By Daniel Hunter
The government has published the second annual report of the three year Infrastructure Cost Review programme, launched in March 2011, to radically transform the way the UK delivers infrastructure.
Building on the success of last year, which identified examples of savings of £1.5 billion, there has been further progress towards embedding good practice and reducing the cost of delivering the infrastructure the UK needs to compete in the global race.
The report highlights key examples where projects and programmes applying the Cost Review principles are cutting costs, running more efficiently and identifying better ways of working.
It shows that High Speed 2 has identified potential efficiency opportunities of over £1 billion, and progress implementing Cost Review principles across other Top 40 projects such as the Thames Tideway Tunnel, flood and coastal defence, the strategic roads programme and Transport for London investment.
There is much evidence of progress toward the 15 per cent cost saving, with in-year efficiencies for 2012/13 from the Highways Agency and Environment Agency totally over £290 million, on sample projects worth £1.165 billion — a saving of 25 per cent.
In its latest illustrative ‘cost benchmarks’ for renewals expenditure between 2010/11 and 2011/12, Network Rail has demonstrated a 4.9 per cent reduction in unit costs.
Visibility of the infrastructure pipeline, longer-term investment planning and a programme based approach are vital components in establishing more effective delivery environments. We will refresh the infrastructure pipeline after the Spending Round. The Cost Review programme has also shown the importance of long-term approach to capital funding and provided the evidence underpinning government’s commitment made in the Budget 2013 to take a longer-term approach to capital funding as part of the 2015-16 Spending Round.
The Annual Cost Review industry survey indicated there is evidence of improved behaviours and more successful outcomes, but more progress is needed in the energy and telecoms sectors. Building on the success of the water sector cyclicality report particular focus will be placed on improved visibility of the pipeline and improved collaboration with industry in these sectors. This will be a key focus of the final year of the programme, along with establishing effective arrangements to maintain its legacy so that benefits can be sustained and developed in years to come.
The Infrastructure Client Working Group, established under the guidance of the Institution of Civil Engineers, has had a significant effect in promoting and sharing best practice among clients from different sectors.
Commercial Secretary to the Treasury, Lord Deighton said: "The UK has demonstrated its capability to deliver major infrastructure projects like the 2012 Olympics. As the next wave of projects come forward for delivery it is more important than ever that we find ways to reduce costs and get the most from each pound of taxpayer or consumer money, and the Cost Review work has shown there are big savings to be made.
"It is vital that government and industry continue to work together to ensure a lasting legacy from this programme, to continue to bear down on the cost of building the infrastructure vital to sustained UK growth. I want to ensure that going forward we have much better visibility of the performance of these projects and a means to continually measure and monitor performance."
Director General of the Institution of Civil Engineers, Nick Baveystock said: "The cost savings identified, and the evidence of changing behaviours in the supply chain are very encouraging and the drive for further efficiencies from both industry and government must continue. The creation of a Major Infrastructure Tracking team is also welcome news and could increase supply chain confidence and encourage investment in skills and capabilities."
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