Industry

03 APR 2019

COUNTING THE HUGE COST OF INFRASTRUCTURE DELAYS

A new report on infrastructure delivery across the globe has uncovered the huge direct cost to economies of poor delivery, says Mace’s Jason Millett.

Good infrastructure is a popular policy. And, 73% of people across the world agree that investing in new infrastructure is vital to ensure that their economies can keep growing. 

Even if the remaining people are occasionally very vocal in their opposition to infrastructure investment, you will still struggle to find anyone who won’t admit that at least some investment and development is required to ensure that we can connect communities, unlock jobs, build new homes and drive economic development. 

With more and more people living in towns and cities across the globe, that investment is only going to become more important. That’s why more than $5.25 trillion will be spent annual on infrastructure by 2030, the vast majority of it funded by taxpayers from across the globe. It’s a huge investment and so it is important that that money is spent well. 

Unfortunately, that isn’t the reality. Infrastructure projects – by their very nature, complex and lengthy – are prone to going over budget and being delivered late. Figures show that on average, around 80% of projects experience cost or programme overruns. Whether it’s delivering new trainlines, bridges or utility projects, the industry’s record of successful delivery isn’t great. 

What that means in practice is that vast sums of money are wasted, and millions of people lose out on the benefits that the new infrastructure would have brought. Growth is restrained, careers limited and regions failing to live up to their potential. Too often, solving the challenges of complex infrastructure delivery is seen as too difficult. It’s assumed that some many late and over budget projects is just ‘how the world works’. 

However, if we’re honest with ourselves, that isn’t true and shouldn’t be accepted. Complex projects can be delivered well. Look at the Moon landings, the £1.5bn A14 upgrade or the London 2012 Olympic Games. It is perfectly possible; it just takes a change of mindset. 

"Our latest research has done a deep dive on infrastructure delivery across the globe and we've uncovered the huge direct cost to our economies of poor delivery. In the UK alone, taxpayers face an annual bill of £19bn a year by 2030 - and globally, that figure will be more than $1.2 trillion."

In our latest research report, Mace has done a deep dive on infrastructure delivery across the globe, and we’ve uncovered the huge direct cost to our economies of poor delivery. In the UK alone, taxpayers face an annual bill of £19bn a year by 2030 – and globally, that figure will be more than $1.2 trillion. 

That just isn’t good enough. 

All of us in the sector – from clients to contractors to consultants – need to recognise that these delays and overruns are our collective failure. We owe it to society to ensure that we can spend their money better and deliver on our promises. At Mace, our experience in delivering complex programmes has shown us there are a number of measures we could introduce to help mitigate those risks. 

First and foremost, the key thing is more independent scrutiny of budgets and programmes. An independent panel of experts overseeing the largest projects means that people have to face up to problems before they become endemic and it helps project teams break free from any group think. This worked well for the London 2012 Olympics and the Hong Kong Aviation Authority. There’s no reason we can’t do it elsewhere. 

We also need to build in more delivery skills on the infrastructure owner side. The best programmes and projects have capable owners, however large infrastructure delivery bodies and developers are often public bodies that often struggle to attract the best talent as they can’t compete on salaries. National infrastructure academies could help address that imbalance. 

Government departments with responsibility for delivering infrastructure could also be bought together, creating ‘centres of excellence’ around project delivery that ensure lessons from major projects are captured and we don’t lose hard-earned experience every time a major project comes to an end.

Most importantly, however, is a change in mindset. Projects are pressured into providing unrealistic budgets and programmes by political pressure. We all need to recognise that infrastructure delivery is complex, unpredictable and expensive. By spending more money earlier and having realistic expectations around how effectively we can mitigate risks, we can ensure projects face more realistic targets and timescales. 

That will take courage from everyone. It will need politicians, clients and the industry to work together to effect change. That’s not an easy step, but as our new research shows, if we don’t fix this, we’ll all have to pay.   

Jason Millett is Mace’s chief operating officer for consultancy.

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