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Construction delivery 'step change' required if UK to meet targets, says Arcadis

Out-Law News | 18 Sep 2017 | 9:56 am | 3 min. read

UK construction must be able to "innovate on a massive scale" if it is to successfully deliver on the country's infrastructure ambitions, according to a new report.

Arcadis, the construction consultancy, said that delivery of planned projects on the UK's National Infrastructure and Construction Pipeline (NICP) depended on the industry doubling up on output for at least the next decade. This could only be done with a "step-change" in project delivery, based around digital solutions, investment in skills and training, better collaboration and offsite manufacture, it said.

The Arcadis report, which also called for better alignment of individual projects with the UK's industrial strategy and regional development agendas, coincided with a new report from EY, which warned of growing regional skills gaps putting large public sector projects at increased risk of delays and budget hikes. EY called for project leaders to leverage technology, share resources and be more flexible on skills and recruitment in order to address these gaps.

Both reports based their findings on the current iteration of the NICP, which sets out the government's plans for over £500 billion worth of infrastructure spending over the next 10 years. However Greg Barclay, one of the authors of the Arcadis report, said that the NICP "actually understates the real scale of the opportunity", particularly from disruptive technologies likely to come to market over the next 10 years.

"We could be looking at the need to deliver UK infrastructure at a scale and pace that is unprecedented," he said.

"We have a massive opportunity here to upgrade our much needed infrastructure networks, and to do things differently. From new roads, railways, power plants and utility networks to new technologies and 'smart cities', there has never been a more exciting opportunity to transfer how we plan and deliver projects. The need to double construction output on infrastructure is no small task, and it will force us to do things differently," he said.

The UK is entering a period of "unprecedented commitment to infrastructure investment", based on the projects set out in the NICP, according to the Arcadis report. However, the UK has never delivered much more than £20bn worth of infrastructure construction output in a single year, compared to the £50bn of annual output necessary to deliver all those projects, it said.

Increasing output alone will not be enough, as this will also increase demands on funding, skills and capacity, all of which are already under strain, according to the report. Earlier this year, Arcadis found that the UK would need as many as 400,000 new construction workers every year until 2021 if it was to deliver all the planned projects in the NICP, even before workforce attrition and Brexit-related immigration issues were taken into account.

Global infrastructure expert Graham Robinson of Pinsent Masons, the law firm behind Out-Law.com, said that there was a "widening funding gap" between the industry's projected output and the UK's ambitions.

"A 100% increase or more in infrastructure output is going to be a significant challenge for government," he said.

"There is a clear need for government to address its own capability and capacity to initiate major infrastructure investments if it wants to drive up levels of investment in infrastructure from 0.8% of GDP to between 1.0% and 1.2% of GDP - an up to 50% increase - which government wants to try to achieve by 2020. A new model is needed, which means a much more integrated and technology-driven approach," he said.

"This is especially so when levels of productivity in the infrastructure sector have been stagnant, and compared to other sectors like manufacturing the infrastructure sector has fallen significantly behind. None of this is good for the UK economy," he said.

"Technology is going to play a huge part in driving levels of productivity upward, but the highly fragmented nature of the infrastructure sector will need addressing. Integrators and alliances are needed where technology companies can play a part in helping to raise levels of infrastructure investment and improve productivity, giving a boost to the UK economy," he said.

The UK government and independent National Infrastructure Commission (NIC) have been looking closely at the growing potential of so-called 'infratech' solutions, including as part of a national industrial strategy. The government has already earmarked £23bn for investment in innovation and infrastructure over the next five years though its National Productivity Investment Fund.

Pinsent Masons, the law firm behind Out-Law.com, has been working in partnership with the Institution of Civil Engineers and techUK on a new study, which aims to establish the opportunities and challenges that arise from the increasing convergence between digital technology and physical infrastructure and how they might be addressed. Results of the study will be published later in the autumn.

Register your interest in a Pinsent Masons study of the opportunities and challenges presented by the convergence of digital technology and physical infrastructure. Results of the study will be published in autumn.