public can’t afford it, he explained.
“It is open to question as to whether the Hinkley C new nuclear power station will be built. The cost keeps going up. It comes back to what we can afford and what the public can afford to pay for electricity.”
Focusing on costs of new infrastructure and how to make it affordable has to be the responsibility of everyone in the sector, he said.
“We in this country have a lot to do to improve the aspect of cost. I was involved in comparing the cost of high speed rail around the world and there is a significant difference to here. Some of it is to do with how we design, some to do with specification, political scope and procurement as well as the complexity of the industry with its many subcontractors.
“If you compare what can be delivered by a European contractor and a UK contractor, the Europeans are far more vertically integrated and likely to do much more research and innovation than in the UK, whose contractors will say they don’t have the margins to invest.”
So who holds the responsibility to make the industry change?
“I say it is the clients,” he said. “Leadership for change has to come from clients. Clients, especially in the public sector, have to change industry by laying down challenging expectations from the beginning.”
That challenge has to include offsite manufacture, he said. “The only way to go is offsite manufacture which will require radical thinking by everyone in the profession, particularly architects and engineers. If we carry on designing as we always have, not a lot is going to change.”
But he warned, from his own experience that to get general acceptance for modular construction that is the efficient outcome of offsite manufacture will be a hard fight.
“When I started work 50 years ago it was on modular housing, it’s not new. But the challenge then was that clients and architects wanted schemes that looked different each time so you immediately lost the benefits of modularisation,” he said.
“I have the highest regard for Ray O’Rourke (who at Laing O’Rourke is investing in offsite, modular manufacturing) but it’s going to be tough. Without the support of clients it is going to be an uphill challenge.”
If clients want the innovation, better productivity and more cost efficiency necessary for home grown firms to compete with overseas businesses, they need to factor in 10% margins to allow their suppliers to invest in research, Armitt stressed.
“I say to clients we will not get research in the sector as long as you assume contractors can work at 5% margins. Unless the norm is 10% there will be no money for R&D. And that is where improvements are going to come to make the end products better quality and affordable. It will not come from an industry where clients think that lowest price is the main aim.”