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Michael Davison's avatar

What you fail to take into consideration a key block to cost effective construction - it is that the whole construction market in the UK is designed to increase cost - the “main” contractor subcontracts out each and every element, the award of contract is based on price - with scant regard for the ability of the subbie to complete the works - this leads to increased costs rectifying low quality workmanship. The days when a company employed its own workforce are long gone, it is only the SME’s that do this today, the company has no interest in the myriad of works that go into the whole - it is price and price alone. The contracts they sign are never fixed price, they are linked to material price index’s, so whilst the price they secure the project at may appear unrealistic, it is never what they end up getting paid which is always higher due to unforeseen price increases - meanwhile the subbies are contracted to complete works on a fixed price - in many cases these subbies fail, and replacements are appointed, does the main contractor care, no, the “failed” subbie does not get paid for the works done - more cash to the main contractor.

If you want to get a major project built, on time, to spec, then you need a fixed, unmovable price to be agreed, the contractor then knows that the days of padding increases are over and they are on the hook for delays. This will encourage direct employment of trades, bringing both security to tradesmen and an uplift in work quality. Failing that, only employ German, Norwegian or French companies from start to finish - they at least have the experience and direct employed workforce to get the job done - on time, on budget.

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movingturtle's avatar

Was just about to write a very similar comment to this! There is also a Government policy preference for subcontracting, I believe the idea is to support smaller UK businesses, but it is massively inefficient.

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Claire Hartnell's avatar

I agree entirely. My son’s school was 90% completed - then the lead contractor went bust (they pulled down a bunch of other high profile projects with them). That 10% under completion is the slack / redundancy that has to be built into economic systems at every level. We have gouged it out with price seeking which, as you point out, undermines productivity.

I have a little house in Austria & when our village rebuilt a flooded complex next to the lake (restaurant, changing rooms, offices), they put up a sign showing the contractors. All local, all mittelstand. All with roots in community (ie skin in the game). This is a modular system - one point of failure can be quickly replaced. Not like the crazy, fragile structures we create to deliver important projects in Britain. It makes me furious to see us failing at such easy, scaleable projects like implementing a tram network.

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Jonathan Quaade's avatar

Hi @Michael

You seem to know a lot about construction. My co-founders and I are building vertically integrate construction company with a big goal to reduce construction costs and drive the UK to build more. Would it be crazy to get your email and ask you a few questions? If you prefer, hit me up at hello@jonathanquaade.com

Jonathan

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movingturtle's avatar

In addition to the failures around procurement relating to subcontracting is the practice of tendering work piecemeal; HS2 being a case in point. The work was tendered in 3 parts, with different companies winning the tender to deliver separate legs. This meant that delivery couldn't proceed as in France, for example, where standard practice is to build the line from both ends simultaneously, meeting in the middle. This permits moving heavy machinery and plant around on the newly laid track, obviating the need for expensive and destructive construction of access roads, which are a major cost driver on HS2.

It also increases risk and difficulty in the areas where the different segments must be joined up, as the various contractors need to coordinate between themselves to ensure alignment.

[edit to add]

Procurement failures are a major driver of cost for UK infrastructure projects and the Civil Service is extremely poor at it. This is primarily because the current wage structures do not allow them to hire people with the engineering or legal expertise to procure complex technical proects and negotiate contract effectively.

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Steve H's avatar

Are wage structures for procurement teams in the Scandi countries, Spain, France etc very different then? Ie do they pay commercially competitive rates for public roles? And how has the UK got itself in a position of tendering piecemeal, and is this truly unique? I’m interested to know if the cost drivers are conceptual, ie could be changed simply by changing mental models, or if they are structural, eg require legislation or some other change that is harder to achieve. I really hope someone from Labour is trying to address this

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Michael Davison's avatar

You mentioned the failed tram project in Leeds, what was interesting is that Birse Construction did the major groundwork’s, got the tramways, stops etc in place…….and then nothing. The result is that unusual as it was, they were on budget, on time but decisions taken higher up the food chain stopped the project. If, and it is a big IF, the project is revived, the work done will almost definitely be re-done, at a much higher cost (forget the £millions already wasted), but unless the project is ringfenced, it could again be cancelled. The biggest issue this country faces is that the infrastructure is fit for 1960’s Great Britain, unfortunately, we are living in 2020’s Great Britain and until someone realises that, nothing will get done - and always remember a key element - whatever a Conservative Government agree to do, the following Labour Government will cancel, and vice versa - and given the need to get LibDems, Green, SNP on board, neither main party can be trusted not to cancel, delay the others ideas. The construction industry loves delays and cancellations, they submit costs/fees and are paid - the more delays, the higher the fees………..and you wonder why it is almost impossible to get anything large done on time and budget.

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Claire Hartnell's avatar

You make a good point. A cross party ‘productivity task force’ with 15 people drawn from industry, research (universities) & govt would be a good start. Agree on a rolling rostrum of 5 big, important projects & be given fast track permission by statute, to drive them through. In fairness I think this is what Cummings was trying to do wrt Civil Service. Bypass the standard rules / bureaucracy/ approvals etc & treat as Manhattan Project / Apollo programme. Small group co-ordinating high impact outcomes.

