Over the past two weeks the Chancellor has committed close to £50bn in funding for transport through to 2028-29, providing a clear signal of the importance of connectivity and mobility to delivery of Government's Missions. Whilst some of this is "new" money, unlocked through efficiencies and borrowing, much of it has previously been announced (for example, in the previous government' s "Network North" funding), but not yet committed to by this government.
Notwithstanding the origination of the funding it is a material amount which has the opportunity to deliver transformative change across the country – helping to deliver new and extended metro systems in Leeds, Birmingham, and Manchester; enabling the transition to fully zero emission bus fleets across the North; and, providing a much-needed multi-year funding deal to Transport for London to name but a few initiatives.
Delivered well, this funding has the potential to unlock place-based development, private finance, and recruitment across the supply chain; however, announcing the funding is but the first step on a long journey to realising the vision.
Many of the schemes in scope for the funding are still at concept level, with Strategic Outline Business Cases in place, but now require rapid acceleration to enable funding to be spent and value delivered within this parliament, and to mitigate the enduring threat of cost inflation. Prioritisation of portfolios will be critical to deliver visible & tangible value early meanwhile recognising that, despite political desire, renewals of existing infrastructure (e.g. tunnels) can be as important (if not more in some cases) than "ribbon cutting" on new projects to balance the books in the long term.
Capability and capacity to deliver are key challenges: whilst a number of recipients will have (at least some) experience of delivering large capital programmes from previous metro development and CRSTS schemes, many are starting from scratch. Even those that do have experience recognise that their forward programme cannot be delivered in the same way that previous programmes have been executed. It took National Highways five years to develop the capabilities needed to deliver its ~£18bn RIS1 capital budget (a four-fold increase from its previous settlement): Local and Combined Authorities need to stand up these capabilities in less than two years to get spades in the ground whilst facing the headwind of critical STEM skills gaps caused by an aging workforce and congested infrastructure market (transport's £30bn competing with £750bn being spent on infrastructure in the next 10 years). These capability gaps will need to be addressed with agile governance and delivery models, innovative digital solutions, and optimised ways of working. What follows are the fundamental building blocks which authorities need to have in place to deliver one of the most significant capital funding allocations in a decade.
- Establishing Programme Business Cases with a mix of "quick win" and long lead-time schemes and benefits, outcome-focused and place-based criteria to enable effective prioritisation (and agile re-prioritisation) of projects, cost tolerances (to avoid constant re-planning), and delegated authority for approval of project-level full business cases.
- Establishment of robust Portfolio, Programme, and Project Management (P3M) capabilities: Authorities need to consider innovation across the whole capital delivery lifecycle, establishing capabilities in all three P3M levels;
- Balancing and prioritising the portfolio of capital investments: major projects should not be endorsed in isolation without considering the overall portfolio balance. Failure to do so could lead to a portfolio mix of high-risk, complex, low-return projects that take years to deliver and are prone to blockers.
- Taking a programmatic approach to delivery – developing a programme "mix" to group projects based on (for example) strategic pillars, target benefits and benefit realisation timeframes, asset category, and location to drive delivery and supply chain efficiencies.
- Driving value from and in each project across the capital delivery lifecycle – from whole life costing, advanced procurement, digital workflows, streamlined governance, proactive consents, standardisation, predictive project controls, progressive assurance, and integrated logistics.
- Adopting a whole-life approach to Asset Management, considering not only the capital cost but the implications for ongoing operational expenditure (OPEX) resulting from schemes, ensuring that new transport assets are maintainable in a good state of repair alongside the existing asset base / portfolio in the long term, and incorporating an optimised renewals programme that can be committed to. In doing so authorities should pause to reflect on the renewals regime for existing assets and whether these can be changed (possible deferred but more likely brought forward, supported by settlement funding) to ensure consistent future operation and minimise future RDEL costs.
- Embedding technology and data from the outset to rapidly build the required capabilities using integrated, cloud-based solutions and the latest P3M, Digital Design, and collaboration tools, built around a common data model, to provide the foundations for on-time and on-budget delivery from outline to detailed design, business casing, development, handover and operations. AI has a role to play too – whether in automating elements of business case development and enabling rapid development of procurement documents to get to project delivery sooner, or in contract management and operating project controls to predict and mitigate delays in delivery itself, helping to keep projects on time and on budget.
Organisations also need to think about the technologies they need in place in the end product to "break the FTE curve": we can't expect to manage the assets of the future with the workforce of today. Enterprise Asset Management platforms need to be in place for through-life management of the new physical assets, incorporating 'Agentic AI' to reduce and/or eliminate tasks, with 'AI at the edge' in smart assets to self-diagnose and self-heal, predicting and preventing performance issues.
- Finally, adopting new collaboration and partnership models – both between authorities and with supply chains. Whilst individual authorities have each been assigned funding for their own programmes, many of these schemes are similar, providing opportunities for both sharing or pooling of client-side resources across authorities, and potentially extending to joint procurements of common materials and assets (for example, steel for the Metro extension / delivery schemes across Manchester, West Midlands, West England, and West Yorkshire, or zero emission buses across the northern cities).
Meanwhile Several authorities are now engaged in early-stage discussions with the market to understand how Strategic Delivery Partnerships ('SDP's' )can be established to facilitate Early Contractor Involvement (ECI), leverage private finance, accelerate delivery, address STEM skills gaps, and achieve 10-30% efficiency challenges across the asset lifecycle. Long-term commitment from the public and private sector - including the ability for the private sector to put "skin in the game" and share in the long-term benefits of schemes), and suitable allocation of risks and control between the counterparties will be key to the success of these models. In establishing SDP's it will be important to reflect on lessons from legacy PFI and Development Corporation models – both good and bad - whilst embedding the latest leading practice emerging in other sectors such as water.
The announcements of the past two weeks represent exciting times for the transport sector across the UK. With the right approach this investment has the potential to unlock transformational benefits throughout the country.
