The road to success is always under construction…
Well, I think Highways England would argue that the road to just about anywhere is always under construction.
The UK Highways market has seen some massive changes over the last few years with the introduction of RIS1 and it doesn’t look like the industry doesn’t will be slowing down anytime soon. The start of November has been a busy one for the sector, with three big announcements back to back to discuss at the annual Highways UK event.
- Almost £30bn has been allocated to England’s roads
- PFI schemes are no more
- 13 winning contractors have been announced for Highways England’s £8.7bn regional framework
But what impact will these have on the industry?
1. Extra investment
Matthew Lugg, CIHT President has said that Hammond’s generous pledge of almost £28.8bn dedicated to upgrading England’s roads network between 2020 and 2025 is ““very welcomed news for cash-strapped English local highway authorities”.*
The announcement comes at a critical time, as Highways England begins to establish their plans for RIS2. The promised investment provides a degree of certainty to both Highways England and contractors bidding (and winning) places on their frameworks, that the projects pipeline will be bolstered in the next investment period.
Not only this, but the additional £420m, on top of an existing fund of £300m, that has been made immediately available for local councils to tackle the growing number of potholes, bridge repairs and other minor works, will provide the industry with a small boost to productivity.
2. PFI
Although all this extra investment is great news for highways, Mr Hammond also announced that he will be scrapping the use of PFI and PF2 for any future schemes.
While current schemes are safe, the impact of this blanket ban on Highways England’s biggest projects; the A303 Stonehenge tunnel, and the Lower Thames Crossing, is significant.
Back in April the Treasury confirmed that both of these projects were to be financed through PF2 and with the Lower Thames Crossing currently forecast at £6.8bn and the A303 Stonehenge tunnel at £1.6bn, that’s a hefty sum to suddenly cough up.
Highways England Chief Executive, Jim O’Sullivan has said that “both of these projects will likely end up with public money, under a traditional contracting model”** but it is possible that we may see delays while alternative financing options are considered. External consultants will likely be brought in to assess the financing possibilities.
3. Regional framework winners
The announcement of the 13 contractors that will develop, design and construct highway projects across England from 2019 through to 2024 is big news for the sector. The frameworks are part of the new Routes to Market Regional Delivery Partnership which replaces the Collaborative Delivery Framework (CDF).
The new system is a fresh way of approaching procurement for Highways England as contractors will now be incentivised on performance rather than price. Companies will be rewarded for shorter duration and better management of roadworks and for sourcing more efficiently and locally within the key regions.
For the contractors, both the new and the ones that have lost out, the awards will most likely mean a shake-up of their teams. Previously, Highways England has worked on a scheme by scheme basis, so this new regional approach might mean that winning contractors will need to look to their competitors in the regional areas that they have been awarded to find the talent they need to undertake the works.
Similarly, if companies have historically worked in different regions, then current employees may be reluctant to travel long distances and look to move into the companies that have been successful in their local areas.
All in all, it’s been a big start to the month for those in the UK roads sector with a lot of major changes afoot. If you are looking to ramp up your senior teams in this area, click HERE to see how we can help.
*http://www.infrastructure-intelligence.com/article/oct-2018/budget-2018-chancellor%E2%80%99s-%C2%A3288bn-uk-road-funding-receives-mixed-response
**https://www.newcivilengineer.com/latest/exclusive-taxpayer-to-pay-for-16bn-stonehenge-tunnel-after-pfi-axe/10036973.article?blocktitle=Top-Stories&contentID=18359