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Charles Orton-Jones's avatar

Superb article. I sincerely hope MPs and policy makers are reading this

Ps: I'd love to see a breakdown on costs for a big project. Where does all the money go?

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Robin D's avatar

That was a useful (and depressing) itemisation of the huge cost of infrastructure projects in the UK, though often it wasn’t comparing like with like.

But we knew that. It would have been significantly more useful if it had analysed systematically the reasons for the differences. It only mentioned nimbyism and environmental protection. Other comments helpfully referred to the way contracts are let.

Does the cost of land make a difference, England being more densely populated than most European countries? Is site security significant? Are our technical standards needlessly higher? Legal costs? What else adds to cost here?

Once we know what’s causing the difference, then we will be closer to identifying solutions. I’m not a civil engineer by the way!

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Martin's avatar

One of the issues is the UK having done things first has led to a mish-mash of standards and a lot of things buried underground, some of it undocumented.

Crossrail's delays party from harmonising multiple signalling systems from the 1930s to today. The delays to electrification partly because signalling cables (needing replacement) were buried to prevent theft and no-one recorded where they were buried.

Britain needs a harmonised masterplan for its future infrastructure, at a country and city level. Spending on standardisation, however expensive, will unlock benefits for the future.

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Matthew Hutton's avatar

In the UK agricultural land is £10k/acre - so ~£125k/km assuming a 50m wide right of way.

This is meaningful for a cycleway but not a high speed railway.

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Robin D's avatar

Thanks Matthew. Oh well, one theory for the cost differential rendered invalid. Any thoughts yourself?

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Matthew Hutton's avatar

Well the obvious one is the excessive design speed of 400km/h. Reduce that to a more sensible 300-320km/h and things look a lot better.

Some of the experts cited for this work believe that the soft costs are also very high.

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Julian Le Vay's avatar

Fascinating article. But we knew all this. What we lack is a thorough analysis of the cost drivers that make UK projects so much more expensive. Incidentally I worked in one area, prisons,where both construction costs and timescales were halved by replacing trad. public sector finance and construction by PFI. We ought to have a judge led inquiry into What Went Right

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David Burns's avatar

It would be interesting to understand if delivery structures and financing have any influence on this, and how other countries go about it. While planning, re-planning, scope change and ministerial vacillation clearly part of the problem, and as others have procurement processes that don't appear to deliver value, some of the European infrastructure projects mentioned make use of public companies that raise funds on capital markets. This may have the benefit of a focus on timetable (reduces financing costs), discipline of cost control (as otherwise have to raise more finance) and the oversight of bond holders who have an interest in seeing the job done effectively. The Grand Paris Express is funded like this, and the Copenhagen metro used bonds and income from land development (which the metro extensions helpfully raised the land value for). While HS2 Ltd, for example, is a public company, its funding is simply block grant - so it knows it can just ask for more, with limited civil service control. If you look at bits of infrastructure that has been built by private sector alone (CWG build Canary Wharf Crossrail box, and Berkeley built the Woolwich box) they tend to be on time and budget, as they are incentivised to do so.

I wonder if there is also a British/English thing about managing ‘unfairness’ – so we focus on the local impact (which will be very difficult for some people) over the national growth picture, and tie ourselves in knots over the impact the infrastructure may have. When the reality is it isn’t possible to achieve without some unfairness, and so the priority should be proper compensation over changing the scope (The difficulty being those with most to lose often have least economic agency, viz. Council homes knocked down to make way for HS2 at Euston).

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Matthew Hutton's avatar

HS2 is very unfair on the people of Buckinghamshire and aside from a slightly longer tunnel under the Chilterns no meaningful concessions have been made. Theres almost no community money spent - nor is there a station.

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Martin Pollard's avatar

And this kind of remark describes the problem. Sometimes you are delivering a connection between point A and point B. But then some community group between A and B squeaks "hey what about me" and so the politicos say "can you just". The project leadership then spends so much time prevaricating about maybe introducing an unfeasible change to the project before spending money on consultants to tell them how unfeasible it is. Nobody wins but the costs just went up.

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Matthew Hutton's avatar

Adding a stop for Coventry, Britain’s 10th largest city and a stop for the Thames Valley, a region with millions of people in it and the wealthiest part of Britain is hardly unreasonable.

And if every other train stopped at each it really wouldn't be that bad. Plus you’d get millions of extra passengers - many of whom would otherwise drive.

And better connecting a wealthy region to the northern cities and northern tourist destinations empowers more domestic tourism and business which is definitely good for levelling up.

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Martin Pollard's avatar

Unreasonable, no. Unfeasible without majorly shifting the project scope? Almost certainly.

It's fine to put these changes in during the project scoping stages but once you proceed to the design and surveying stages then any shifting of scope that ramps up the costs.

Part of the problem with high speed train lines is everyone thinks they're simple and they understand them, alas, it gets very technical very fast.

