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Ready to start spending

Release of public funds plus substantial private investment is putting a smile back on the face of Scottish civil engineering. Jon Masters, Claire Symes and Mike Walter begin NCE’s special feature by reviewing prospects north of the border.

Scotland’s construction markets, already buoyed by substantial private investment, look likely to be boosted further as the new Parliament gets to grips with public expenditure.

Edinburgh’s emerging political scene is creating a hotspot of activity in the capital and in Scotland’s central belt area, home to 80% of the country’s 5M population. Sectors such as water treatment and privatisation of trunk road maintenance are now playing catch-up following a slow down during the devolution process.

Creation of the Scottish Parliament devolved 10 major powers from Westminster. Six of these directly affect civil engineering - transport, health, education, local government, economic development and tourism. The Scottish Executive, as the civil service of the Scottish Parliament, is now administering policy in these areas.

ICE executive secretary for Scotland Wylie Cunningham says the Scottish Parliament’s first 18 months have been largely spent structuring the new ministerial process.

‘Now political control is coming from Edinburgh instead of Westminster, Scotland is likely to benefit from closer links and better representation from Government, ’ says Cunningham.

‘For instance, transport issues, such as congestion charging, need to be considered specifically for Scotland due to its unique geographical spread of population.’

Head of property development for Perth & Kinross Council Ken Dunn says local authorities are hoping to receive greater support from the Scottish Parliament in recognition of their differing needs.

‘Devolution is likely to have a positive effect on policy and funding in future because the regional differences between England and Scotland should be taken into account, ’ he says.

More direct representation may also have a beneficial impact on Scotland’s publicly owned water authorities, which have their own unique problems related to balancing services between urban concentrations and remote districts.

The three water authorities, East, West and North of Scotland Water, are currently the big construction spenders in Scotland albeit through Private Finance Initiative projects. Around 900M of PFI schemes have now been procured to comply with EU directives on urban waste water treatment.

‘Almost half of all construction activity in Scotland at the moment is related to the water industry, ’ says East of Scotland Water director of development Robin Hamilton. ‘There are no plans to privatise Scotland’s water industry, but we are looking closely at how water companies in the rest of the UK are working to improve efficiency and taking on board current best practice.’

According to Hamilton, when the large PFI funded construction projects draw to a close maintenance in England have come north to bid for the regional five year contracts worth between 14M and 26M each year.

Policy on transport investment, particularly for developing Scotland’s road network, looks promising for the next few years. According to Scott Wilson managing director Jim McCafferty, devolution is making the difference.

‘It has got quite hectic in Scotland lately with more work around than a year ago and the recent hiatus in road spending coming to an end. The political departments are in place, they know their levels of funding and what their priorities should be, ’ says McCafferty.

‘It is an interesting time. There is now more general recognition that roads form a vital part of integrated transport, providing environmental aspects are properly dealt with. There is a general shortage of engineers though, which will affect some local firms more than others, as a lot of companies moved resources into England and Ireland while work was very slow in Scotland.’

The SEDD’s Transport Group has a budget for new-build roads and highway maintenance of 210M for 2000/01. Its November 1999 Strategic Road Review announced five new publicly funded motorway and bypass schemes. According to the review, all five projects will start before the end of 2002.

Work to be released under the SEDD’s road review is more than matched by major projects being considered for procurement through PFI. These include the proposed M74 extension into Glasgow, expected to cost 300M, Glasgow’s southern orbital and upgrading of the A92.

Bidders for the 30M, A92 Dundee to Arbroath scheme are currently being shortlisted by client Angus Council and its adviser Babtie.

‘The Scottish Executive has been very proactive with PFI and trying to take procurement forward, ’ says Babtie Infrastructure Consultancy managing director Alan Craig. ‘A lot of procurement initiatives have been taken and there is healthy debate on how to move PFI beyond basic shadow tolling.

‘Devolution is having a neutral overall effect on workloads in my view, with more or less the same bag of money available.

Private investment seems to be the way forward for developing large schemes.’

According to Craig, Babtie’s rail business is growing with good prospects in the light of planned investment in the rail network. Railtrack Scotland’s annually updated 10 year spending plan claims 2,300M will be spent on Scotland’s railways before 2010.

