This note has been prepared by Steve Lett who has recently joined Invennt as an Associate. The note contains some great clues as to how to shape your businesses strategy in relation to the infrastructure market in the UK.
I recently attended an interesting briefing, hosted at Clyde and Co with Partnerships Bulleting, by Infrastructure UK (IUK) Chief Executive Geoffrey Spence, on the recent issue of the National Infrastructure Plan 2014.
Primarily a briefing to financiers and lawyers on the potential opportunities for investment arising from the latest version of the National Infrastructure Plan it also gave a great (and more interesting!) insight into the aspiration of IUK to gain better value from their major investment in infrastructure, with particular reference to:
- Turning projects into programmes
- Integrating the vertical supply chain
- Early contractor involvement (see Brendan post here on Innovative Contractor Engagement)
There was an interesting dynamic between Geoffrey (the Government) the Financiers (the Private Sector) and James Stewart (KPMG – the bridge between the two), and their discussions on how financing the National Infrastructure Plan should provide private sector gain whilst delivering public sector requirements. The guarantee scheme seemed a particular point of contention, but Geoffrey was unapologetic in stating that the Government was going to guarantee schemes that it saw as imperative and not run the risk of non-delivery as a result of cautious private investment.
Finance aside, I was very engaged about the opportunities to improve the value of construction within Infrastructure, as this is a segment of the construction industry that my colleagues and I have been very involved in through our careers. Having worked in all levels of the vertical supply chain, in highly collaborative environments, we can see the tremendous potential in managing programmes of work with integrated supply chains.
With the publication of the Strategic Business Plan by Highways England, last week, setting out a five-year business plan and programme of work, implementation is clearly underway.
Can IUK bring about the changes to create the value? I believe they can, and it would be great to be involved in helping them meet their goals.
Summary of Presentation
- Primary focus of IUK is cost effective delivery with engagement of 1st and 2nd tier of supply chain.
- Major changes in infrastructure delivery since 2010 with 2,500 projects completed, 66% of IUK programme is in build.
- £466bn pipeline, £277bn in construction, £189bn future investment.
- Highways Agency (HA) has a 5-year budget (rather than annual) moving to a programme focus rather than project focus.
- Environment Agency (EA) – ditto.
- Infrastructure in the UK deemed expensive – supply chain to drive savings.
- Infrastructure Client Group set up.
- Private sector expertise being brought in – Highways Agency now chaired by ex BAA Chief Executive, Colin Matthews. Environment Agency now chaired by Sir Phillip Dilley, previously Group Chairman of Arup.
- Controlling cost is the biggest focus of IUK.
- 2/3rds of funding from Private sources (consumers) i.e. regulated industries gas/electric companies and corporate companies i.e. telecoms
- IUK is biggest lender in the UK.
These summary bullet points give useful clues as to where you might point your strategy to tackle this exciting market. We have produced some useful white papers which cover a number of pertinent subject areas:
- Collaboration on Mega Projects
- Market Analysis of Network Rail for CP5
- A Guide to BS11000- the business to business framework standard
- A thought piece on managing through the boom and preparing for the next recession.
These can all be found on our resources page.
Steve Lett is an Associate of Invennt. He has spent his career predominantly in commercial management and has helped both contractors and consultants manage their contracts more effectively. His experience has been international as well as UK focused. Steve’s thoughtful style is much sought after particularly where clients are seeking a systems solution to their cost and contract management issues.