Infrastructure Cost Review

Last updated

The Infrastructure Cost Review was a 2010 report commissioned by the government of the United Kingdom and written by Infrastructure UK to find efficiency savings in the delivery of infrastructure projects. The British government aimed to make savings of up to £3 billion per year on current expenditure by 2015, primarily in the pre-construction phase. The report made a series of recommendations for changes in government procurement and planning. Cost savings were quickly realised and Infrastructure UK reported savings of £1.5 billion at the end of the first reporting year and £3 billion by 2014. The programme was projected to have saved £50 billion in expenditure by the end of the 2010s. Infrastructure UK was absorbed into the Infrastructure and Projects Authority which launched its Transforming Infrastructure Performance in 2017 which aims to make £15 billion in annual savings.

United Kingdom Country in Europe

The United Kingdom (UK), officially the United Kingdom of Great Britain and Northern Ireland, and sometimes referred to as Britain, is a sovereign country located off the north-western coast of the European mainland. The United Kingdom includes the island of Great Britain, the north-eastern part of the island of Ireland, and many smaller islands. Northern Ireland is the only part of the United Kingdom that shares a land border with another sovereign state, the Republic of Ireland. Apart from this land border, the United Kingdom is surrounded by the Atlantic Ocean, with the North Sea to the east, the English Channel to the south and the Celtic Sea to the south-west, giving it the 12th-longest coastline in the world. The Irish Sea lies between Great Britain and Ireland. With an area of 242,500 square kilometres (93,600 sq mi), the United Kingdom is the 78th-largest sovereign state in the world. It is also the 22nd-most populous country, with an estimated 66.0 million inhabitants in 2017.

Infrastructure UK (IUK) was a division of HM Treasury that advised government on the long-term infrastructure needs of the UK and provided commercial expertise to support major projects and programmes. It was created in 2010.

The Infrastructure and Projects Authority (IPA) is the United Kingdom government's centre of expertise for infrastructure and major projects. The IPA sits at the heart of government, reporting to the Cabinet Office and HM Treasury. The core teams include experts in infrastructure, project delivery and project finance who work with government departments and industry.

Contents

Background

The incoming Conservative-Liberal Democrat coalition government made a commitment in the June 2010 United Kingdom budget (dubbed an "emergency budget") to launch an investigation into how to reduce the cost of major infrastructures and to report back by the end of the year. The report was issued in December 2010. The government had committed to spending £200 billion on infrastructure projects over the following five-year period. [1]

June 2010 United Kingdom budget

The June 2010 United Kingdom Budget, officially also known as Responsibility, freedom, fairness: a five-year plan to re-build the economy, was delivered by George Osborne, Chancellor of the Exchequer, to the House of Commons in his budget speech that commenced at 12.33pm on Tuesday, 22 June 2010. It was the first budget of the Conservative-Liberal Democrat coalition formed after the general election of May 2010. The government dubbed it an "emergency budget", and stated that its purpose was to reduce the national debt accumulated under the Labour government.

Findings

The report showed that no single factor was driving excessive costs - though they were mainly incurred in the pre-construction phases - but rather a combination of factors: [1]

The report showed that increasing fragmentation of the construction industry and a shift towards greater use of sub-contracting had also led to cost increases. The report writers considered that there was an opportunity to make savings of around 15% in infrastructure spending (£2-3 billion per year). [1]

Objectives

The report set five objectives in an attempt to improve cost efficiency: [1]

Reviews

The benchmarking process began in March 2011. At the time of the one-year review in March 2012 Infrastructure UK estimated that their measures had already saved £1.5 billion. This included a 20% saving on 20 major projects being delivered by the Highways Agency and £400 million saved on London Underground works. Commercial Secretary to the Treasury Lord Sassoon said: "Every pound saved through this Cost Review programme is a pound more that can be spent on new infrastructure for the UK". [2] In 2013 Infrastructure UK claimed in a year which saw significant infrastructure projects being developed such as HS2 and the Thames Tideway Tunnel. An estimated 25% saving was made on Highways Agency and Environment Agency projects, 4.9% savings on the Network Rail renewals programme and more than £1 billion on HS2 phase 1. The progress towards more collaborative behaviours was more notable in the rail, highways and water sectors than in energy, waste and telecoms. [3]

