KPMG calls 'consistency' of UK construction pipeline into question

According to the professional advisory firm, 860 of the 880 projects dropped from the list since December 2014 related to the defence, justice and policing sectors. The overall value of planned transport projects fell by £6.7 billion, representing the biggest cut in terms of value, KPMG said.

Although part of the decrease could be attributed to projects completed over the past nine months, KPMG said that many had been removed from the pipeline "to avoid pre-empting decisions in the forthcoming Spending Review". It was also concerned that 1,784 of the 2,262 projects remaining as of August 2015 did not specify a date on which construction would begin.

Richard Threlfall, KPMG's head of UK infrastructure, said that the industry needed more "consistency and accuracy" from the published pipeline than what was shown by KPMG's figures.

"A stable pipeline would give the construction industry good visibility of future demand and the ability to plan and invest for that demand," he said. "It would lead to efficiencies for the government, and hence for the taxpayer. Instead, we have a pipeline whose data is so incomplete, and which fluctuates so wildly and erratically, that the industry can place no detailed reliance on it."

"I hope that we will get a clearer picture in November when the Spending Review is published. But in the meantime, the huge 28% drop in the number of projects included suggests some government departments are putting projects on hold in the expectation that they get culled ... I hope the government will recognise what this industry most needs is long-term certainty and stability in demand, to provide it with the confidence to invest in technology and its workforce," he said.

The UK government is due to publish its Spending Review for 2015 on 25 November, which will set out how it intends to reduce public spending to the extent required to eliminate the country's deficit by financial year 2019/20. Some of these savings will be delivered by reducing spending on welfare and the amount lost to tax evasion, as set out in the Summer Budget. However, the £20 billion remaining will be cut from the funding for individual government departments, which have been asked to draw up plans setting out how this should be done.

The August 2015 construction pipeline includes information on government-funded construction projects as at April 2015. The pipeline is updated twice a year and, since 2013, has been published on a dedicated platform designed to give investors and the supply chain more of an insight into the UK's infrastructure needs and the government's spending plans. The government also publishes a regularly-updated national infrastructure pipeline as part of the National Infrastructure Plan (NIP), which is designed to provide a more strategic overview of the UK's public and private infrastructure investment plans.

According to KPMG's analysis (36-page / 1.6MB PDF), nearly 70% of the construction pipeline by value consists of transport and energy projects, mirroring the breakdown in the NIP. However, these projects only contribute 9% of the planned pipeline by volume. Defence, justice and police projects account for around 74% of projects by volume, but only 10% of total allocated spend. These projects tend to be refurbishment, maintenance and minor improvement programmes, according to KPMG.

The UK government published its most recent update to the national infrastructure pipeline in July. Over £400bn of investment will be needed to deliver all 265 investment programmes and 299 projects set out in the document up to 2020 and beyond; however, the government intends to seek over 60% of this investment from the private sector.