After all this, economy won't be the same

Aug 21 2009 by Phil Young, The Journal

IN the past, this column has referred to the need for, and ability of, frameworks and infrastructure activity to help our sector through difficult times.

Many firms have already been benefiting from frameworks, particularly those which work in housing repairs and maintenance, thanks to the Government’s Decent Homes initiative.

At the start of this month, we had the news that Network Rail had chosen 14 companies for its £1bn Multi-Asset Enhancement five-year framework. Like the construction industry, it appears repairs and maintenance to rail infrastructure are taking the place of Network Rail replacing its assets in this climate.

Given the current climate, these frameworks will have to work hard to reduce overall spending on individual projects, which will be valued between £1m and £15m from 2009 to 2014 and will carry out work on stations, civils, electrification, power, signalling, track and telecommunications.

BAA is taking a different approach and overhauling its framework deals in an effort to drive value for money.

This is an approach which will no doubt be reflected in the water industry as it gets tougher with its supply chains.

In the meantime, though, the £30m of Government money released to build transport links to support new housing may not seem the biggest pot of money going, but it marks an investment in something new, which is always encouraging.

The money is earmarked from the Community Infrastructure Fund (CIF) and supports the Government’s Building Britain’s Future plans, as well as the £1.5bn housing pledge by Housing Minister John Healey, aimed at building 20,000 affordable, energy efficient homes over two years.

Readers will probably expect me to say something about green shoots at this point, but while the signs appear encouraging, we are still a long way off being able to look back at the black hole of recession and breathe a sigh of relief. All indications are that even when we do reach that point, the economy will not be the same.

Borrowing will be harder and more expensive, for a start.

We are already seeing that.

That post-recession future can still be fruitful but it will rely on the industry driving efficiencies throughout the supply chain and it will be based on a mix of larger scale infrastructure and frameworks.

This puts more emphasis on improving processes and innovation, which in turn will bring the return of private investment as a lean and efficient industry emerges.

For information on Constructing Excellence in the North East, please contact chief executive Catriona Lingwood on (0191) 383-7435 or catriona@cene.org.uk .

Phil Young is director of Constructing Excellence in the North East