What will solve the UK’s infrastructure output headache?
Despite a recent increase in investment and awarding of tenders, infrastructure output in general is still not at the level that it could or should be according to industry experts. The Essential Infrastructure Report by Scape identified that in the 20 year period between 1997 and 2017 construction output on UK infrastructure and public construction projects had only increased by £64bn which is considerably disproportionate to the increase in investment over the same period.
As infrastructure output is typically measured in relation to local populations this can skew the results as some regions populations grow faster than others. However, it is interesting to note that despite the average output being low, there are some regions that are performing impressively. Compared to London, Scotland has increased their output by 54%. And the North-East region is not far behind with 40% more output than London. So it appears a higher output is not impossible, it’s just the exception rather than the norm.
While productivity is in part to blame, there are other industry factors that make increasing output difficult. A much talked about subject recently is that of retentions and late payments. This hits the smaller contractors and sub-contractors hardest. How does one increase output if you don’t have the money to pay wages for the work that’s already been done?
Red tape still ties up many infrastructure project decisions and this is often due to differing political views. Getting different role players and decision makers to work together, supporting a devolution agenda will be beneficial for the industry and contribute to streamlining projects and output. The NIC in particular aims to help reduce the impact of politicizing decisions with regards to developing infrastructure. In addition it hopes to see more social value attributed to contracts, particularly when they exceed £10 million in value.
If the industry is to overcome its reputation for poor productivity and output, all industry role players need to make a commitment to collaborating better with one another. Recognizing that smaller projects can hold just as much value in the communities they serve as the larger infrastructure projects such as HS2 that cross over multiple regions. Combined these factors can help assure a continual pipeline of work in infrastructure and further secure long-term relationships in the supply chain, thereby giving the stimulus needed to improve output.