Spending figures for the near future are unclear however, as Scottish aspects of the Strategic Rail Authority’s blueprint for rail investment and the Rail Regulator’s review are still to be added to Railtrack Scotland’s plans.

Reinstatement of disused rail there will still be a lot of capital investment to come for packages of small to medium sized schemes, which will be let through three to five year framework agreements similar to those in England.

‘Retaining our industrial customers against strengthening competition from private water suppliers is our biggest challenge and essential for maintaining sufficient income levels and good supply to outlying regions, ’ Hamilton says.

Contractor Morrison, now Edmund Nuttall’s geotechnical division Ritchies has recently completed the first in a series of stabilisation schemes under a three year framework agreement with Railtrack in Scotland. The 330,000 rock slope project at Slochd Summit near Aviemore involved rock scaling and the installation of rock anchors and wire mesh during 60 overnight track possessions in September and October this year.

part of the Anglian Worldwide Group (AWG) following its acquisition by Anglian Water this year, is involved in a number of PFI water deals in Scotland including the 100M Tay wastewater scheme for North of Scotland Water.

‘The market is good with work levels up in most areas, ’ says Morrison divisional director for north and west Scotland Iain Logue. ‘Increased investment from British Waterways for example is producing work and encouraging development in Scotland’s central area. We are also looking to increase our involvement in rail as anticipated funding is now above the threshold required to make entry by newcomers viable.’

According to Logue, Morrison and Anglian Water are now combining resources to diversify into transport and whole life management of outsourced local and central government assets.

Morrison is bidding as part of private sector and public/private partnerships for two out of the four regional trunk road term maintenance contracts currently being let by the the Scottish Executive Development Department. Several companies with experience of trunk road links and construction of new lines through public/private partnerships, such as the Aberdeen and Glasgow Crossrail schemes, seems to be more prevalent north of the border.

Railtrack Scotland has stated a commitment to working in partnership with the public and private sectors to reinstate the Waverley line between Edinburgh and the Borders. It is also looking to reopen the Stirling, Alloa, Dunfermline rail link to connect with a planned European port development at Rosyth.

The power sector offers the promise of substantial future workload in Scotland. The main spurs appear to be the results of privatisation and government carbon dioxide emission targets set following the 1996 Kyoto environment summit.

Greater investment in renewable energy sources is also on the horizon. This will be ploughed predominantly into wind power and combined heat and power (CHP) plants with efficiency levels of greater than 75% conversion, which have also been classified as renewable generators.

Asset design and construction management firm Ingenco, formed in June 2000 following a management buyout of Scottish Power Technology, looks set to benefit from developments in the power sector.

Ingenco chief executive Ken Jackson says: ‘The market is growing because privatisation has led to a lot of assets in the Wind power will benefit from greater investment.

power sector changing hands.

Opportunities have arisen for refurbishing and improving existing facilities with pressure from power regulator OFFER (Office of Electricity Regulation) to increase power plant efficiency.’

According to Jackson, high efficiency CHP plants are capable of meeting the Kyoto CO 2target and encouragement for their installation has come in the form of tax relief for industry using renewable energy sources.

‘Acceleration of CHP plant use is good news for us, as are new regulations governing the Scottish western islands Eriskay and Barra have been provided with a fixed link for the first time. Contractor RJ McLeod completed the first stage of the Eriskay rockfill causeway to 2.5m above mean sea level for Western Isles Council on 20 November.

Rock armour is now being placed before the causeway can be built up to its full 5.5m above the Sound of Barra.

Halcrow, now a multi-national civil engineering consultant, started out from a Scottish base in 1868.

After building up its business around the world, the company has recently made moves to increase its share of the home market, acquiring Scottish based consultant Crouch Hogg Waterman in 1997.

‘We have seen a great deal of growth in activity levels over the last few years, partly due to our broader business base since the takeover, but also due to Scotland’s prospering economy, ’ says Halcrow Scotland chief executive Martin Harrison.

Halcrow’s Scottish business now has five offices specialising in civil and structural engineering, building, transportation and It is too early to assess properly the Scottish Executive’s impact on construction north of the border says Edinburgh based contractor Balfour Beatty Construction’s Alan Cessford.