Most complex is a change of route; high speed train lines are by design mostly straight lines. Every new kink you introduce means you will have to do geological surveys then compulsory purchase new land for miles to keep that high design speed.

If on the other hand you are merely adding another major stop to the existing route, you still have to consider the knock on effects in both directions. Do you for example need to add more passing loops for goods? What do you need to do to the signalling systems to manage this? Etc. It all costs.

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Matthew Hutton's avatar

If adding the two stations costs £375m but adds you 5m passengers with a mean ticket price of £25/journey then it pays for itself in 3 years.

And redoing Oxford station which is much more constrained has a budget of £160m so that is hardly an unfairly small amount of money.

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Rian Chad Whitton's avatar

Very interesting. Keen to know more about why Spain is so capable at building train links on time and on budget. Besides hiring the necessary number of tunneling machines and using standardized design, what are they doing right?

As with nuclear infrastructure, the lessons appear quite obvious. Standardized designs, using the same suppliers and contractors over a long period and so on.

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Mike D's avatar

Excellent piece. I’d also say the weak influence of finance staff in British civil service is a factor. Self-indulgent engineers with no limits or timelines are a huge detriment too

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Glen Paul Mendes's avatar

As I am given to understand Great Britain does not support its infrastructure as its costs are unaffordable and due to a lack of foresight and lack of a vision for our future, other than 5 years in advance there is no need.

So the Government coffers go to other costs, other costs that relate to Political gain and old promises gained or lost to many wars over territory since the mid 17th century, and now 21st century these handshake deals are publicised and the costs are documented unfortunately they are con-sided as hidden costs that enable smooth running of our now rapidly dwindling empire, losing Europe now losing the commonwealth is costly and this including the hidden costs that go elsewhere,, do we need to support those who no longer have a vested interest in the tired old British Empire, after all the Ottomans came to an end by the stroke of a pen, unless a new ottoman empire was reappraised at the same stroke the middle territories of our globalised system, that includes Great Britain, Europe and its former Ottoman Empire may never be able to pay its bills and the entire properties of Great Britain may be become forfeit, to the rising power of the west or the east....Think on because our future is in a retrial of these hidden costs and the deals of the past we have agreed to seem to be falling apart, its now each man to his own God Like Leaders...where or who is our God like visionary who is it that can Bring back Britain? or are we not now relegated as pourer than the poorest state in the USA, populated mainly by an ethnic race.....its also about Global perception and are we not in a great danger of losing the worlds respect due to being to woke to wake up to a misguided truth that multiculturalism is a disruptive force.

We once ruled them all and now they tear down our statues...Rome was not built in a day,,,but it was bought down by calamity...now so are we.

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Bob Robinson's avatar

“It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who gain by the new ones. ”

― Niccolò Machiavelli

In simpler times when the aristocracy owned vast swathes of land it was easier to negotiate and easier to mitigate. The Earl of Stafford aka the Duke of Sutherland insisted on a cosmetic tunnel, for which there was no engineering requirement, at Trentham Gardens on the West Coast Main Line to Scotland as did the Duke of Rutland on the line behind Haddon Hall. In today's property owning democracy everybody close to the line of route now can be/is a offended stakeholder who is able to jerk his elected representatives collar.

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SGfrmthe33's avatar

One more addition for the list of construction issues in the UK: lack of talent.

Unfortunately, in this country, the only builders you can get in most parts of the country are shockingly mediocre, and they still charge a fortune for their mediocrity. This is because our best and brightest people are far from construction. This allows a few shitty builders dominate the market because literally no one else wants to do their job. Though no one likes to admit it, the UKs construction industry is littered with people that are generally unskilled, and not very conscientious.

One bad hire makes everyone's jobs much more difficult. When the majority are bad hires, you are doomed.

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Francis Turner's avatar

And the day after you publish this I see Japan opened a new tram

https://english.kyodonews.net/news/2023/08/16c7e5e9d81d-japans-1st-new-tram-in-75-years-starts-operating-north-of-tokyo.html

9 miles for about £400 and only 18 months late.

The Haga Utsunomiya Light Rail Transit, which has cost 68.4 billion yen ($467 million), was initially planned to open in March 2022, but the schedule was postponed twice due to a delay in construction work

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Alistair Howard's avatar

Fascinating.

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Patstick's avatar

"Only New York can beat its staggering £1,392bn per mile cost."

I think this is a typo. That's 1.3 trillion per mile.

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Francis Turner's avatar

Yeah it's £1.393 Bn or £1,392 Mn - but it is still mindblowingly expensive. And may be in fact be too low unless the pound has miraculously gained enormously against the USD

This bloomberg article - https://www.bloomberg.com/news/articles/2023-02-23/in-nyc-subway-a-case-study-in-runaway-transit-construction-costs - says it cost $2.5 B /mile

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Matthew Edwards's avatar

Ctrl+F Conservative: 0 Results. Ctrl+F Tory: 0 Results. Hmm. Dunno lads. Feels like Britain Remade might be overlooking something.

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