Supply Chain Early Involvement Essential for Delivering Infrastructure Value
Following the recent calls from both the Labour opposition and the outgoing bank of England Governor, Mervyn King, for a boost in infrastructure investment, Roger Bafico, UK Regional Director for formwork and falsework specialists, RMD Kwikform, comments on the impact delays are having, early supply chain involvement and the importance of pipeline work.
Having had a number of years where the Olympics have supported businesses through the construction downturn, the last 12-24 months have seen a notable drop in the project pipeline. Coupled with the extreme weather that has damaged our aging infrastructure and highlighted a need for greater investment, it is clear that spending has to increase if we are to maintain the core skills needed to deliver cost savings and innovation in the UK.
From a practical point of view, we need a two-tier approach to infrastructure spending. A cut in red tape and planning for large scale projects to get them from design to ‘on the ground’ delivery and a release of funding for ‘ready now’ maintenance work to ensure cash flow through the sector. If we can get middle market/medium sized works underway very quickly, we can create jobs in the short and long-term, helping to boost productivity. In some cases, we don’t need money, we just need to remove the project blocks and delays.
If we can speed up planning, work together as an industry to improve procurement and build developer confidence, we can also unlock the all important availability of finance. This will in-turn help to generate revenue that is needed to protect the talent pool and ultimately keep companies in business.
Until the tap is well and truly turned on, the unsettled nature of workflow means that there are fewer instances where the supply chain is engaged earlier in the solution design phase. This in itself has a detrimental impact on cost reduction and efficiency. It is far more difficult to create innovative solutions in very tight timeframes, in comparison to what can be achieved with early engagement led projects.
When it comes to larger schemes this early involvement can be particularly tricky for the supply chain, as the primary contractors have already secured the funding and contracts, so there is less of a risk in the design phase for them. Typically as a supply chain we only get paid for the end result of supplying equipment, not at contract stage. This places much more risk on the front end design work that is needed to take cost out at the early stages.
The most successful projects from a cost and innovation perspective are those that use the supply chain skills base at conception stage. Two good examples of this are the Olympics Aquatics Centre roof and more recently the approach taken by the project team on the new Walton on Thames bridge. Here early involvement with the supply chain helped to deliver innovation through modularisation of temporary works, which in-turn cut costs and increased the speed of project delivery. In this case the outline designs and solutions were then passed through to the subcontractor, helping them to reduce their risk and therefore the cost of the scheme.
So for larger infrastructure projects, there has to be a better way to work together as an industry in the longer term, with early involvement at the heart of the process. Therefore there has to be a greater level of understanding and even funding to help to retain the skillsets needed. It is always difficult to justify investment in staff and expertise in a downturn, especially if you are having to design solutions that can then be taken out to a tender ‘free for all’ not recognising the value already put in by the supplier.
In conclusion, yes we have to get the pipeline flowing and in particular get work on to site, but we have to look at the bigger supply chain involvement issue and for larger projects learn from successes like the Olympics.