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Smart construction and technology could save £15bn a year, says UK government

A three-point plan to improve UK infrastructure delivery could generate savings of £15 billion a year, the government has claimed.08 Dec 2017

A new report on transforming infrastructure performance has identified three areas for improvement: 'smart' construction, including use of offsite manufacture; more and better use of digital technology to make new and existing infrastructure 'smarter'; and better sharing of innovation and best practice.

The plans will be implemented over the next 10 years, and includes seven immediate priorities that the UK's Infrastructure Projects Authority (IPA) will focus on over the next two years. These include establishing a new 'benchmarking' team to define cost and performance benchmarks, better cross-sector integration and more use of digital technology and innovation to improve its delivery of infrastructure projects.

Publication of the report corresponded with that of the updated National Infrastructure and Construction Pipeline (NICP) for 2017. The NCIP sets out the £600bn worth of projects, to be funded by both the public and private sectors, which the government intends to deliver over the next decade.

"We are backing Britain with a record amount of infrastructure investment as we build an economy fit for the future," said treasury secretary Andrew Jones. "That's why we're working with the industry to skill up and scale up for the challenges ahead."

"Investment in infrastructure boosts productivity for the economy as a whole. The scale of the investment we are talking about here will deliver a step change for our country," he said.

The government has targeted the construction sector with an industry-specific 'sector deal' as part of its recently-published industrial strategy. This sets out its plans to boost UK productivity, which currently lags behind productivity levels in Germany, France, the US and Italy. The construction sector deal includes additional investment in innovation and skills as well as a new procurement model, which will ensure that construction projects across the public and private sectors are procured and built based on their whole life value and not just the initial capital cost.

The TIP programme sets out how the government will ensure that its planned projects are delivered as quickly and efficiently as possible. The government has also developed a transport-specific transport infrastructure efficiency strategy, which sets out how these lessons will be applied to drive efficiency and productivity in the UK transport network.

The construction sector faces low profit margins and particular productivity issues compared to other sectors of the economy, leading to a sector-specific productivity gap of £15bn. The government intends to address this through interventions including benchmarking projects and accelerating the use of modern methods of construction such as off-site manufacturing, where projects are part-constructed before being assembled on location.

The IPA will support the delivery of the construction sector deal as part of its immediate priorities for the next two years, as well as developing formal cost and performance benchmarks and working with regulators in order to better understand performance outcomes. It will support the roll-out of the new 'procuring for growth' procurement mechanism, apply a presumption in favour of off-site construction by 2019 and build on the recommendations of the National Infrastructure Commission's study of technology and infrastructure to lead by example on extracting maximum whole life value from infrastructure assets.

Simon Colvin, a technology contracts specialist at Pinsent Masons, the law firm behind Out-Law.com, welcomed the government's "positive messaging" around innovation, technology and infrastructure contained in the report. The report's central message, that technology and the use of data can help to drive and improve UK infrastructure, aligns with that demonstrated in recent research by Pinsent Masons into the growth of 'infratech', he said.

"From a technology perspective, it is positive to see this recognition that digitalisation is a positive disruptor for the future build, operation and use of infrastructure assets," he said.

"However, there is still education to be done for infrastructure businesses seeking to understand the benefits and risks of digitalisation. Our infratech research identified agreeing data requirements and data management standards as the second biggest challenge for projects where technology and infrastructure are integrated. There is an opportunity here for the government to take the lead on developing the required data standards," he said.

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