1.5 The Infrastructure Cost Review was published on 21st December 2010. The report concluded that there is no single overriding factor driving higher costs and that higher costs are mainly generated in the early project formulation and pre-construction phases. It provided evidence of a number of contributing factors, as set out in Box 1.A below, and proposed a range of actions for consideration to improve delivery.
Box 1.A: Summary of drivers of higher cost • Stop-start investment programmes and the lack of a visible and continuous pipeline of forward work. • Lack of clarity and direction, particularly in the public sector, over key decisions at inception and during design. Projects are started before the design is sufficiently complete. The roles of client, funder and delivery agent become blurred in many public sector governance structures. • The management of large infrastructure projects and programmes within a quoted budget, rather than aiming at lowest cost for the required performance. If the budget includes contingencies, the higher total becomes the available budget. • Over-specification and the tendency, more prevalent in some sectors than others, to apply unnecessary standards, and use bespoke solutions when off-the-shelf designs would suffice. • Interpretation and use of competition processes not always being effective in producing lowest outturn costs, with public sector clients in particular being more risk averse to the cost and time implications of potential legal challenges. • Companies in the supply chain typically investing tactically for the next project, rather than strategically for the market as a whole. • Lack of targeted investment by industry in key skills and capability limiting the drive to improve productivity performance. |
1.6 Since publishing the report, Infrastructure UK has continued to work with other parts of Government and with industry to develop this detailed implementation plan alongside the construction elements of the growth review that were announced at Budget 2011.
1.7 Crossrail, for example, has already examined the Infrastructure Cost Review and taken steps, where appropriate, to apply its findings to its contracting strategy. Infrastructure UK is working with the Highways Agency, High Speed 2 and the Environment Agency flood defence programme - amongst other projects - to help develop ways to reduce outturn costs. Through collaboration across Government, with Local Partnerships and with industry, the benefits arising from these measures will be realised across the public and private infrastructure sectors.