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IPW: New Zealand and the UK look into making the most of infrastructure investment

Date
29 February 2024

In this Infrastructure Policy Watch, New Zealand and the UK report on how to maximise the value of infrastructure.

IPW: New Zealand and the UK look into making the most of infrastructure investment
Major projects can act as a catalyst for growth, but a clear vision, objectives and leadership culture focused on the value of the project are key. Image credit: Shutterstock

New Zealand evaluates the value of its infrastructure

Te Waihanga/New Zealand Infrastructure Commission has published its first comprehensive assessment of the value of the country’s infrastructure.

The report is clear that policymakers face constraints: they simply can’t invest in everything.

To help navigate these choices, policymakers need a better understanding of the infrastructure they already have, how much is currently being invested, and how fast infrastructure systems are wearing out.

The research calculates that New Zealand needs to spend around 60% of its infrastructure investment to maintain existing infrastructure assets, rather than building more.

The value of New Zealand’s infrastructure is also rising over time, from NZD$32,900 per person in 1990 to NZD$55,800 per person in 2022.

Data within the research highlights that New Zealand is currently not spending enough to renew and maintain its infrastructure.

This is especially impacting infrastructure for state highways, local roads, water supply, wastewater and stormwater, and gas distribution.

The ICE’s view

Te Waihanga’s assessment raises questions policymakers around the world will also be forced to address.

They must consider the need to upgrade existing infrastructure, potentially at the expense of new infrastructure projects that tend to be more attractive to the public and politicians.

Resilience of existing infrastructure must be improved to meet future challenges.

Prioritising resilience and adaptation measures will enable countries to develop stronger and more innovative infrastructure systems in the long term.

The ICE discusses this at length in our paper on climate resilience.

Putting in place robust, long-term strategies is key to supporting decision-makers when prioritising areas for infrastructure investment.

The ICE’s Enabling Better Infrastructure programme aims to assist the strategic planning and prioritisation of infrastructure.

It focuses on sharing international best practice to deliver reliable and sustainable national infrastructure.

UK examines how government can make infrastructure investment go further

In the UK, the National Audit Office (NAO) published a report on getting the most value out of government investment in major projects.

As of March 2023, the Government Major Projects Portfolio, a register of the costliest and riskiest programmes, included 244 projects with an estimated total whole-life cost of £805 billion.

The NAO’s report, entitled ‘Lessons learned: Delivering value from government investment in major projects’, focuses on six exemplar projects that received public funding.

It focused on what seemed to work best to make the projects successful, particularly post-delivery.

The projects include:

  • The Millennium Dome/The O2 (completed 1999), an entertainment venue on the Greenwich Peninsula in London.
  • Diamond Light Source (opened 2007), the UK’s national synchrotron science facility located at the Harwell Science and Innovation Campus in Oxfordshire.
  • High Speed 1 (completed 2007), also called the Channel Tunnel Rail Link, providing high speed rail access from London to Kent and continental Europe. It’s managed by HS1 Ltd.
  • The BBC’s move to Salford (completed 2012) which involved the move of several of the BBC’s operational and production facilities from London to a new site in Salford, Greater Manchester.
  • The London 2012 Olympic and Paralympic Games (completed 2012) which involved developing the Olympic Park (now the Queen Elizabeth Olympic Park), venues and infrastructure required for the games and their legacy.
  • The Hartree Centre (opened 2013), funded by UKRI and located at the Sci-Tech Daresbury Campus in Cheshire, helping UK businesses and organisations adopt supercomputing, data science and artificial intelligence technology solutions.

Getting major projects done right

The report identified that to demonstrate value, projects need to be properly evaluated.

Major projects can act as a catalyst for growth, but a clear vision, objectives and leadership culture focused on the intended value of the project are key.

Many organisations and stakeholders need to work in partnership, creating a shared vision, through delivery and beyond.

The report also acknowledges that it can take time and more investment to realise value from major projects.

However, the flip side of this is that the potential value from a project can go beyond the value that was originally intended or expected.

The NAO has set out three key themes for the government to consider as it looks to generate greater value from its major projects:

  1. Start with the difference a project should make and the value that should be produced, rather than what thepeople on the project team or in the government want to do.
  2. Fully consider the wants, needs and concerns of stakeholders (those who will use, operate or benefit from the project) from design through to business as usual, and balance this against strategic objectives.
  3. Once the asset or transformed service is complete, regularly review the contribution it makes to strategic objectives and be willing to adapt if it would deliver more value.

The ICE’s view

Investing in infrastructure through major projects creates income opportunities and generates jobs:

  • directly through construction and maintenance; and
  • indirectly through wider supply-chain benefits that support economic activity across the UK in the short to medium term.

The ICE’s research has shown that government over relies on cost (and to some extent, time) to determine project success.

Meanwhile, project scrutiny also focuses on completion against budgets and not the wider benefits.

To improve delivery in the long term, more weight should be attached to the whole-life benefits of projects and programmes.

The importance of economic, social and environmental value must be recognised, as opposed to fixating on achieving lowest capital cost in delivery.

As the NAO states within the report, project teams should focus on the difference a project can make, rather than creating a ‘vanity project’ they want to do.

The ICE’s 2022 State of the Nation report on improving infrastructure productivity highlighted that any effort to improve infrastructure productivity that’s concerned only with products and processes and not the people using them will fail.

The ICE policy team is currently working on a Next Steps programme focused on improving the productivity of infrastructure in Australia.

Another project examines the day one infrastructure priorities for the next UK government.


In case you missed it

  • Guest blogger Matthew Colton examines Infrastructure Australia’s latest market capacity report
  • Chair of the All Party Parliamentary Group for Infrastructure (APPGI) Andrew Jones outlines that the net zero debate has moved from ‘why’ to ‘how’
  • Zoe Roberts, freelancer, previously at UK100, discusses what powers do UK local authorities have to deliver net zero?
  • Laura Cunliffe-Hall, policy manager at Institution of Civil Engineers