UK infrastructure is ‘behind the curve’
By Sandy Guthrie04 October 2016
A key element of major UK infrastructure projects in the future must be to ensure that innovation is fully understood and exploited, according to a longstanding joint venture between the UK’s Balfour Beatty and the French Vinci group.
However, the two groups said that all the evidence showed that this was not currently the case.
They said, “The UK infrastructure industry is behind the curve compared to other sectors in key areas – for example, it is among the least digitised.
“As projects get increasingly larger and more complicated, improving the way we work in areas such as this will become more and more important.”
In 2008, Balfour Beatty and Vinci Construction set up a strategic alliance to deliver major infrastructure projects in the UK. This week, it has released a paper called Innovation for the Future – Better Delivery of Mega Projects.
Balfour Beatty Vinci said it believed that the infrastructure industry had to modernise in order to secure its own future.
“We must be at the forefront of innovation to attract the multi-generational, skilled workforce we need,” the joint venture said.
They recommended a move towards a more collaborative approach, where all parties worked together to achieve the desired outcome. They said, “Innovation has to replace business as usual and become the new normal.”
The paper considered how certain areas might evolve in order to deliver this change, including enabling contractors to innovate; skills; technological innovation; and supply chain engagement.
They pointed out that the UK had a number of mega projects in the pipeline, from the new runway in the south east, to the Thames Tideway Tunnel, a nuclear power station at Hinkley Point, and new railways including HS (High Speed) 2 and Crossrail 2.
“Given the scale and importance of these mega projects to the UK, all the key players, including government, contractors and commissioners, need to play their part in ensuring that they are delivered as efficiently as possible,” said Balfour Beatty Vinci.
Among its recommendations were that all mega projects should follow the example of the first Crossrail – the largest construction project in Europe – of developing and implementing an innovation strategy.
It called for government to maintain funding in R&D (research and development) ensuring that it was accessible and operating within a long-term strategy to support innovation. The joint venture said that an overall framework should also be set which effectively managed the risk that came with these innovations, along with establishing a firm pipeline for infrastructure projects which built and maintained investor confidence.
The government should also consider establishing a mechanism to boost R&D in construction, the paper suggested, such as France’s R&D tax credit, in order to redress the decline in public funding of R&D in construction.
It also said that the UK should be brought into line with other advanced countries which had dedicated construction R&D funding streams.
Another recommendation was that contractors must be encouraged to suggest new ideas, implement them and share rewards even once contracts have been awarded and the supply chain established.
Contractors should be treated as partners in the delivery of mega projects, it said, adding that this was more likely to drive the delivery of high quality projects to time.
Contracts should, it said, therefore be based on a set of common interests with well-defined payment structures and a balanced mix of incentives and penalties, rather than a position where fixed-price contracts, risk transfer, lowest-cost tendering and adversarial relationships were the norm.
Outcomes-based specification in contracts as opposed to overly-detailed specification should be considered where it allows for greater innovation, and allows suppliers to adapt to unexpected challenges which emerge once contracts have been signed, the paper said.
It added that those commissioning mega projects should consider a longer, more detailed planning cycle before construction began, in order to save time and cost later in the process.
It said that the incentives, both regulated and non-regulated, that governed infrastructure networks, should be examined in order to address the fact that they often promoted low-risk behaviour and had an impact on procurement processes.
Barriers to developing and accepting innovative ideas must be challenged, it said, and regulators and other key players should be encouraged to facilitate innovation.
Finally, it said that companies which pioneered innovative new ways to drive efficiency while maintaining quality should be drawn out for praise.
Summarising, the joint venture said that innovation did exist in the infrastructure industry, but that industry often found it difficult to innovate as quickly as it could and should. It said the industry still built by pouring concrete and using other traditional materials and methods.
“Industry remains fractured,” said the paper, “with procurement processes failing to incentivise innovation, or research and design, in part due to slender profit margins.
“Furthermore, companies often view projects in isolation – a mind-set that works against the transfer of innovation from one scheme to another.”
It said it was in response to this challenge that Vinci introduced its bi-annual internal Innovation Awards to allow the sharing and dissemination of the best ideas across the company, and ensuring that innovation was embedded across the organisation.
“It is Balfour Beatty Vinci’s view that with billions of pounds being invested in infrastructure, a more strategic approach to managing innovation will release huge potential,” said the paper.