The cost of materials has risen by almost a quarter in the last six months, according to IPA chief
Credit: Steve Buissinne/Pixabay
Those responsible for delivering government major projects have been urged to make use of digital and robotics technologies to help cope a massive spike in other costs.
The cost of materials for big construction projects has risen by 23% in the last six months, according to Nick Smallwood, the chief executive of government’s Infrastructure and Projects Authority.
The IPA head, who was giving evidence to parliament’s Public Accounts Committee, said that programmes to build schools, hospitals and other public infrastructure are now experiencing the impact of inflation as “a very real issue, [that] is beyond a risk: it is reality”.
To help counteract the huge spike in costs, Smallwood said that project leaders “have to really be focused on having robust delivery plans, long-lead procurement of the critical materials if that is possible, and looking to offset any inflationary pressures by being more productive”.
Using technology in the design and delivery of construction programmes could also have a big impact, he added.
“I have certainly been very vocal in the infrastructure space that there are huge opportunities to do far better projects with far less cost by using digital technologies, whether robotics, automated design software or advanced work packaging, but really leveraging what I would call modern methods of construction and offsite fabrication, and taking work hours out of the field,” Smallwood told MPs. “We are seeing some really good examples across government projects of them starting to take that seriously. The hospital building programme is looking at a kit-of-parts programme. We are already busy with offsite fabrication in the school building programme. Most recently, we have seen some really good results in the prison building programme, using offsite fabrication. There is more to do, but there is a real opportunity to be a significant offset to all the inflationary pressures in the next couple of years.”
Appearing alongside Smallwood at the PAC session was Cat Little, HM Treasury’s director general for public spending, who made a point of contributing to the evidence on inflation – asking committee chair Meg Hillier for permission to provide additional comment.
“I would not want anyone to think that this is all managed and fine,” she said. “There are some really big inflationary pressures facing all departments and all programmes. The IPA has done some fantastic work in trying to evidence as much as we can, but it is really early days, and what I am really worried about is where departments are struggling to evidence what the impact is. Some programmes have not yet got to a commercial negotiation or a milestone in the programme that allows them to quantify what the inflationary impact is, so this is ongoing work and we are expecting to have a further update in the autumn to better assess and quantify that impact, but this is far from easy and far from fully gripped.”
Little added that the impact of inflation was being “not just [by] major programmes – we have big pressures just on basic running costs and particular pay costs within government”.