£48k of GDP ‘lost every minute’ due to delayed infrastructure decisions
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Cancelled and delayed infrastructure projects are seeing Scotland’s economy miss out on tens of thousands of pounds each and every minute, according to a new report.
Construction consultants Arcadis said a mere one-month average delay in the national transport infrastructure pipeline will see the UK economy miss out on around £2 billion of GDP over the next five years. This is equivalent to £48,425 for every minute of delay.
Furthermore, with project costs growing by £241 million for a mere one-month delay in the overall pipeline, Arcadis argues that Scotland’s potential as a safe haven for overseas infrastructure investment post-Brexit could be at risk, with project costs multiplying if delays are not minimised.
Released today, the Spiralling Cost of Indecision report compares the 2015 and 2016 National Infrastructure Pipeline datasets and calculates estimated costs – such as missed GDP from investment and additional design and build cost – associated with delays and cancellations. It estimates that over the next five years, the cumulative impact of stalling on those projects identified in the 2015-16 pipelines could see the UK economy miss out on up to £35bn of investment-related GDP.
The report estimates that, as a result of a one month delay, the costs involved in delivering all transport projects in the pipeline would rise by £241m over five years – equivalent to around £8 million for every single day of delay. With rail having been identified as the greatest cause of stalled or cancelled transport infrastructure spend, a postponement of just one month could result in as much as an extra £4.2m being added to the total delivery cost of all rail projects for every single day of slippage.
This puts some perspective around the challenges the industry is facing, making it imperative that it restructures quickly. It also provides a prompt to government to clarify its plans and properly back the National Infrastructure Commission in its long term planning role. Equally, this sheds some light on why infrastructure projects can appear to overspend.
The National Audit Office has suggested that over a third of major government projects due to be delivered in the next five years are in doubt, and the calculations from Arcadis underscore the magnitude of lost benefits.
Graham Hill, cities director for Scotland at Arcadis, said: “Commitment to major infrastructure opens up opportunities for potential investors and has huge potential to bolster the Scottish economy. However with delays being such a recurring issue when it comes to our nation’s infrastructure, we are potentially missing out on around £48,000 each and every minute. Time is critical and the impacts of delay should be realised.
“Clearly, there are a number of reasons for projects not going ahead on schedule but, all too often, stalling could potentially be avoided or, if the impacts were clearly understood, decisions may be taken differently. By progressing plans and getting projects moving at the earliest opportunity, without compromising safety or security, the government and industry can send a clear message to the world that Scotland is open for business.”
*Excludes decision on additional capacity in South East as no project has yet been listed in the National Infrastructure Pipeline
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