Infrastructure in the New Era is published by Constructing Excellence and Pinsent Masons.
Over the past twelve months, together with Constructing Excellence, we have been examining how the infrastructure sector has made better progress than many other sectors in reforming, improving and modernising its approach to the delivery of major infrastructure assets.
We sought the views and opinions of over 70 chief executives and other senior executives from clients, consultants, contractors and suppliers, including Infrastructure UK (IUK) and the government.
Infrastructure cost review
The UK Infrastructure Cost Review concluded that the UK could save up to £3billion on delivery of key infrastructure programmes. We think this research should be extended to examine whole life infrastructure asset costs, where we believe there is further significant value to be gained. The performance of infrastructure assets over their lifetime is critical for clients and for the infrastructure sector to focus on to achieve success.
Whole life budgets
Therefore, developing whole life budgets is critical. A whole life budget incorporates both capital and operational expenditure throughout the whole life of the asset. To procure an infrastructure asset on a whole life basis, the client must specify the required performance of the asset over its lifetime. The client needs to be involved in the optimisation of asset performance throughout the whole life of the asset and ensure that operational issues inform the discussion around the initial capital cost and the design of the asset.
The overwhelming view of all stakeholders in our roundtable discussions is that clients need to become more “intelligent” and better able to develop and manage assets over their lifetime. BAA provides an example, where a major infrastructure client is transforming its approach to the delivery of a major programme of work at Heathrow.
Integrated supply chains
The supply side needs to continue to develop integrated supply chains to offer clients a seamless and integrated solution: a complete asset planning, design, construction and aftercare service.
Integrated teams may come together under a single umbrella organisation – commonly called a project integrator. This is a role that many lead contractors are increasingly embracing. Developing alliances and joint ventures is also one way to achieve the goals of clients, where parties in the alliance or joint venture are committed to a long-term relationship and where each party has aligned objectives within the alliance or joint venture.
All stakeholders in our discussions emphasised that modern intelligent clients focus on the efficient sharing of commercial, technical and reputation risks.
Modern collaborative forms of contract, particularly NEC, have been successfully adopted in the infrastructure sector. These seek to align risk and reward with the collaborative working behaviours essential to success and provide the tools for effective project management.
It is important that those involved understand how to use standard and innovative contract mechanisms to align the interests of clients and suppliers. The issues that continue to arise on projects demonstrate that too few understand the management, organisational and commercial principles on which the NEC is built.
We work with project teams to build solutions that enable mutual commercial alignment and work alongside project teams to help parties to clearly and proactively identify and manage key responsibilities and accountabilities and thereby reduce the potential for conflict.
Action plan for success
We will work proactively with clients and others to develop some of the key actions that have arisen from Infrastructure in the new era.