National Infrastructure Commission
How do we make better decisions on future infrastructure delivery?
The National Infrastructure Assessment – the UK’s first – set out a clear long-term plan for the UK’s economic infrastructure needs up to 2050. All of its recommendations are affordable within a ceiling of public investment in infrastructure of 1.2% of GDP a year, with a similar amount funded by consumers and bill payers.
It is, therefore, essential that we fully understand the outcomes from such major investment, to ensure value for money for the taxpayer and improve practice.
A range of procurement models are currently used to deliver infrastructure projects. Their selection is influenced a number of factors, such as the client’s strategic objectives for the project and attitudes to risk. There is no one size fits all approach to procurement. So, it is important to develop an understanding of where procurement models work best.
In the Assessment, the Commission proposed an analytical framework for the analysis of costs and benefits of private financing and traditional procurement. The focus is on these two models as both are commonly used by public procurers. Other models applying partnering principles have been used successfully to deliver major infrastructure projects, such as Heathrow Airport’s Terminal 5.
Over the last nine months, I have been working with Highways England on a pilot project, using data from five road projects to test the robustness of the analytical framework and identify where it should be refined. Today’s summary report on this project sets out two main findings: on the state of data availability on private and public financed projects, and the implications for the proposals put forward in the Assessment.
This project and report make an important contribution to the conversation about how the UK will effectively deliver its infrastructure requirements to 2050. The country needs an informed debate on the role that private finance should play. And when we say ‘private finance’, it’s important to remember that many of these investors are the pension funds, public and private, which manage the savings of people up and down the country.
One lesson I’ve taken from being involved in this project is the value of hearing the experience of the widest range of stakeholders. In addition to the invaluable contribution from Highways England, the project companies managing the private financed projects, the views of the advisory group and the input of technical experts provided invaluable insight to the development of the work. The discussions with the advisory group and our Commissioners highlighted the benefit of having many heads around the table sharing individual expertise in a focused way.
Engaging directly with the project companies helped me understand the asset operators’ perspective in a way I simply would not have gained from research papers. For example, the configuration of a road project, compact or linear, has an impact on the efficient management of operations activities such as incident response.
Better insights on performance that can emerge from the analysis of projects are already seen in cost benchmarking in the transport sector being developed by the Infrastructure Projects Authority and Department for Transport. The latter has been developed within a collaborative group of organisations that fall under the Department of Transport umbrella enabling sharing on ways to improve transport infrastructure efficiency and outcomes for users across.
Looking ahead, it’s important that we move away from the analysis of project performance being seen as an opportunity for point scoring. A culture in the public sector that engages openly and positively with results from post-project implementation reviews and benchmarking exercises is vital for continued improvement.
This challenge is not unique to the UK alone. In my discussions with other international organisations seeking to develop their own analysis of procurement models, the concern of procuring bodies about what data and analysis will be used for is also raised. That’s why the evaluation of costs and benefits of procurement models needs to be reframed as an opportunity to learn and improve future practice, and necessary to support the calls for greater transparency and public accountability.
The Commission set itself a challenging ambition to develop approaches to evaluate where procurement models work best, and why. It’s a big piece of work, but it must start somewhere, and the pilot project brings us one step closer to that goal.
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National Infrastructure Commission
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Back in July last year we launched the National Infrastructure Assessment, the first of its kind in this country and of its scope anywhere in the world. It identifies clear priorities for the UK’s economic infrastructure over the coming years and decades, based on a thirty-year forward look at the changing shape of our economy and society and at the potential impacts of environmental and technological change.