Roundup: Infrastructure UK plan to slash civils costs by 15%

The government has drawn up a list of projects designed to demonstrate that 15% can be slashed from the cost of civil engineering schemes over the next five years, Building reported.

The trial list of road, rail and flood defence projects follows publication of the report for Infrastructure UK, produced by Terry Hill of Arup, which said that £3bn of savings in the UK’s infrastructure building programme could be found each year.

The Hill report found that outturn costs on some recent civils projects – for example, the construction of major new rail stations – were up to 50% higher in the UK than in our near European neighbours.

Stephen Dance, head of public sector markets at Infrastructure UK, which is part of the Treasury, said that capital works undertaken for the Highways Agency would trial the new methods outlined in the report.

The Hill report identifies key actions, including the need for more “discipline” in commissioning projects, including keeping specification in check; encouraging greater integration in the supply chain, and seeking innovation as a way to reduce costs.

However, the full details of how these ideas will be applied, and which projects have been identified, are contained in an implementation plan, which has not yet been published.

This will be refined and agreed over the next three months, before being published in the March Budget.

A Treasury source said: “We have a list of projects, it’s just not one we’re willing to go public on yet.”

But the methodology has already been used to make theoretical savings of up to £800m from the estimated cost of High Speed Two.

Report author Hill said the savings could be ploughed into more infrastructure work.

“We’ve identified an annual saving of £3bn a year. You can imagine the projects that are canned or deferred that this could then allow to go ahead.

“That is the prize, if in the current tight fiscal environment those savings can be released to fund other projects,” he said.

Peter Hansford, ICE president and chair of the Arup study’s stakeholder reference group, told Building: “This is not about reducing margins, which are already very tight. This is about making construction more efficient. Look at some of our major projects, and how long they take in gestation.”