Crossrail, HS2 and the nuclear new build programme have all left the public with a sour taste - but can Heathrow buck the trend?
Mega infrastructure jobs are in the spotlight like never before, and for all the wrong reasons. Crossrail, for so long the darling project that could do no wrong, is subject to an unsightly and very public blame game as costs spiral by the billions and the end date recedes ever more into the distant future.
Meanwhile the start date for construction work on HS2 has been pushed back to the summer although there are murmurs nothing will actually happen until 2020. More worrying perhaps, the chief executive of the £56bn job admitted to MPs he intends to rein in costs by – and the irony of this will not be lost on the long-suffering British public – slowing down trains on the high speed line.
A sophisticated client such as Heathrow will have no truck with suicide bidding – it wants a healthy construction industry with thriving companies able to attract the best talent
And let’s not forget the nuclear new build programme, which looks like it’s coming unstuck with the Wylfa plant now in doubt amid reports that Hitachi is concerned about soaring costs and is on the verge of pulling out. This would be the latest disappointment in the nuclear sector after Toshiba wound up plans to build a reactor at Moorside last year.
The public is left with the unfortunate impression that the UK just cannot deliver big infrastructure projects: they inevitably overrun, fail to attract private finance and taxpayers end up having to fork out for eye-watering cost overruns.
But there is one project, admittedly in its infancy, that has the potential to buck the trend: the expansion of Heathrow airport is looking very promising and given the success of previous Heathrow projects such as T5, there are good grounds for thinking this client can combine ambitious vision and innovative methods with an ability to get the basics right.
Of course, Heathrow’s third runway is hugely controversial: it only received parliamentary approval last summer after years of political wrangling and just this week campaigners in the High Court challenged the government’s “unlawful” decision to approve the plans. This is the first of at least five legal bids to block the runway by opponents concerned about the climate, pollution and the wellbeing of local residents. And there’s another hurdle: the airport still has to get past the Planning Inspectorate, when it submits its plans in early 2020.
But while all of this drama plays out, construction firms will be hoping the project can offer the sector a chance to shine. The size of the prize is considerable: the overall expansion works are worth £14bn, with the first package of work valued at £1bn and appointments expected by the end of the year. So, what is the client looking for from prospective construction partners? First up, it wants to find contractors with strong balance sheets. It’s telling that in the week that marks one year since Carillion’s collapse, Heathrow’s expansion programme director Phil Wilbraham chose to make this point to Building.
Some unkind voices may pipe up “good luck with that one” – and it’s true we start the year with some of the biggest contractors in less than robust health: Kier and Galliford Try were forced into rights issues in 2018 while Interserve has still to finalise the details of its second rescue deal. Meanwhile, a survey by law firm CMS supports the widespread view that firms have started panic buying work to shore up their order books. This is a deeply worrying trend – the race to the bottom is never pretty and many firms are still scarred by jobs won during the last downturn.
But the point is that a sophisticated client such as Heathrow will have no truck with suicide bidding – as Wilbraham says, it wants a healthy construction industry with thriving companies able to attract the best talent. The airport’s current hunt to find offsite logistics hubs is another signal that this is a client prepared to do things differently. The four hubs – to be whittled down from the 65 sites on the longlist – could be the big kick-start to offsite the industry has been waiting for. Wilbraham predicts the hubs will mean a third fewer workers on site than if traditional methods were used, but perhaps more importantly this offsite work can be spread around the UK. Heathrow and the government have long been at pains to say it is not just an airport for London and the South-east but for the benefit of the whole country – now this offsite approach means the work to build it will be spread around the country too.
In short, Heathrow has all the makings of a good news story for construction, promising genuinely integrated supply chains and efficient ways of working. As the industry faces gloomy economic prospects with weak commercial and public sector demand, large-scale infrastructure in general should be a source of hope – and this is where government has an important role. Yes, the latest construction output figures were positive – surpassing £14bn for the first time, boosted by a strong performance from infrastructure work. But industry leaders are warning politicians not to take this for granted – if the government wavers over big ticket infrastructure projects for financial or electoral reasons, what looks on the surface like an industry in rude health could very quickly become an ailing one.