Infrastructure is big business: a world of megaprojects and trillion-dollar spend, historic success and eye-watering failure. Performance is on a grand scale and world stage.
According to forecasts from PwC, around $1.5 trillion of the $78-trillion global investment pot to 2025 is destined for the UK, where annual spending on capital projects and infrastructure is set to rise by 51 per cent, even with the £50-billion HS2 high-speed rail project still on the drawing board. Headline numbers are huge.
Dubbed by government a “blueprint for Britain”, the National Infrastructure Plan has laid foundations for a pipeline of public investment worth £100 billion over the next Parliament.
However, big-money projects attract big media attention. So when things go wrong, as happened with the Wembley Stadium own goal and never-ending story of the British Library, the fallout is bad news for investor confidence in the construction sector as a whole. By contrast, the universally recognised success of the 2012 Olympics has seen UK project management and infrastructure delivery stock rise strongly in global markets.
Professor Andrew Davies, chair in the management of projects, at The Bartlett Faculty of the Built Environment, University College London (UCL), cites two key organisational innovations as having transformed how we design and deliver infrastructure megaprojects in the UK, for the better.
“First, the T5 Agreement developed for Heathrow is now recognised worldwide as a major innovation in how to deliver megaprojects. The client, BAA/Ferrovial, decided to bear the risk and worked with suppliers in highly collaborative integrated teams to promote innovation to deal with uncertainties and respond to opportunities to improve performance,” he says.
This approach to risk, collaboration and innovation can clearly be seen to have influenced subsequent projects, including the London Olympics. The supply chain is also the focus of the second exemplar flagged by Professor Davies, Crossrail.
SUPPLY CHAIN INNOVATION
“Crossrail has pioneered a new approach to promote innovation within the project supply chain”, he continues. “In collaboration with Imperial College London and UCL, Crossrail has developed a strategy to identify, support, finance and reward innovation. All organisations involved are encouraged to bring forward novel ideas, practices and new technologies.”
Recognising the importance of supplier activity downstream, National Grid has just become the first infrastructure client to join the Supply Chain Sustainability School as a partner, collaborating with 22 other major players to help develop more than 6,000 member companies. Chairman of the school Shaun McCarthy experienced first-hand the critical role of supply chains in megaprojects, in his previous capacity as chairman of the Commission for a Sustainable London 2012.
“Infrastructure projects are never delivered by one organisation; most have long and complex supply chains and competence is critical to success. Very large projects, such as Heathrow Terminal 5, London 2012 and Crossrail, have the scale to develop supply chains to meet their needs, smaller projects do not,” he says.
A culture of blame, claim and shame persists in some sections
His concern is that, despite the respected recommendations of the 1994 Latham and 1998 Egan advisory reports, the construction industry as a whole remains stubbornly entrenched for smaller, lower-profile projects and a culture of “blame, claim and shame” persists in some sections.
“We are evolving a two-tier industry,” he says, “where the same people move from one megaproject to another and perpetrate the good practice that has been developed, but very little filters down to smaller projects.”
PEOPLE AND PERFORMANCE
The global talent pool for major projects is already small relative to rising demand. If any development programme is arguably only as good as the people engaged in delivery, how smart are major infrastructure projects at attracting and retaining the necessary calibre of human resources?
Answering this question is key to business growth, divisional director at Mott MacDonald, Martin Perks, explains: “Maturing your talent acquisition and management is the hot topic in construction and consulting. With potential for the market to expand, getting people involved in your business and keeping them is the number-one focus.”
The solution is not simply transfer-market headhunting, but adopting a more systemic approach, he argues.
“Building relationships with new talent from leaving schools through to trade and professional qualifications is becoming essential. This isn’t just about cash investment, but creating academic and industry partnerships, supporting the growth of rounded professionals with the right behaviours and soft relationship skills, not just technically competent people,” he says.
According to Professor Peter Head, executive chairman of The Ecological Sequestration Trust, it is also people who are central to industry growth and change, albeit from a different, end-user perspective. In his analysis, as a civil and structural engineer previously responsible for megaprojects such as the Second Severn Crossing, ongoing failure of the infrastructure sector to place people at the heart of project decision-making and design intention is the big lesson on holistic thinking going unheeded.
“We are not learning,” he counsels, “because we are still not designing and financing infrastructure to deliver social, environmental and economic outcomes. Too often we fall back into designing the ‘thing’ not the performance. For example, a railway to connect cities with faster journey time, instead of improving human wellbeing more widely through mobility.”
Performance for wellbeing takes the delivery debate beyond issues of investor confidence, long-term political vision and a stable planning framework; it accelerates progress past the cutting edge of digital technology and intelligent infrastructure management or IIM.
Infrastructure created by the people, for the people, sounds like revolution – a revolution to be project managed.
GATEWAY TO REGENERATION
While Ferry Cross the Mersey might still work for Gerry and the Pacemakers, 50 years on, the prospect of a new six-lane toll bridge is perhaps more likely to have residents singing in Runcorn and Widnes.
Work started on the Mersey Gateway Bridge in May, following appointment of preferred bidder Merseylink Consortium. The vision is for a landmark structure, 2,130 metres long, with a 1,000-metre river span. The unique reinforced-concrete design, with steel cable stays, is similar to the Second Severn Crossing, but with three towers, the tallest standing 125 metres high.
Opening of the transformational new crossing in autumn 2017 will bring about much-needed traffic relief for the existing, congested, ageing Silver Jubilee Bridge, which is operating at ten times design capacity, conveying 80,000 vehicles every weekday.
Development will act as a catalyst for regeneration of the local Borough of Halton, plus support economic growth in Liverpool City region, Cheshire and the wider North West. Both bridgeswill be tolled, but free for Halton residents to cross.
Employment arising from major infrastructure is a key development benefit. The new bridge will create 470 jobs on site during construction and 4,640 in total, including agglomeration impacts of operation, regeneration and inward investment. In economic terms, this equates to £61.9 million a year in gross value added by 2030.
In a privately financed public-private partnership arrangement, Halton Borough Council and Merseylink Consortium together cut the lifetime project cost by £250 million through savings made in procurement. Total project costs over 30 years will be around £1.86 billion, with 70 per cent of funding coming from tolls paid by road users. UK government provides the £212 million remainder, in £86 million development cost grant, plus long-term revenue support up to £126 million over 12 years. Construction and land assembly costs amount to around £600 million.
Large-scale, high-profile projects carry potential to build – or damage – investor confidence in the infrastructure sector as a whole. On the Mersey Gateway, the success story has already been written in part thanks to procurement savings secured.
Looking ahead, the aim is to share this experience and best practice externally, says project director Steve Nicholson. “The Mersey Gateway success was built over several years, where a dedicated client team worked alongside government civil servants focused on clear objectives,” he says. “Performance in tackling procurement is now being reviewed in a lessons-learnt exercise, and it is intended that findings will be shared across government and the industry.”