Infrastructure Cost Review highlights important new efficiency initiatives, says expert

Jonathan Hart of Pinsent Masons, the law firm behind Out-Law.com, was commenting as Treasury department Infrastructure UK (IUK) published its second annual report as part of its Infrastructure Cost Review. This three-year programme, which began in March 2011, aims to deliver efficiency savings of 15% across required public infrastructure investment by 2015.

This year's report sets out the progress made by the UK's top 40 infrastructure projects in implementing the principles set out in IUK's original Infrastructure Cost Review Report, published in 2010. These projects include the new HS2 national high-speed rail link, the Thames Tideway Tunnel, flood and coastal defence, the strategic roads programme and the Transport for London investment programme.

Hart said that most of the headlines in relation to the report would likely focus on the "opportunity" for cost savings of over £1 billion in relation to the first phase of HS2. However, he pointed out that IUK had highlighted a range of new initiatives designed to improve project delivery efficiency.

"The review also seeks to answer some of the criticisms of the National Infrastructure Plan and highlight some important new initiatives, some of which overlap with IUK's Procurement Routemap," he said. "Key amongst the new initiatives is a fresh consultation in relation to the continuing use of NEC contracts and production of 'collaborative working' and broader cost benchmarking through the arrival of the Major Infrastructure Tracking team."

He warned that "cynics" could see the report as "evidence of further uncertainty associated with HS2 and its overall out-turn costs". "They may ask why the opportunity has 'only' been limited to £1bn, for example, whilst missing the underlying work starting to be undertaken on cost bench-marking across the construction industry and even undertaking some comparative analysis, most notably with the Tours-Bordeaux HSR scheme across the Channel," he said.

IUK highlighted a number of Government-commissioned projects including the Industry Standards Group's work on simplifying procurement specifications and the removal of unnecessary technical standards. The Infrastructure Procurement Routemap, published for consultation in January, contained a number of guidelines and tools to improve the delivery of large scale projects and programmes, it said.

However, not enough evidence of progress towards the targets was being seen in the energy and telecoms sectors, IUK said. The final year of the costs programme would therefore focus on improved visibility of the "pipeline" of potential projects, and improving collaboration between the public sector and industry in these sectors, the report said. It would refer to successful work on smoothing investment cycles in the water industry, published by IUK in July 2012, it said.

Among its broader conclusions, the report called for greater visibility of the infrastructure pipeline as a whole as well as a longer-term, programme based approach to investment planning and capital funding. The Government said that it would take a "longer-term approach" to capital funding as part of the next Spending Round during this year's Budget announcement. IUK said that it would "refresh" the infrastructure pipeline after next week's Spending Round, when the Chancellor will set out what funds are available for 2015-16.

"The UK has demonstrated its capability to deliver major infrastructure projects like the 2012 Olympics," said Lord Deighton, Commercial Secretary to the Treasury. "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," he said.

However, infrastructure expert Jonathan Hart sounded a note of caution.

"To repeat a commonly-repeated theme, many will no doubt be asking as to the whereabouts of the new projects to be collaborated upon and the new major infrastructure to be tracked," he said.