‘Fortunately, the people controlling day to day transportation, for example, have remained much the same as before devolution and there has been a good degree of continuity.

‘Nevertheless, we are busier than we have ever been in the water and sewerage sectors, ’ he says. ‘Roads and bridges have been relatively quiet, but way electricity is bought and sold in Britain, ’ says Jackson.

‘From April 2001 power will be bought from the lowest bidder, which will drive prices down and force operators to increase the efficiency of their assets and run plants in a more flexible way.

‘Also, UKAEA’s October 2000 announcement of 1,000M spending on nuclear decommissioning over the next 40 years at Dounreay and talk from Scottish Power of installing 500 additional 1MW wind turbines, which we believe will go ahead, is making these exciting times for us.’

Rail infrastructure maintenance in Scotland is divided into four regional five year contracts. All four, with a total value of 330M, are currently held by First Engineering, which was formed through a management buyout of British Rail’s Scottish Infrastructure Group in 1996. ‘The rail market is booming, but the industry faces a very real problem in a shortage of skilled people, ’ says First Engineering commercial director Graham Montief.

‘Planned investment in the rail network is huge with a lot of track renewal, signalling and overhead power projects as well as the West and East Coast Main Line upgrade work. However, the resource shortage is a very important issue.

We could be importing a lot of expertise from overseas in future.’

Despite the apparent skills shortage, Montief says it has not been difficult for First Engineering to expand from its Glasgow headquarters.

‘There are not all that many companies offering the right skills for rail projects. But, while conscious of not expanding too quickly, we have controlled our growth following a softly softly approach. We now have offices in London, Birmingham, Crewe and Manchester.’

First Engineering has also been awarded its first term rail maintenance contract south of Scotland. The 100M five year contract in the Manchester area of Railtrack’s north west zone started in April 2000. It is being carried out by First Engineering Maintenance, supplemented by Track Renewals, Project Services and Consultancy & Facilities management divisions.

‘Infrastructure maintenance is our core business, but we are increasing our involvement in track renewals and multi-disciplinary projects throughout the UK, ’ says Montief. ‘Remodelling of Retford junction in the London North Eastern zone is a typical example where we project managed track laying, signalling, overhead cabling and telecommunications.’

a recent statement by the Scottish Executive Transport Minister is indicating a rise in expenditure for local roads and trunk roads from 2001 onwards.’

Cessford is the business development director of Balfour Beatty Construction’s civil engineering division, which he says, currently has a turnover approaching 80M in Scotland.

BBC, which operates throughout the UK, has long been headquartered in Scotland.

Balfour Beatty Construction has regional offices in Paisley and Aberdeen as well as Edinburgh. According to Cessford, the company’s civil engineering division is aiming to provide clients with a local service employing a local workforce. ‘We are also developing much closer relationships with our customers through partnering arrangements, ’ he says.

‘Repeat business now accounts for 70% of our work.’

The company is currently involved in a 30M bridge strengthening contract on Kingston Bridge which crosses the Clyde in Glasgow. The bridge is reckoned to be the UK’s most heavily trafficked crossing, with 155,000 vehicles using it every day. Balfour Beatty has replaced the bridge’s piers and moved its 50,000t bridge deck 40mm to the south.

Scottish Executive Development Department Defence Estates Organisation West of Scotland Water East of Scotland Water North of Scotland Water Railtrack Scotland BAA Scottish Enterprise Network Forth Ports Authority British Waterways economics, and recorded a turnover of 17M during 1999/2000. The firm is involved in a number of high profile projects in Scotland including the structural design of an 11 storey office block within three existing listed facades on Glasgow’s St Vincent Street.

Harrison credits the current construction boom in Scotland’s central belt between Glasgow and Edinburgh mainly to urban regeneration projects and increased spending on water, health and education. But he adds: ‘Scottish companies have looked further afield for work during quieter times and cultivated strong markets in northern England and Ireland. Now the Scottish construction industry is becoming more active, most companies are experiencing a skills shortage.’

According to Harrison, Halcrow has already set plans in motion to expand its Scottish operations and the company held a recruitment fair in Glasgow earlier this month in a bid to attract new employees.

‘Scotland is a great place to live and work. Devolution and a thriving construction industry is making this a very vibrant and exciting place to be.’

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