Treasury report claims that infrastructure budget costs could be reduced by 15%

Infrastructure UK (IUK), the Treasury division responsible for encouraging private investment into major infrastructure projects, has set out a blueprint for future infrastructure projects which, it claims, will reduce the cost of future schemes by at least 15%.

In its Infrastructure Cost Review, IUK said that savings in the delivery cost of projects – including those in the transport, waste and flood defence sectors - could be achieved by government working with industry to improve procurement, raise productivity, simplify processes and promote innovation and better industry integration.

The report said that saving 15% on delivery costs would equate to savings of between two and three billion a year.

It found that a number of factors were contributing to excessive costs for UK projects when compared with other countries. These included the fragmentation of the construction industry, lack of certainty over long-term workflow, the blurring of decision-making roles making governance inefficient and the over-specification of standards. It also said that the procurement process was  “over-burdensome” and “stifled innovation”, while a lack of good quality data was limiting  commissioners' ability to set challenging target of contractors.

After taking evidence from a steering group of industry leaders, IUK said that costs in the delivery of UK infrastructure could be reduced by :

• eliminating peaks and troughs in the infrastructure investment pipeline;
• improving client leadership, streamlining project governance and procurement;
• reducing unnecessary prescription, standards and third party requirements;
• improving asset management and benchmark data;
• developing smarter ways to use competition; and
• encouraging industry to invest more in innovation and skills.

Treasury Ministers welcomed the plan saying it could promote growth by freeing up more money for infrastructure investment.

Chief Secretary to the Treasury, Danny Alexander said: "One look at projects like the Olympics, where over £600million has been saved, shows that the UK can deliver big infrastructure projects on time and within budget.

"We just have to make sure that the rest learn from the best. By working with industry we can identify ways to save money for them and the taxpayer. The data gathered through IUK's investigation has enabled us to identify savings of between £400 million and £800 million from the initial cost estimate for High Speed 2.

"Savings are in everyone's interests, as it will see the taxpayer get more value for money and will make the UK a cheaper place to do business, promoting growth in the long term."

Full report is available at the following link: http://www.hm-treasury.gov.uk/iuk_cost_review_index.htm