Transforming infrastructure delivery: the truth about what is still holding us back

Antony Oliver

Economies around the globe continue to back infrastructure investment as key to underpinning economic growth and driving positive social outcomes. But the industry’s delivery track record remains woeful. AECOM brought together senior UK industry leaders to discuss what’s holding us back.

The demand for infrastructure investment has never been higher. According to research by McKinsey, the current US$2.5 trillion spent each year on transportation, power, water, and telecommunications systems, should actually be closer to US$3.3 trillion to meet the demands of a growing population and increasingly urbanised world.

Despite decades of initiatives, procurement reforms and the emergence of new technology and techniques around the developed world, productivity and delivery predictability across the infrastructure sector remains low.

The result of this failure is that we still see eagerly awaited and much-needed projects facing massive delays getting off the ground. And when they do, they often run over time and budget, deliver below expectation when in use, and cost more than anticipated to operate and maintain.

It is a situation that has to change if we are to properly tackle road congestion, rail network delays, power cuts, water shortages and flooding and so lift the global brake on economic growth costing several trillion dollars each year.

Two solutions are widely recognised:

  1. Projects need to be set up with a more integrated approach that links across the lifecycle of an asset, reduces total cost of ownership and creates assets that are more constructible and fit for purpose.
  2. Digital tools should be embraced to unlock the full power of this integrated approach.

Five areas for change

Having identified these simple solutions, the question still remains — what is holding us back from embracing the necessary change? This was discussed at a recent roundtable hosted by AECOM which highlighted five distinct areas to focus change.

1/ Leadership with the courage to define value

The key to delivering infrastructure to expectation is setting projects up for success from the start.

“You have got to have political will behind a project, but you also have to have the right leadership,” said Martin Hoff, Head of Major Projects at Thames Water. “As a business and as a client we have realised the importance of being clear about what we want. It creates the consistency needed through the supply chain.”

Having the courage to initiate honest conversations about cost and time across all stakeholders, the public and the supply chain is vital to building confidence in successful delivery.

“The acceptance that projects will always finish late and over budget is one of the reasons why the industry has got the bad reputation that it has,” said AECOM Director of Strategy & Growth, David Beddell. “Leadership is about holding ourselves to a higher standard.”

Association for Consultancy and Engineering (ACE) Chief Executive Hannah Vickers agreed, but pointed to Crossrail as an example where short-term political focus on cost rather than a longer-term search for value had hindered the project. “We are perhaps arguing about the wrong things,” she said. “We are arguing too much about getting the cost down rather than weighing up what you actually value.”

She added: “Giving Treasury a much better idea of what things cost and what the benefits are is important, but we must also actually get them to make a value judgement over what money is spent on.”

Without this clear value judgement, she said, Crossrail suffered. Despite creating a word-class piece of economy-driving infrastructure and developing a delivery process that can be exported around the world, late opening and last-minute cost escalation has ultimately grabbed the headlines.

Projects such as HS2 understand the challenge. “We have to work harder to explain and justify value,” said HS2 Engineering Director Giles Thomas. “It is a long-term programme. We have to push our case forward and help people to think far ahead.”

2/ Embracing a longer-term view on investment.

“Too often there are flaws in the consideration of construction methodology and logistics contained within the statutory process,” said BAM Nuttall Director Adrian Savory.  “This is where true ECI, involving ideally the contractor — or assembler in Project 13 language — is largely missing. This community is added too late and is often done in a largely superficial way.”

The challenge for politicians, particularly in cash-strapped local authorities, is balancing the clear social and economic gains from long-term, outcome-based infrastructure thinking and investment against the short-term policy making coming out of central government.

Martin Tugwell, Programme Director at the strategic alliance group England’s Economic Heartland, highlighted policy tools, such as National Policy Statements, as crucial to locking in long-term central government policy in the regions — allowing local politicians to have that honest conversation with stakeholders nationally and regionally, based on indicative funding commitment.

“My political leaders are being asked to sign up for doubling or tripling the size of their local economy, but they have absolutely no certainty that beyond the next Secretary of State that same political ambition will be there with government. That is why we are asking for a National Policy Statement for Strategic Infrastructure: one that enables us to align investment across sectors to a common objective.  It shows the commitment beyond the limits of parliamentary terms,” he said.

Setting out a 30-year time horizon for investment would enable clients to have sensible and sustained conversations with contractors and consultants about innovative solutions that unlock greater value across the asset lifecycle.

3/ Preparing the business case for change

Placing greater emphasis on planning and design in infrastructure projects inevitably alters the investment cost plan for clients. Establishing a robust business case is therefore crucial to the introduction of new processes, new technologies or ideas that help move towards outcome-based, or whole-life, value-oriented designs.

