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UK Infrastructure costs

Posted: Thu Feb 13, 2020 10:55 am
by macliam
I don't recall a single UK infrastructure project that has come in on time and on budget lately.
https://www.bbc.co.uk/news/uk-politics-51482370

How do you not know about bomb damage? How do you not anticipate asbestos?

As an ex-Project Manager, hitting targets was my job..... and if I failed, the future was dim.

So, what happens to those responsible for these fiascos :eh: ..... Let me guess, they're covered by the UK Banker's conditions of employment, where they get bonused for failure....

Maybe it's time to hand over these projects to the Chinese.......

Re: UK Infrastructure costs

Posted: Thu Feb 13, 2020 12:04 pm
by pabenny
I suspect the problem lies in the budget setting rather than the management of spend. I also don't think the UK is notably worse than other countries.

Cost estimates are managed down to be politically acceptable rather than being reliable projections. So the budget-setters take the most favourable assumptions where ever possible, omit elements of known spend, by making no contingencies for unforeseen/unforeseeable complications, or even just not allowing for cost inflation.

It's fairly straightforward to estimate the cost of building a house because it's been done lots of times before. But we've built only a couple of completely new rail lines in most people's lifetimes and so there is limited experience to go dawn on.

And you've got political interference - the line must avoid that habitat rather than go through it. Ker-ching, the cost goes up by £500m. Delayed by a year while there's a review. Ker-Ching. Another £1bn for inflation.

Re: UK Infrastructure costs

Posted: Thu Feb 13, 2020 1:36 pm
by AAAlphaThunder
The Chinese are exceptional. They have a good track record delivering in time, in budget, in specs.

Re: UK Infrastructure costs

Posted: Thu Feb 13, 2020 2:33 pm
by Chadwick
Also, when the work is tendered, a lot of weight is put on the cost, so usually the cheapest bidder wins. They will meet the minimum standards required and the cost will be kept down by excluding contingency for unforeseen problems.

Then those problems occur and cost more to fix than if they had been factored in in the first place.

Re: UK Infrastructure costs

Posted: Thu Feb 13, 2020 4:29 pm
by expressman33
macliam wrote:
Thu Feb 13, 2020 10:55 am
Let me guess, they're covered by the UK Banker's conditions of employment, where they get bonused for failure....
Ocado boss Tim Steiner bags £54m bonus
The boss of online shopping company Ocado has bagged a £54m bonus, despite his firm posting a bruising £214.5m loss last year.https://www.bbc.co.uk/news/business-51469002

Re: UK Infrastructure costs

Posted: Fri Feb 14, 2020 10:20 am
by planteria
i broadly macliam..
one of the key challenges is that non-financial people have been making financial plans.
fwiw Sunak is apparently a top guy.

Re: UK Infrastructure costs

Posted: Fri Feb 14, 2020 10:24 am
by blythburgh
expressman33 wrote:
Thu Feb 13, 2020 4:29 pm
Ocado boss Tim Steiner bags £54m bonus
The boss of online shopping company Ocado has bagged a £54m bonus, despite his firm posting a bruising £214.5m loss last year.https://www.bbc.co.uk/news/business-51469002
Workers get sacked for shoddy work. Bosses get huge bonuses.

Wonder if the big shareholders will scream about this and justice for all shareholders will be done and this obscenity is reversed. A bonus should be properly earned and how can this be when there is such massive loss? Maybe he has done painful stuff to turn the firm around but until the fruits of his decision are seen he should not be getting huge bonuses

Re: UK Infrastructure costs

Posted: Fri Feb 14, 2020 10:36 am
by pabenny
As the linked article says, that bonus is the result of growth in the share price of Ocado over 5 years. It looks like he has increased the value of the company by more than £6 billion - and Mr Steiner has received a bonus of about 1% of that.

Ocado is now much more than the grocery business of that name. The growth in share price is largely because they now provide online shopping for Morrisons in the UK and eight other businesses around the world.

Re: UK Infrastructure costs

Posted: Fri Feb 14, 2020 12:19 pm
by expressman33
pabenny wrote:
Fri Feb 14, 2020 10:36 am
As the linked article says, that bonus is the result of growth in the share price of Ocado over 5 years. It looks like he has increased the value of the company by more than £6 billion - and Mr Steiner has received a bonus of about 1% of that.

Ocado is now much more than the grocery business of that name. The growth in share price is largely because they now provide online shopping for Morrisons in the UK and eight other businesses around the world.
I wonder if the share price drops will he be required to pay back any of the bonus , I doubt it .

Re: UK Infrastructure costs

Posted: Fri Feb 14, 2020 12:38 pm
by pabenny
The shareholders who agreed to that bonus calculation could have sold those shares.

BTW - you may (indirectly) be one of those shareholders through a pension or other investment.