Delivering improved outcomes through Intelligent Sponsorship and Client capability
As delegates at last year’s Highways UK conference heard, the £15bn investment in the strategic road network over the five year RIS1 period involves quadrupling of Highways England’s annual spend by 2021. This is a very welcome and much needed cash injection into a vital part of our national infrastructure. But, as was pointed out, it means that new ways of working will be needed. The opportunities and benefits offered by this fantastic level of investment are counterbalanced by the challenges that a five-year investment programme of this scale and intensity presents.
To put things in context, it is estimated that US$682bn is wasted annually on under-performing projects across the globe. The UK has seen its share of this underperformance over the years. But, of late, we are stopping convincing ourselves that we are awful at delivering major programmes and have started to regain our “Infrastructure Mojo” through the successes of the London 2012 Olympics, Crossrail and other schemes. This rediscovered sense of purpose and self-belief is an important ingredient in maintaining focus on, and momentum for, ongoing UK infrastructure investment to underpin and catalyse economic growth, regeneration and social cohesion. The outcome of the Brexit vote makes this more important than ever.
The capability of the public sector bodies that are responsible for selecting, developing and sponsoring infrastructure programmes, and acting as clients to their supply chains, is a critical factor. Their level of capability affects whether the right programmes are identified, the rate at which those programmes come to market, the level of market interest in the proposed schemes, the cost of private finance, contract pricing and, ultimately, the success or otherwise of those programmes in terms of whether they deliver the intended outcomes and benefits. The importance of these procuring bodies developing and applying the skills needed to operate as effective and intelligent Sponsors and Clients cannot, therefore, be overstated.
This is further reinforced by recognising that, in relation to major infrastructure schemes, typically, the public sector ultimately bears the risk of programme failure, despite what supply contracts and financing structures might suggest. The failure of the London Underground InfraCo PPPs is a prime example. It is the public sector that ends up holding the baby and it must have the capability to mitigate this risk as effectively as possible.
And so, despite the prominent successes of London 2012, Crossrail and others, there remains a very real and ongoing concern in both the public and private sectors that not enough procuring authorities have enough of the required capabilities to act as intelligent Clients and Sponsors, especially where complex, £multibillion mega-programmes are concerned. A number of publications seek to highlight the skills needed and promulgate best practice, such as:
- Infrastructure & Projects Authority and HM Treasury: Improving Infrastructure Delivery: Project Initiation Routemap
- Royal Institution of Chartered Surveyors: The Informed Infrastructure Client
- National Audit Office: Initiating Successful Projects.
Encouraging things are happening in some key areas of the UK transport sector. For example, the DfT’s High Speed Rail Group has recognised its need to understand what it must be able to do in order to act as Intelligent Sponsor to HS2 Ltd, which is charged with delivering what is the largest transport infrastructure scheme in Europe. It has put in place an Intelligent Sponsor capability development programme to build its knowledge and capability to act credibly and intelligently as custodian of the HS2 Business Case, holding HS2 Ltd to account for its delivery and engaging with other stakeholders to realise the wider benefits of the scheme.
Highways England has similarly recognised the need for it to change its approach and build or reinforce its capabilities in certain key areas. Its Supply Chain Strategy is a case in point, where it is embarking on a focused, systematic programme to implement its new strategy and engage with its supply chain in a different way to deliver greater performance.
Whilst much remains to be done to build a sufficient level of infrastructure sponsorship and client capability across the UK public sector, the steps being taken in that regard by bodies such as DfT and Highways England are welcome. Hopefully, they will form the basis of further capability enhancement across both organisations, as well as stimulating similar action by other procuring authorities.
Jonathan Moseley is a member of the Infrastructure sector leadership team within EY’s UK & Ireland Advisory practice. He has 26 years’ experience in the structuring, development and delivery of complex infrastructure schemes and recently led EY’s Intelligent Sponsor work with DfT’s High Speed Rail Group. He is EY’s account leader for Highways England. EY is a Gold Sponsor of the 2016 Highways UK Conference and will be participating in a number of sessions. EY has launched its Intelligent Client Thought Leadership piece as part of its Building Future Britain campaign. It can be downloaded at http://www.ey.com/UK/en/Services/Specialty-Services/EY-intelligent-client
Jonathan Moseley – Executive Director, Advisory Services – infrastructure, EY