The Infrastructure Cost Review published in December 2010 identified potential savings of £2billion - £3billion per annum from reducing the costs of delivery of the UK's economic infrastructure projects and programmes. This Implementation Plan sets out the measures to be taken by Government and industry to realise those savings.
The measures will enable Government and private sector infrastructure providers to work with the construction supply chain to develop new business models that will improve productivity, achieve better supply chain integration and promote innovation and growth.
The plan sets out a prioritised programme of activities targeted at the economic infrastructure sectors. To ensure consistency of approach and maximise the beneficial impact of measures across the wider construction sector, implementation of these programmes will be overseen by a cross-Government Joint Programme Management Board. The Board will help integrate the actions of this infrastructure implementation plan with other Government actions to improve public sector construction procurement and encourage growth.
To help ensure that departments and industry are fully engaged with the programme the Government will publish a Charter by the end of May 2011 that will set out the priorities and key components for reform and behavioural change, to be embedded into client and supply chain practice at all levels. The Charter aims to change behaviours and working practice for infrastructure delivery to:
• provide improved transparency and certainty around the infrastructure forward programme;
• group projects into more efficient longer-term programmes with clear outcome based objectives;
• encourage innovation and allow for earlier and integrated supply chain involvement through improved competition and procurement processes;
• seek the best whole life outcome rather than seeking the lowest cost for a given specification;
• select supply chain partners on the basis of their ability to deliver innovative solutions set against transparent and affordable cost targets and long-term outcomes;
• develop appropriate client technical expertise and intelligent commissioning capability and make better use of infrastructure data to support decision making and the setting of cost targets; and
• create the environment for industry to invest in new technologies and skills improvement to deliver greater outcome-based efficiencies.
To embed these goals into departmental and regulatory planning, departments will report annually on progress against these objectives, through the Joint Programme Management Board, the first report will be published March 2012. Overall progress against the objectives will be published annually by the Joint Programme Board. The Government will report at the end of the programme in 2014 on the progress made in bringing about these behavioural changes, and the outcomes of the specific programme of activities set out in this Implementation Plan.
The Implementation Plan comprises six interlinked workstreams, visibility of forward programme, stronger governance, improved commissioning, smarter competition, industry integration and infrastructure data, building on the themes identified in the December report.
The Government has already announced in the Plan for Growth at Budget 2011 that it will:
• publish the UK's long term forward view of infrastructure projects and programmes in the autumn as part of the National Infrastructure Plan 2011;
• publish quarterly from Autumn 2011 a rolling 2 year forward programme of public infrastructure and construction projects where funding has been agreed; and
• work with industry between now and Budget 2012 to review the standards and codes in operation and remove redundancy and duplication of standards where the costs outweigh the benefits.
These measures are a critical starting point for the implementation plan and will help provide a better commercial environment that encourages construction businesses to invest in innovation, in skills and training, and in their own supply chains.
In addition, over the next twelve months:
• The Government will review measures to smooth out the impact of stop-start investment, for example, by optimising work planning periods with funding cycles and enabling grouping of projects into longer-term programmes:
• in the public sector Infrastructure UK, working with the Department for Transport and the Department for the Environment, Food and Rural Affairs, will report on alternative approaches in collaboration with the Highways Agency roads and Environment Agency flood defence programmes; and
• in the regulated sectors Infrastructure UK will start by pursuing alternative approaches with Defra and Ofwat, as part of the wider regulatory review of the water industry. In the energy sector Ofgem has already announced plans to extend the price control cycle from five to eight years.
• Infrastructure UK and the Cabinet Office Efficiency and Reform Group will develop new model competition and procurement processes in collaboration with Highways Agency and Environment Agency programmes.
• Infrastructure UK and the Cabinet Office Efficiency and Reform Group will publish, alongside these new models, guidance on the selection of effective procurement models and contracting options for different categories of infrastructure projects and programmes to encourage procurement approaches and contract form selection that properly consider clients' risk appetite and commercial capability.
• Infrastructure UK will develop in conjunction with the Efficiency and Reform Group Major Projects Authority checklists of key features of success for major infrastructure projects to complement the Starting Gate reviews.
• Infrastructure UK will publish a common set of principles for the structuring and management of contingency and risk and mechanisms for embedding cost and risk control into a range of different project and programme scenarios. This will be tested in collaboration with a range of projects and programmes, including High Speed 2 and London Underground's renewals programme.
• Infrastructure UK will publish guidance and template agreements for use between public sector stakeholders on major infrastructure projects and programmes. These will be based on the models used for the Olympics, Crossrail and other complex infrastructure projects and will be tested on the High Speed 2 project.
• In order to create a sustainable basis for improving infrastructure asset data Infrastructure UK has established a joint public sector and industry Infrastructure Data Group. The Government will work through this group to establish means to strengthen the robustness of departmental asset and condition records. In addition, the Government will report on trials for the extended use of benchmarking in setting challenging cost targets, working in collaboration with Highways Agency, Environment Agency, Network Rail and London Underground.
The Government recognises that implementation of this plan will need to consider the different approaches between sectors, particularly for regulated and non-regulated infrastructure. Private sector investment already takes place within a policy and regulatory framework which itself should serve to incentivise improved delivery. The Government announced in the Plan for Growth at Budget 2011 that it will publish, in April 2011, a binding set of principles of economic regulation to provide greater certainty for long-term investors in UK infrastructure.
Infrastructure UK will continue to work with industry in implementing the key components of this plan, building on the successful partnership already developed between Government and industry in undertaking the Infrastructure Cost Review. Industry leaders have been identified to act as champions working alongside Government, for key components of the plan. These industry champions will be focal points for academia and industry professional and trade bodies.
The Government continues to encourage feedback and contributions directly from all stakeholders. Requests for further information on this implementation plan or feedback should be directed to InfrastructureCost@hmtreasury.gsi.gov.uk.