In practice, this does not happen with sufficient clarity. In particular, the consultants driving the design process need to improve the way the relationship between increased spend in the early design, planning or preconstruction stages and the potential yield in savings and added value across the project lifecycle is described to clients.

“It is important that we find a way to persuade clients that there is sometimes value in spending money up front, and that there are opportunities to be realised throughout the project lifecycle,” explained AECOM Engineering and Programme Director, Gavin Davies.

In an effort to find such a new business case, the Institution of Civil Engineers (ICE) and Infrastructure Client Group have been working on the so-called Project 13 initiative to transform the sector.

Project 13 attempts to put in place a client-side business model that gets the supply chain integrated and focused on the outcomes — be they time or cost certainty or whole-life performance. Fundamentally, the process is designed to underpin the client’s knowledge of its customer and incentivise the supply chain to deliver against that value rather than the cost.

“There is an onus on clients to create the right environment and that was really the underlying principle behind Project 13,” explained ACE’s Hannah Vickers who drove the Project 13 initiative while at the ICE. “The opportunity now sits with consultants to bring some of that integration to the fore — and it needs to be done as a collective not piecemeal — there is a huge opportunity to move the whole sector forward.”

4/ The challenge of technology and components as a solution

Establishing long-term relationships is also the key to accelerating the use of technology and the digital tools that will drive more effective asset management. According to AECOM’s David Beddell, this is one area holding us back.

“We are not going to get the most out of technology unless we have a full lifecycle perspective,” said Beddell. “Being brave enough to invest upfront in those decisions that will make a difference downstream that really is the key.”

The industry currently makes a colossal investment in technologies such as BIM and digital modelling, but in general is not yet seeing the benefits from this spend. Breaking from the traditional model of designers working in isolation from the supply chain is vital to move towards a new digitally backed delivery process.

“We have got to realise that things can be made in factories,” explained Heathrow Development Director Phil Wilbraham.  At Heathrow, he explained, his team was working with the supply chain to help to turn design thinking completely on its head by focusing on components that could then be made off-site near to their nationwide logistics hubs.

“We are trying to create a catalyst to make people think that this has to be done differently,” he said. “It is not about using BIM, but about designing components — and if you get enough components then the price comes down and we are all winners.  If we can get engineers and designers to think about that it will change things fast.”

In particular consultants must start to collaborate across the delivery chain to drive new, more efficient digitally driven solutions into the mainstream and embrace new, more diverse skills that will be needed. Failure to do so presents a real risk to the sustainability of their businesses and to the sustainability of organisations across the wider industry.

“We’re starting to see the industry build up its digital expertise, but there’s still work to be done,” said AECOM’s Gavin Davies. “You look at the places where data science is at the fore and it is all in retail and social media. So, the onus is on us in infrastructure to be more proactive to fully capitalise on this opportunity.”

5/ Taking the public and stakeholders with us – is it really so difficult?

Along with its reputation for delivering late and over budget, the UK construction industry is now also wrestling with a loss of public confidence following the January 2018 collapse of outsourcing business Carillion and after the Grenfell Tower fire in West London highlighted serious failings in building control and management.

Re-establishing the lost trust is crucial and everyone across the sector needs to be aware of the impact that they make on local communities and businesses. As such, collaboration — not simply engagement —  is vital to ensure that local communities have a stake in delivering the right outcomes from the infrastructure investment, according to England’s Economic Heartland’s Martin Tugwell.

“Collaboration is about striking that deal where you get something for it. And if you don’t take the communities with you, you will have no chance of delivering the project,” he added.

However, this need for collaboration changes throughout the lifetime of a project as does the team needed to deliver it, explained Heathrow Delivery Director Phil Wilbraham. While the start is all about working with stakeholders to get the project off the ground and funded, the team must quickly morph into one capable of working with another set of stakeholders to actually deliver the project.

“Leadership is of course crucial but getting the right team around you is probably the most important thing you can do to make the project work,” said Wilbraham.

Understanding the truth about holding us back

Global infrastructure is unquestionably in a positive place. Yet the challenge facing the sector remains one of delivering on this ambition. It is a challenge that not only focusses on how to achieve the desired economic returns but that also revolves around how to create the social value needed to regain the trust of stakeholders impacted by change.

To help meet this challenge:

  • Leaders must work harder to define and explain their view of value and have the courage to make difficult decisions.
  • Clients and asset owners must embrace a longer-term view of investment.
  • Industry must respond with business cases that are based on value rather than cost.
  • The supply chain must capitalise on the opportunities of new technology, off-site manufacture and data-led asset management.
  • The whole sector must collaborate and have honest conversations with stakeholders to retain the public’s confidence in the value of investment in infrastructure.

The global infrastructure sector’s delivery track record remains woeful. It must change and, as our panel of industry leaders agreed, once we are honest about what is holding us back, the necessary transformation is within our grasp.

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