The construction supply chain will continue to suffer the mishandling by government of major infrastructure projects impacting costs, an economy expert has warned.
by Rory Butler / March 29, 2023
Industry’s ability to invest in skills, deploy labour, and manage orders and scheduling on public contracts is being ‘constantly’ undermined by poor government planning, Construction Products Association economics director, Noble Francis, has said.
Mr Francis’ feedback came after levelling-up secretary Michael Gove told The Andrew Neil Show HS2 may not terminate at London Euston after all – despite chancellor Jeremy Hunt assuring the public in January it would – though his comments were also aimed at the mismanagement by Whitehall of public infrastructure projects throughout the UK more generally.
Prime minister Rishi Sunak has since said HS2 ‘will go to Euston’, although that project has now been ‘delayed’, according to Pippa Crerar, political editor at The Guardian.
Mr Francis warned the “greater problem” for the construction supply chain is prudent investment in labour, managing its financial obligations and meeting the schedule of delivery against soaring inflation and costs, exacerbated by ministers creating “uncertainty” by bungling planning and procurement.
He also warned delays to major schemes like HS2 will hit both infrastructure and economic activity “in the near term and increase the cost of HS2 by billions in the medium term”.
HS2’s initial budget in 2010 was around £33 billion. In 2015 it was £55.7 billion. Recent estimates however put the total between £70 billion and £100 billion.
“The greater problem is that constant poor government planning, procurement, uncertainty and delays, initially and during major infrastructure projects, means the construction supply chain cannot justify investment in skills and capacity to deliver them, making them go well over budget (even the constantly upwardly revised budget) despite reviews mid-project to cut the project down in scale and quality (‘value-engineering’) and the projects take longer to complete with inflation on delayed projects making costs spiral,” said Mr Francis.
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