NIP: setting UK industry up to deliver at home and around the world

John Hicks
16 December 2014

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The latest National Infrastructure Plan is very welcome but next the focus should be on new finance and delivery models that will help the UK compete on the world stage, says AECOM’s John Hicks.

The 2014 National Infrastructure Plan (NIP) builds on NIP 13 by providing more detailed project data than previous iterations, which was a necessary step to build confidence from industry and investors. There were some welcome highlights, including details about the projects that will benefit from the government’s commitment to spend £15bn on roads and major investment in the rail sector, including a £38bn Network Rail delivery programme supporting a number of projects.

"For the next Parliament I would like to see a more sustainable approach that further encourages new financing and delivery models, such as construction and infrastructure company joint ventures, to help deliver the NIP pipeline of projects and ultimately support Britain’s industry to compete on a world stage."

Its programme-orientated approach should help industry and investors make more informed decisions. The world’s infrastructure landscape is an open hunting ground for the biggest institutional investors. Their main criteria are that the returns are right and the risk acceptable – not the geographical location of the investment.

Key to this is ensuring a predictable political environment and, ideally, one that takes a long-term view and acknowledges that the development cycle extends beyond regulatory change. We are witnessing this happening in the UK with initiatives such as the Highways Agency’s imminent transition to a government-owned company, spending plans that extend to a five-year cycle and, through Infrastructure UK, the creation of a central team of commercial specialists tasked with overseeing major projects across government.

The level of transparency and clarity NIP 14 offers in terms of the identification of specific projects is welcome – but now the focus must be on delivery.

In order for the UK to compete on the global stage as an exporter of skills and be perceived as an attractive location for investment, the government must show that the UK can effectively deliver the projects it has committed to.

For the next Parliament I would like to see a more sustainable approach that further encourages new financing and delivery models, such as construction and infrastructure company joint ventures, to help deliver the NIP pipeline of projects and ultimately support Britain’s industry to compete on a world stage.

Organisations’ professional competencies are critical not only in areas such as programme management but also in stimulating how companies restructure, work together and get fit to compete to deliver. Carillion’s recent investment in the Canadian power transmission and distribution services company Rokstad is an example of a UK company positioning itself for the future. It is anticipating demand for replacing the UK’s aging pylon distribution – a demand that does not stop at UK shores as many parts of Europe and large swathes of Africa face similar challenges.

More needs to be done, however, if UK-based companies are to become more than tier two suppliers to major multinationals, many of which already provide integrated services from construction through to operations. Large consultancies are similarly well positioned to become integrators and could seize this opportunity.

Encouragement for developing organisational structures, as well as base skills, is therefore essential if the UK is to successfully deliver complex major infrastructure projects and build on the country’s collective expertise and knowledge gained through the 2012 Olympics, Crossrail and increasingly HS2. Without this focus on organisational competencies it will be difficult for the UK to develop the skills required to meet its future infrastructure ambitions, let alone export home-grown expertise to international markets.

Lord Deighton stated that now that projects have been identified, the government’s next priority is to invest in the skills that we need to deliver the projects, a point I wholeheartedly agree with. The skills required for successful delivery of future projects are vital and mapping infrastructure skills against the future pipeline of projects will be crucial to help avoid the boom-bust cycle that has slowed down progress in the past.

For industry to equip the UK’s current workforce with the skills required to deliver the major projects of the future, it needs to see the same level of clarity around delivery as has been applied to specifying future projects. Programmes need to be packaged up with funding streams and clear plans to ensure there is an ample supply of company expertise and skilled workers to deliver them. If this happens then the UK will become a tempting location for big international investors in an increasingly competitive world for infrastructure investment. This is essential not just for the NIP but critically for the wealth of major projects abroad in which the UK could once again be active.

I see opportunity not only in the NIP, but also for UK business to regain a sustainable position on the world stage.

John Hicks is head of government & public, AECOM