Transforming Infrastructure Performance December 2017 Transforming Infrastructure Performance December 2017 This report is also available on the IPA website: www.gov.uk/IPA Cover image courtesy of Bryden Wood © Crown copyright 2017 Produced by the Infrastructure and Projects Authority You may re-use this information (excluding logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit http:// www.nationalarchives.gov.uk/doc/open-government-licence/ or email: psi@nationalarchives. gsi.gov.uk Where we have identified any third party copyright material you will need to obtain permission from the copyright holders concerned. Alternative format versions of this report are available on request from [email protected]. Contents 3 Contents Ministerial Foreword 4 Chief Executive Foreword 5 Executive Summary 6 A productivity programme for infrastructure 6 Governance 11 Improving infrastructure productivity and performance 12 The imperative 12 Progressing towards whole system performance 14 A partnership with stakeholders 14 Benchmarking for better performance 19 The challenge 20 What we will do 20 Priority interventions 23 Alignment and integration 24 The challenge 25 What we will do 26 Priority interventions 29 Procurement for growth 30 The challenge 31 What we will do 32 Priority interventions 33 Smarter infrastructure 34 The challenge 35 What we will do 36 Priority interventions 41 4 Transforming Infrastructure Performance Ministerial Foreword Lifting productivity growth by even one quarter of one per cent a year, on a sustained basis over 10 years would add £56 billion to GDP. Infrastructure investment can help increase our national productivity, which is why we have made it a cornerstone of our national economic plan and one of the five foundations of our Industrial Strategy. We are making substantial increases in infrastructure investment, including a 50% increase in transport investment between 2015 and 2020. We have extended the £23 billion National Productivity Investment Fund to £31 billion and appointed the National Infrastructure Commission to provide independent advice on the country’s long-term strategic infrastructure needs. The Infrastructure and Projects Authority will publish the National Infrastructure and Construction Pipeline, which sets out around £600 billion of public and private infrastructure investment over the next 10 years and the country’s infrastructure delivery record since 2010 including the delivery of more than 4,500 projects. The construction sector faces issues such as low profit margins and lagging productivity compared to other sectors of the economy. It is vital that we address these issues if we are to deliver this investment as efficiently as possible. Our ambitious investment plans must be met with ambitious plans to modernise the way we manage and deliver major projects. Transforming Infrastructure Performance is the government’s long-term plan to change the way infrastructure is planned, procured, delivered and operated so we can make the most out of our increased investment. Through interventions including benchmarking projects and accelerating the use of modern methods of construction like offsite manufacturing, our programme will help us to support economic growth and exploit a £15 billion productivity opportunity in construction every year. We will only achieve this, however, if we work in collaboration with the construction industry, which we recognise is already making strides in improving its delivery and performance. You will see that we showcase best practice and are putting measures in place to drive a greater pace and scale of change. This government is seeking to transform the way we both deliver and use our infrastructure so we can extract the maximum possible value from our investment and so bring about real change for people, communities and our economy. As we begin to implement our programme over the coming months, I hope you will join us on our journey for higher performance. Andrew Jones MP Exchequer Secretary to the Treasury Chief Executive Foreword 5 Chief Executive Foreword The government has ambitious plans for infrastructure over the next decade. The IPA, at the centre of government, has a unique role to play in helping to realise them. We estimate there will be around £600 billion of public and private infrastructure investment over the next 10 years and we have a delivery record to be proud of. Successful delivery builds confidence. This enables us to develop future networks that meet our needs and support increasing investment. Looking to the future, changes in technology, the impact of digitalisation and growth of city regions will transform the way we plan and deliver infrastructure. We must protect this confidence by delivering our future pipeline as efficiently as possible and maintain our excellent track record. Then we will ensure investment will continue to flow. Transforming Infrastructure Performance is our long-term programme to improve the delivery and performance of infrastructure. We examine how the government and industry can work together to benchmark performance and select the right projects; improve integrated planning across sectors; support effective commercial relationships; and increase uptake of technologies and innovations – both for new and existing infrastructure. We have also set ourselves some bold ambitions for the short-term, identifying key areas we want to prioritise over the next two years. This includes improving our capability as the country’s biggest construction client. We will leverage our buying power and champion the wealth of good practice that is already occurring. It has become increasingly clear that the government, working with industry, can play a significant role in helping to create a more productive and innovative sector. Our programme has, therefore, been designed in tandem with our Industrial Strategy. We will work with major initiatives already taking place such as the Department for Transport’s Transport Infrastructure Efficiency Strategy, the Construction Sector Deal, and the National Infrastructure Commission’s studies. I see our programme as a direct response to the many calls for the IPA to play a leading role in helping to make the government an enabler of change. While we do not claim that we will solve every problem, this is a significant step in the right direction. We are sending a clear signal for how the government wants to select, procure and deliver infrastructure going forward. The scale of ambition is great but it is not unrealistic. I have seen productivity leaps in the oil sector and we have all witnessed the transformation of the UK automotive sector in more recent times. By government and industry working together and aligning our work through this programme, I believe we can future-proof our investment and drive the transformation in this sector that we all want to see. Tony Meggs Chief Executive, Infrastructure and Projects Authority 6 Transforming Infrastructure Performance Executive Summary Having modern and accessible infrastructure throughout the country is essential to our future growth and prosperity. It is one of the five foundations of productivity set out in the government’s Industrial Strategy, along with Ideas, People, Business Environment and Places. In recognition of the importance of infrastructure, government has recently set out a number of key policy commitments. These include increasing the National Productivity Investment Fund (NPIF) to £31 billion, supporting investments in transport and housing infrastructure, and boosting our digital infrastructure, including £176 million for 5G and £200 million for local areas to encourage roll out of full-fibre networks in support of the Industrial Strategy’s objectives.1 A productivity programme for infrastructure Transforming Infrastructure Performance (TIP) is the government’s plan to increase the effectiveness of investment in infrastructure – both economic infrastructure such as transport and energy networks, and social infrastructure such as schools and hospitals – by improving productivity in the way we design, build and operate assets. It is a substantial change programme with a ten-year horizon that builds on existing best practice and tackles the systemic issues that still limit the performance of UK infrastructure, and it is an important part of the government’s plan to implement the Industrial Strategy. TIP will significantly improve the ways in which infrastructure is planned, procured and delivered to focus on the whole life performance of systems, moving beyond the capital efficiency of individual projects within the system. It will encourage promoters to consider how to integrate projects and programmes across traditional sector boundaries, exploit the opportunities made possible by using new technologies and ensure that the outcomes provide maximum benefit against the expenditure incurred. It will help industry – including delivery organisations, contractors and supply chains – to invest with confidence in more efficient methods of construction and to integrate technology into existing infrastructure to improve its operational performance and the productivity of the sector. Addressing the core issues TIP responds to three strategic challenges that are critical to improving the delivery and performance of infrastructure: 1. Prioritising investment in the right projects. Studies show consistently that investing in economic infrastructure contributes to economic