Kicking off GE's annual focus on the international tunnelling and underground construction sector, Chris Dulake takes a look at the UK industry and its prospects at home and abroad.
The market for consultancy services in the tunnelling industry is historically a barometer of future workload for contractors.
In the past 10 years the move towards public-private partnerships, the Private Finance Initiative, design, build, fund and operate and design and build contracts has changed the way consultants and contractors view their markets and the skills required to deliver services that will be valued by clients.
In particular, where contractors lead projects, there is a greater opportunity for them to develop inhouse design services.
This is certainly the case for those working on major international schemes. Many international contractors maintain good in-house tunnelling and underground construction design services. These are supplemented by the skills of international consultants who deliver engineering focused, cost-effective services.
Consultants have tended to follow contractors to projects around the world and the relationships on these projects are generally based on shared global and local past experiences. Global company coverage and staff mobility/flexibility have been key issues in servicing the global tunnelling market.
The way projects are funded has also changed in recent years.
The reinvention of private funding for major international tunnelling projects refl ects a response to economic cycles. In the UK, Europe, Canada and the US, little money is now available for fully publicly funded major schemes.
Today, infrastructure development is seen as an investment opportunity where future revenue streams fi nance bank loans. Completed schemes provide project equity partners with an opportunity to trade their investments, creating a 'secondaries' market with a value that will soon reach £1bn a year.
The satisfaction taken by engineers in creating infrastructure that benefi ts people seems to be matched by bankers, accountants and lawyers who also get a sense of achievement through their involvement. Maybe the disciplines are uncomfortably similar?
But it is sometimes the case that the skills required to create underground space are not given suffi iently high importance, despite the feat of tunnel engineering itself being a remarkable achievement.
In many major projects the tunnel is not usually the focus of the client's attention but a means of allowing cars, trains, potable water, sewage, people or services to pass beneath man-made or natural obstacles as part of a bigger project.
More sophisticated clients are able to understand and manage underground construction risk in the development of designs and in their procurement strategy. However, some are distracted when their focus is targeted towards function or they do not have the necessary skills in their own organisations to understand and manage these risks.
In the UK tunnelling industry, most believe the home market is not buoyant. Firms are looking overseas for work.
Eastern Europe is one area of opportunities. Infrastructure in many of these countries has suffered from years of under-investment and has generally not kept pace with the increase in the population of towns and cities.
But in recent years the cost of UK-based skills has increased in the international market with the increasing strength of the pound.
Coupled with this is the availability of local engineers who have strong (and improving) technical skills.
Development for UK contractors and consultants has therefore been through acquisition or slower growth through the development of regionally focused offices.
China is seen by all as an expanding market. But the reality for most companies entering it is that unless there is ready access to suitably skilled local staff, or the company can offer specialist skills, the potential volume of business is limited.
The other downside of China's growth is the gradual transfer of technologies to the country and its continuous investment in training and skill development. The next five years is likely to see the export of Chinese services into the international market. This is both an opportunity and a threat to UK companies.
The UK tunnelling sector has just delivered the Channel Tunnel Rail Link and once again taken the industry to a skill level that is envied in the global market place.
However there is not sufficient continuity of work in the UK to best use these skills. A feeling of dÚjÓ vu is drifting across industry, similar to that felt after the completion of the Jubilee Line Extension in the late 1990s. Despite this, there appears to be just enough to be getting on with.
Chris Dulake is a director responsible for tunnels and underground space at UK consultant Faber Maunsell.