Budget 2016: Don’t believe the hype, says PwC
Accountants at PwC are advising the construction industry not to get too excited about all these mega construction projects apparently getting green-lighted by the chancellor.
Contrary to what the newspaper headlines may lead one to believe, nothing much will happen for years yet. All that has been approved is more money for consultants, not for contractors.
Richard Abadie, PwC transport and infrastructure partner, said: “We welcome the funding announced for further analysis of the Trans-Pennine tunnel, HS3 and Crossrail 2. This should help provide clarity around the commercial, technical and environmental feasibility of the projects.
“Nonetheless, there is still a long way to go on these projects and it would be misleading and premature for anyone to think they have either been approved or are proceeding. Like with any mega-projects, these three projects have significant hurdles to overcome and this will take time.”
He added: “In recent years we’ve seen a growing trend towards complex transport mega-projects which are expensive to procure, difficult to manage and govern and limit the ability to transfer risk away from the taxpayer and user to the suppliers.
“This shift also disadvantages small and medium enterprises (SMEs) which struggle to participate in these kind of mega-projects. Properly managing the supply chain and affording proper competition is critical to broad-based wealth creation and economic growth.
“The long lead time on mega-projects also means announcements now don't lead to job creation and economic growth any time soon, nor does the Treasury need to set aside substantial money to pay for the projects in the current parliament.
“So, in the round, what we have is a little money to further project assessments, but limited hard and fast commitment to delivering the projects nor any significant near term economic impact.”
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This article was published on 17 Mar 2016 (last updated on 17 Mar 2016).