The report, by the Institution of Civil Engineers (ICE), looks at how the built environment sector can reduce the gap between cost estimates and outturns for major infrastructure projects.
A survey of the public also found that nearly three quarters (74%) of adults agree that politicians should talk to the public more about the benefits major infrastructure projects bring, rather than the costs.
ICE’s investigation into infrastructure forecasting shows, globally, it is incredibly difficult to forecast time and cost for major projects due to there being many unforeseen issues that can arise during delivery. Despite these uncertainties, the ultimate measure of success continues to be initial cost forecasts.
The Institution recommends that the success measures for projects should shift from an over-focus on costs towards whole-life benefit. The survey data illustrates support from the general public for such a move.
Miles Ashley, Chair of the report’s Steering Group, said: "Infrastructure is a vital part of society, with major assets helping to stimulate economic growth, improve health and well-being of the population and protect communities from the effects of extreme weather and climate change.
"We cannot continue to dismiss from the conversation these important benefits. Industry and government need to work smarter, find ways to reduce the disparity between forecasts and outturns, but also to change the narrative and ensure the wider public, the end users, are also aware of the whole-life benefits these incredible infrastructure projects are bringing to them."
ICE asked adults across Great Britain what they considered most important in deciding the success of major infrastructure projects:
• 3% said for overall cost of construction to be low;
• 17% said for the project to strengthen economic growth in the long-term;
• 27% said for the infrastructure to be reliable and cost-effective in the long-term;
• 30% said for the project to regenerate communities.
The Institution’s report, Reducing the gap between cost estimates and outturns for major infrastructure projects and programmes, makes four recommendations:
- Infrastructure owners should complete scope, design and exploration before commencement of work is allowed, to avoid scope creep or retroactive changes, taking steps to include contractors in design at an early stage.
- The Government and infrastructure owners must move away from capital cost as the most important metric when assessing project benefits, recognising the importance of whole-life economic, social and environmental value.
- Principles set out in the Outsourcing Playbook should be mandatory for Government infrastructure owners, this includes infrastructure owners undertaking should-cost modelling to help inform their expectations and knowledge of appropriate tender prices during the procurement process.
- It should be mandatory for all public infrastructure owners undertaking procurement to award contracts based on a cost estimate range, using a should-cost estimate as a reference point, with an amount of contingency allocated appropriate to the level of project maturity.
The report recognises the impact that relying on early estimates, created before full scope and complexity is known, can have on the final cost versus outturn conversation. To minimise the disparity between early and final costs, ICE recommends industry adopt the principles set out in the government’s Outsourcing Playbook. It further discusses the way asset owners can use should-cost estimations to obtain fairer and more accurate tenders.
The report also suggests how the Infrastructure Client Group’s Project 13 approach can help the sector move away from transactional arrangements towards an enterprise model.