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.
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.
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.
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
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!
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).
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.
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
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
“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.
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.
I don't really understand why dualing the A1 north of Newcastle and another bridge for the Menai strait are projects that are particularly worth doing.
The traffic delay of ~12 minutes at peak over the Britannia Bridge as per Google maps or ~10 minutes north of Morpeth aren't particularly large as things go.
You can be delayed on the M5 between Bristol and Exeter for hours if theres bad traffic - and the M4/5 at Bristol probably adds an hour to journey times to Devon and Cornwall at peak.
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.
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.
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?
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.
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
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!
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).
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.
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
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
Ctrl+F Conservative: 0 Results. Ctrl+F Tory: 0 Results. Hmm. Dunno lads. Feels like Britain Remade might be overlooking something.
“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.
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.
I don't really understand why dualing the A1 north of Newcastle and another bridge for the Menai strait are projects that are particularly worth doing.
The traffic delay of ~12 minutes at peak over the Britannia Bridge as per Google maps or ~10 minutes north of Morpeth aren't particularly large as things go.
You can be delayed on the M5 between Bristol and Exeter for hours if theres bad traffic - and the M4/5 at Bristol probably adds an hour to journey times to Devon and Cornwall at peak.
Fascinating.
"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.