Earlier this month, the National Infrastructure Commission published their first ever assessment of the UK’s infrastructure needs. The National Infrastructure Assessment (NIA) made a variety of suggestions, including limiting investment in nuclear schemes and working towards half of the UK’s power being provided by renewables by 2030.
Shockingly, the assessment also highlighted that every major city in the UK, aside from Bristol, is below the national average in terms of productivity.
To tackle this lack of productivity, the NIC have proposed that infrastructure budgets are devolved out to transport authorities outside of the capital.
The NIA recommends that Metro Mayors and Local leaders should be given a £43bn budget up to 2040 which will be divided across five year “settlements”. The NIA compared the idea to the control periods adopted by Network Rail and Highways England, with fixed annual budgets set at least two years before the start of the five year period.
The budgets would be used to cover; maintenance, small to medium enhancement projects and programmes for new smart infrastructure technologies. The devolved infrastructure budgets will be a replacement for Department for Transport and Local Growth Fund grants for local infrastructure, and will be additional to any funding that authorities can raise themselves.
Across our industries, investment control periods are nothing new, with almost all infrastructure sectors having some version of a regulatory period.
We have seen one or two hiccups of course; Highways England for example have had to revise their first Road Investment Strategy and push schemes back into the next regulatory period. But on the whole, the frameworks are a significant aid to shaping investment priorities and timescales.
What are the current Infrastructure investment periods?
Rail – CP5 – April 2014 – March 2019
Water – AMP6 – April 2015 – March 2020
Airports – Heathrow Q6 – April 2014 – March 2019
Highways – RIS1 – April 2015 – March 2020
Power – RIIO T1 – April 2013 – March 2021 (8 year framework)
But what do five year cycles mean from a recruitment perspective?
Year 1 –
For contractors and consultants who win places on frameworks, we typically, see a boom and bust pattern across the lifecycle of the control period.
The first year is generally quite uncertain in terms of strategies and projects. Until schemes are firmed up, contractors tend to be reluctant to commit to taking on new recruits and leaders as requirements could (and do) change dramatically. As a result, recruitment activity at this stage may be low, with a ramp up to Y2. Consultants often start recruiting immediately as they can experience a rapid pick-up in workload from the framework to develop schemes, before the contractors get busy.
Comparatively, for the client organisations, strategies will have been firmed up two years in advance of the upcoming cycle and there will be a lot more certainty regarding what skills and experience will be required to deliver those strategies.
We would expect a small level of recruitment while the strategies are being drawn up, and then an increase in hiring from 6 months prior to the new investment period commencing.
If the plans for the new period are drastically different from previous years’, the level of recruitment at this stage could see a significant step up. For example, Network Rail have announced that for CP6, 25% of their £47bn budget will be focused on improving the efficiency of the railway, including phasing out conventional resignalling (the basis of controlling train movements for the past 175 years) and introducing digital train control. This suggests that we can expect a rise in demand for people with the complex programme management and technological skills required to undertake such a monumental overhaul in CP6.
Years 2-4 –
Across the middle of the cycle, contractors and consultants will have a lot of work to do. Plans will firmly be in place and recruitment to carry out the contracts they have won will go in to overdrive.
This will be particularly noticeable if clients have introduced significant strategic changes in approach, as they are unlikely to have the skills already on hand to deliver innovative new approaches. In these instances, contractors and consultancies may tap into allied industries that have undergone similar changes already and have already cultivated the skills required.
Year 5 –
For contractors and consultants, year five is back to a period of uncertainty. While they still have a long way to go until projects are completed, they don’t know at this stage if they will still have that contract in a year’s time and will be reluctant to take on more people for the final year. Recruitment tends to slow, particularly at senior levels, with the contract uncertainty making it difficult to attract new leaders.
Quite often, when bidding companies are fairly confident, that their new framework bid will be successful, they commission executive search consultancies, such as us, to map out the market for them.
Market mapping entails researching the talent pool across the industry (and further afield if necessary) to determine where the skills are for the framework/programme, how readily available the candidates are to come on board, and how much companies will need to pay to secure them.
Market mapping is a useful tool as it means that while resources aren’t being fully committed until contracts are signed, the recruitment strategy is in place and ready to be deployed as soon as possible.
Investment control periods have proven to be successful across many of the infrastructure sectors, despite the odd setback here and there, so devolution out to local authorities is one option that’s worth exploring further.
However, throughout these frameworks, attracting and retaining the best talent required at each stage can be challenging, click HERE to see how we can help you to manage this process effectively.
