Infrastructure Cost Review – construction procurement in UK government (not as boring as it sounds!)

I must admit, I approached the UK Infrastructure Cost Review, published by the UK Treasury (Finance Ministry) last week, with a a somewhat heavy heart. It was one of those 'I know I should read it but I don't really want to"; much like Far from the madding crowd was for my O Level exam many years ago....

I'm not really a construction procurement expert, although I know a certain amount, and a report into how the UK could spend its money better on public sector infrastructure projects didn't really thrill me.  And from the headlines it generated on its publication last week, it sounded like yet another cursory  "we can save loads of money with better procurement" report, and we've had a few of those lately.

But I was pleasantly surprised on actually reading it.  It does make some comparisons with other countries, which appear to show that for instance it costs the UK 10% more than the Netherlands to build a kilometre of road.  But unlike other recent reports, (no names mentioned), the evidence appears strong, the report is clearly well researched, has involved a lot of key people, and while it is still stronger on diagnosis than solutions,  the findings are very considered and make a lot of sense and some very good points.

It talks about the need for longer term planning to enable the market to drive efficiency on the supply side (and we would hope that those benefits were then passed on to clients, of course), and the need for some different procurement approaches.  But it also recognises that the supply side has been at fault too in terms of some of their practices; what may be an excessive use of sub-contractors in the UK compared to other European countries, for instance.  It is rightly complimentary about the Olympics construction programme, and the use of the NEC3 contract; I have had some involvement with both of those topics and I fully agree with the positivity there.

Following this report, the implementation will be designed around five key objectives:

  • create better visibility and continuity of the infrastructure investment pipeline, through publication of the future investment programme in the National Infrastructure Plan;
  • implement effective governance of projects and programmes, particularly in the public
    sector, by ensuring clear accountability for key project decisions;
  • instil greater discipline in the commissioning of projects and programmes by ensuring greater objective challenge of the specification of requirements and cost estimates;
  • develop smarter ways to use competition by improving risk-based assessment of procurement options;
  • and create an environment that encourages industry and the advisory community to invest in efficiency and reduce the direct costs of construction by developing cost effective delivery solutions.

I am however a little cautious around the idea of longer term 'partnering' arrangements, which is presented as one of the major themes here.  Partnering has become an over-used cliche, sometimes without a clear view of what it really means, and I have concerns about whether the skills exist in the public sector to manage successfully that sort of relationship.  Without very good and skilled management, 'partnership' can degenerate into a recipe for supplier exploitation whether we're talking public or private sector (as I've seen with such arrangements  in a couple of public sector organisations).

But directionally, pretty much everything proposed is sound and sensible.  The team responsible was a mix of civil servants, (including David Pitchford, ex OGC, who is building a good reputation for himself as Head of Major Projects in the Cabinet Office, and the highly regarded Lucy Chadwick from Department of Transport) and private sector folk.  It would appear to have been a successful blend.

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