Out-Law / Your Daily Need-To-Know

Arcadis: delays to projects costing UK economy almost £70m a day

Out-Law News | 19 Oct 2016 | 10:09 am | 1 min. read

Decisions to cancel or delay planned transport infrastructure projects are costing the UK economy almost £70 million every day, according to Arcadis, the construction consultancy.

In a new report (12-page / 6MB PDF), Arcadis and the Centre for Economic and Business Research (Cebr) compared the government's official National Infrastructure Pipeline for 2015 and 2016, and estimated the costs associated with those projects identified as delayed or cancelled. These costs included the loss of gross domestic product (GDP) associated with investment, and additional design and build costs.

Around £4.6 billion worth of planned infrastructure projects were delayed or cancelled between the 2015 and 2016 pipeline reports, according to the analysis. This spending would have boosted GDP by £6bn had it taken place.

The cumulative financial impact of project delays and cancellations could amount to a £35bn hit on investment-related GDP by 2020, according to the report.

"Clearly, there are a number of reasons for projects not going ahead on schedule but, all too often, stalling could potentially be avoided or, if the impacts were clearly understood, decisions may be taken differently," said Chris Pike, infrastructure client development director at Arcadis.

"It is clear that government needs to send a clear message to the world that Britain is open for business by progressing vital infrastructure projects at the earliest opportunity, without compromising safety or security. Equally, infrastructure owners and industry need to work together to deliver on these commitments, allowing post-Brexit Britain to reap the full benefit, along with the inevitable bounce effect that will result," he said.

Rail-related transport infrastructure spending has been particularly affected by cancellations and delays over the past year, according to the report. An average delay of one month on current planned rail projects would account for a £36.8m hit to daily GDP, while an average delay of one month to current planned road projects would cost £13.2m per day by 2020, according to the report.

Postponing all planned transport infrastructure projects by a further month would also increase delivery costs by £241m over five years, or by around £8m every day, according to the report.

Last week, the government announced its intention to establish the National Infrastructure Commission (NIC) as an executive agency of the UK Treasury, with its own budget, freedom and autonomy. The NIC, which is currently operating on an interim basis, was set up in order to take a long-term look at the UK's infrastructure needs, and to provide independent advice to ministers and parliament.

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