The committee’s Delivering value from government investment in major projects inquiry report, which took evidence from the Infrastructure Projects Authority (IPA), details the many obstacles the PAC has identified that currently hinder the delivery of the UK’s infrastructure pipeline.

Skills shortage

One of the principal barriers in the way of the government delivering its Major Projects Portfolio, which includes 244 projects with an estimated total whole-life cost of £805bn, is the apparent skills shortage in the UK.

The UK’s projected spend on infrastructure projects over the next five years is very high – “unprecedented” according to the IPA – but with global competition from other countries with massive investment projects such as Saudi Arabia, the PAC believes there is a risk of a skills shortage to deliver such an ambitious portfolio of investment.

The report reads: “Skills shortages in specific trades such as welding are already being seen but design and project management skills are also in short supply.

“Failure to build market capacity could result in higher prices for scarce skills. Too little of the right skills in government has led to an overreliance on the supply chain, particularly in technical and engineering disciplines.”

The IPA further told the PAC there is a serious lack of project management skills in the civil service. This lack of skills places too much reliance on the supply chain again which can place government departments in a weak position because it means departments cannot act as an intelligent client, according to the PAC.

Of 16,000 project professionals that need to gain accreditation from the government’s major project leadership academy, only 1,000 had done so, notes the PAC, which warns that failure to build market capacity could result in higher prices for scarce skills.

Capacity shortage

The report continued to question whether the UK has enough capacity to deliver its pipeline as there are likely to be pinch points, with the risk that increased demand for scarce skills could increase costs. The IPA told the PAC that it is important the government does what it can to increase market capacity and that it has carried out a market analysis of capability and capacity.

Despite the level of planned investment, the PAC believes government departments are failing to devote the time and effort needed to ensure they maximise the value that comes from projects. Only 8% of the £432bn spend on major projects in 2019 had robust impact evaluation plans in place and around two-thirds had no plans at all, according to the PAC. This is despite high quality evaluation being important to provide evidence for what works, demonstrate value and to make the case for or against further investment. Decisions are being made in the absence of evidence, putting value for money at unnecessary risk, the PAC stated.

The PAC’s inquiry found that departments spend more time and effort making the case for investment than on project development leading to projects being announced prematurely and without plans to ensure they achieve their intended purpose and long-term value. Inaccurate cost estimation remains a particular cause for concern and High Speed 2 is a good example of this, the report states, where the budget was set well before plans were sufficiently mature.

Without more and better evaluation, government cannot have a full understanding about whether projects are delivering what was expected. Nor are they in position to apply what they learned to future projects to increase the chances of success.

The PAC further stated government departments have few incentives to commission and carry out high-quality evaluations of major projects and do not routinely learn lessons from their own projects or those of other departments, so are missing opportunities to improve effectiveness and efficiency of future projects.

The Committee believes the government is making decisions in the absence of evidence, putting value for money at unnecessary risk.

PAC chair Meg Hillier said: “Over the coming years, government spending on major infrastructure projects is set to rise to unprecedented levels.

“Such projects present unique and novel challenges which government must navigate if it is to secure value for public money. Without a robust market for essential skills in place, these are challenges the UK will fail to meet, as shortages push costs up in a globally competitive environment.

“All too often we see projects and programmes that are poorly managed and delivered late and over budget. The failure to ensure projects have robust impact evaluation plans in place is symptomatic of the short-term mentality dominating these processes. The government must encourage cross-departmental learning if we are to avoid repeating past mistakes.”

Industry reaction

‌Association for Project Management (APM) head of policy and public affairs Andrew Baldwin said: “We have been warning for some time that there is an ever-growing gap between project professionals’ demand and their supply.

“This is serious, as the skills shortage has impacted on the current government’s ability to achieve its levelling up programme, will impact on the likelihood of achieving net zero by 2030, and unless addressed, will seriously undermine any attempt to implement a party manifesto post-election.

“More must now be done to support the IPA to further professionalise project and programme management within government. Getting 1,000 accreditations per year is sterling work, but the IPA must be given the resources to rapidly increase numbers.

“Beyond this, we need to encourage new entrants, either via university or by changing career, and upskill the current workforce much faster. The government would also benefit from increasing the number of chartered project professionals working on major infrastructure projects.”

Building Cost Information Service (BCIS) chief economist David Crosthwaite said:  “BCIS completely agrees with the proposition by the PAC that the civil service does not have adequate skills to act as an informed client and oversee the delivery of major infrastructure projects and programmes.

“Primarily, skills in cost management, engineering, and project and programme management are lacking and as a result the government must resort to the use of private sector consultants, at a significant cost to cover the shortfall in expertise.

“It’s questionable whether this approach represents value for public money. In the UK there is a litany of infrastructure projects that are delivered late and or over budget. Do we learn from the failures of the past? It appears not.

“Where consultancies are used there is an understandable reluctance, on their part, to share data and information with others. So, it’s no surprise that we end up repeating the same mistakes because we are not learning from past performance.

“Data sharing across projects is crucial to address some of the current challenges and this should be better facilitated by the public sector client or the government client, which need a much more hands-on approach to delivering the infrastructure the country needs.

“We need more well-managed major projects to stimulate the economy and get Britain growing again.”

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