The final review period ending in 2014 showed annual savings on infrastructure spending and reached the target of £3 billion. Infrastructure UK estimated that the efficiencies achieved as a result of the report would save the taxpayer more than £50 billion in the following decade. Commercial Secretary to the Treasury, Lord Deighton stated that "The Infrastructure Cost Review programme has helped to establish a refreshed relationship and more open dialogue between government and industry. This has been a success for the third year running. However, we cannot be complacent. As the economy recovers, we will redouble our efforts to ensure that we have the necessary skills, capacity and innovation to embed cost and efficient delivery". [4]

The programme concluded in 2014 and Infrastructure UK was amalgamated with the Major Projects Authority in 2016 to form the Infrastructure and Projects Authority (IPA). [5] The IPA launched the Transforming Infrastructure Performance report in 2015 aimed at saving £15 billion annually in the industry. [6]

Related Research Articles

A Spending Review or occasionally Comprehensive Spending Review is a governmental process in the United Kingdom carried out by HM Treasury to set firm expenditure limits and, through public service agreements, define the key improvements that the public can expect from these resources.

United States federal budget Budget of the U.S. federal government

The United States federal budget comprises the spending and revenues of the U.S. federal government. The budget is the financial representation of the priorities of the government, reflecting historical debates and competing economic philosophies. The government primarily spends on healthcare, retirement, and defense programs. The non-partisan Congressional Budget Office provides extensive analysis of the budget and its economic effects. It has reported that the U.S. is facing a series of long-term financial challenges, as the population of the country ages and healthcare costs continue growing faster than the economy, leading to the debt held by the public exceeding GDP by 2030. The United States has the largest external debt in the world and the 14th largest government debt as % of GDP in the world.

Indian road network highway system in India

India has a road network of over 5,903,293 kilometres (3,668,136 mi) as of 31 January 2019, the second largest road network in the world. At 1.70 km of roads per square kilometre of land, the quantitative density of India's road network is higher than that of Japan (0.91) and the United States (0.989888) to, and far higher than that of China (0.46), Brazil (0.18) or Russia (0.08). Adjusted for its large population, India has approximately 4.63 km of roads per 1000 people. However, qualitatively India's roads are a mix of modern highways and narrow, unpaved roads, and are being improved. As on 31 March 2016, 62.5% of Indian roads were paved.

A cost overrun, also known as a cost increase or budget overrun, involves unexpected incurred costs. When these costs in are in excess of budgeted amounts due to an underestimation of the actual cost during budgeting, they are known by these terms.

The Gershon Efficiency Review was a review of efficiency in the UK public sector conducted in 2003-4 by Sir Peter Gershon.

Energy Savings Performance Contracts (ESPCs), also known as Energy Performance Contracts, are an alternative financing mechanism authorized by the United States Congress designed to accelerate investment in cost effective energy conservation measures in existing Federal buildings. ESPCs allow Federal agencies to accomplish energy savings projects without up-front capital costs and without special Congressional appropriations. The Energy Policy Act of 1992 authorized Federal agencies to use private sector financing to implement energy conservation methods and energy efficiency technologies.

American Recovery and Reinvestment Act of 2009

The American Recovery and Reinvestment Act of 2009 (ARRA), nicknamed the Recovery Act, was a stimulus package enacted by the 111th U.S. Congress and signed into law by President Barack Obama in February 2009. Developed in response to the Great Recession, the ARRA's primary objective was to save existing jobs and create new ones as soon as possible. Other objectives were to provide temporary relief programs for those most affected by the recession and invest in infrastructure, education, health, and renewable energy.

Regina Bypass highway in Saskatchewan

The Regina Bypass is a four-lane twinned highway connector road linking two National Highway System routes in Regina, Saskatchewan. Highway 1 and Highway 11 will be linked by this new route, forming a partial ring road around the city.

2009 Australian federal budget

The 2009 Australian federal budget for the Australian financial year ended 30 June 2010 was presented on 12 May 2009 by the Treasurer of Australia, Wayne Swan, the second federal budget presented by Swan, and the second budget of the first Rudd Government. Swan commented that the budget would be tougher than in previous years. "Projected government revenue has fallen by $200 billion since the last budget because of the global economic crisis."

The Ministry of Road Transport and Highways is a ministry of the Government of India, that is the apex body for formulation and administration of the rules, regulations and laws relating to road transport, transport research and in also to increase the mobility and efficiency of the road transport system in India. Through its officers of Central Engineering Services (Roads) cadre it is responsible for the development of National Highways of the country. Road transport is a critical infrastructure for economic development of the country. It influences the pace, structure and pattern of development. In India, roads are used to transport over 60 percent of the total goods and 85 percent of the passenger traffic. Hence, development of this sector is of paramount importance for India and accounts for a significant part in the budget. Since May 2014, the Minister for Road Transport and Highways is Nitin Gadkari.

