UK plans ‘common principles’ for best practice in infrastructure procurement

Out-Law News | 09 Oct 2014 | 11:25 am | 2 min. read

Plans by the UK government to improve public sector infrastructure procurement with the introduction of a set of ‘common principles’ have been unveiled in a new report.

The report by the Infrastructure Client Group (ICG) (12-page / 1.15 MB PDF) said plans to pursue principles of best practice for the procurement of construction and infrastructure included “avoiding unnecessary expense and waste” and “improved client understanding of how to improve the procurement process”.

The ICG, a partnership of government and industry to improve infrastructure delivery, was established as part of the government’s Infrastructure Cost Review (ICR).

Opportunities for improving infrastructure were mapped out in the ICR’s 2010 report, which also set a target to remove wastage and make efficiency savings of at least 15% by 2015 across public and private sector infrastructure delivery.

The ICG said: “Infrastructure is the backbone for the UK economy. It provides the networks and systems that supply and support reliable and cost effective transport, flood protection, energy, communications, water and waste management. These are vital to ensuring that the UK remains a competitive force in the global race.”

“In light of improving market conditions and significant increased investment, particularly in infrastructure construction, a sharp rise in construction tender costs is anticipated,” the ICG said. “It is important that appraisal assumptions assess the impact of cost inflation on projects and consider properly informed commercial decisions on pricing strategies or indexation assumptions.”

According to the ICG, many of the “more intractable problems infrastructure clients encounter in getting project teams to perform to their full potential occur at the interfaces between the teams, the organisations that create them and the suppliers and sub-contractors that work with them”. The ICG said that “with the right behaviours, clients can assemble a collaborative project team and develop the management systems, work practices and controls they need to deliver improved outcomes”.

The ICG said “good progress” had been made in improving infrastructure delivery over the three years of the cost review programme, “with evidence of changed behaviours and cost savings”. However, “significant opportunities to build on this work remain”.

Initiatives through to the first quarter of 2015 should include setting up a “common government approach to improving construction and infrastructure procurement”, consultation on principles, launching a best practice guide and establishing “procurement common principles with key performance indicator measures and targets”, the ICG said.

The UK government’s ‘Construction 2025 Strategy’ published in July 2013 (78-page / 2.215 MB PDF) said: “The radical changes promised by the rise of the digital economy will have profound implications for UK construction. UK construction businesses must be ready to secure their share of the forecast £200 billion per annum global market for integrated city systems by 2030.”

Last year, the former chairman of the UK’s Olympic Delivery Authority Sir John Armitt recommended the creation of an independent National Infrastructure Commission (36-page / 423KB PDF) to set clear priorities for UK infrastructure investment over the next 25-30 years.

In his report, Sir John said that "cross-party political consensus" was needed to encourage investment in long-term transport, energy, telecommunications and flood defence projects.