Scottish Futures Trust

The Scottish Futures Trust (SFT) is a public corporation of the Scottish Government, established in September 2008 to improve public infrastructure investment. SFT operates at arm's length from the Government but works closely with the public and private sectors to deliver value-for-money on all public sector infrastructure investment across the country. The trust has the aim of saving £100–£150 million each year through a wide range of activities.

Sir Peter Oliver Gershon, is a British businessman and former civil servant, currently Chairman of Tate & Lyle, and since January 2012, Chairman of the FTSE 20 company National Grid. He is chiefly known for conducting the Gershon Review in 2004/2005 which recommended savings across the UK's public services and for being an adviser to the Conservative Party during the run up to the 2010 General Election. He has also been Chair of the Office of Government Commerce as well as sitting on the boards of several well known companies and organisations.

2011 Australian federal budget

The 2011 Australian federal budget for the Australian financial year ended 30 June 2012 was presented on 10 May 2011 by the Treasurer of Australia, Wayne Swan, the fourth federal budget presented by Swan, and the first budget of the Gillard Government. The budget forecast a $22.6 billion deficit and delivered a $44.4 billion deficit.

2012 Australian federal budget

The 2012 Australian federal budget for the Australian financial year ended 30 June 2013 was presented on 8 May 2012 by the Treasurer of Australia, Wayne Swan, the fifth federal budget presented by Swan, and the second budget of the Gillard Government. The budget was described as a "battlers" budget with benefits geared towards families and low income earners. It forecast a surplus of $1.5 billion in the financial year ended 30 June 2013.

Peter Hansford Civil Engineer

Peter Hansford is an English civil engineer. He served as the 146th President of the Institution of Civil Engineers (ICE) (2010-2011) and succeeded Paul Morrell as the UK government's chief construction adviser in November 2012.

The Efficiency and Reform Group (ERG), established in 2010, was part of the Cabinet Office which worked in partnership with HM Treasury to form the corporate centre for UK Government. Its objectives were to reform the way government works and to support the transformation of government services by driving cost savings and focusing on growth.

The budget sequestration in 2013 refers to the automatic spending cuts to United States federal government spending in particular categories of outlays that were initially set to begin on January 1, 2013, as an austerity fiscal policy as a result of Budget Control Act of 2011 (BCA), and were postponed by two months by the American Taxpayer Relief Act of 2012 until March 1 when this law went into effect.

Northern Powerhouse Rail

Northern Powerhouse Rail (NPR) previously called High Speed 3 (HS3) or Crossrail for the North is a proposed railway network in the North of England. It aims to improve transport connections between major northern English cities and transport hubs, including Liverpool, Manchester, Manchester Airport, Leeds, Bradford, Doncaster, Huddersfield, Sheffield, Newcastle, and Hull, as well as other significant economic centres. The exact route as yet has not been determined.

Transforming Infrastructure Performance is a British government report on the construction industry. Issued by the Infrastructure and Projects Authority in December 2017, its aim is to improve productivity in the sector and make savings of £15 billion per year. It proposes to do this by increasing innovations like off-site construction and new digital technology, improving government procurement procedures, and improving integration and collaboration. It is seen as a welcome initiative by the industry, and early implementation of its aims has been incorporated into the water industry's 2019 price review.

References

  1. 1 2 3 4 "Infrastructure Cost Review: Main Report" (PDF). HM Treasury. Infrastructure UK. Retrieved 6 February 2018.
  2. ↑ "Government 'on track' to deliver infrastructure savings". Construction Index. 23 April 2012. Retrieved 6 February 2018.
  3. ↑ "Infrastructure Cost Review: annual report 2012-13" (PDF). HM Treasury. Retrieved 6 February 2018.
  4. ↑ "Highways sector delivers savings as part of government review programme". Highways Magazine. 15 July 2014. Retrieved 6 February 2018.
  5. ↑ "About the IPA" (PDF). Infrastructure and Projects Authority. Retrieved 6 February 2018.
  6. ↑ Wilmore, James (6 December 2017). "Industry hails plan to tackle £15bn productivity gap". Construction News. Retrieved 6 February 2018.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.