So many projects at once - can Scotland cope?

Published on Friday 24 November 2006 01:50

SCOTLAND today stands on the brink of an infrastructure boom. Major transport projects now clamour for attention. Taken together, they could transform our society and economy, providing something akin to a China-style Great Leap Forward in connectivity and access.

But are we taking on too much all at once? And which projects could end up as casualties?

Projects range from the M74 completion (cost: 375-500 million) to the Borders rail link (130 million), the Glasgow Airport to city-centre rail link (160 million) and the Edinburgh Airport to city-centre rail link, "EARL" (500 million).

There is the Aberdeen city bypass (300 million) and the Edinburgh tram link (714 million); the Baillieston-Newhouse road link 150-180 million), not forgetting the Airdrie-Bathgate rail link (300 million), the Waverley station upgrade (150 million) and the Stirling-Alloa-Kincardine (small but tortuous) rail link at 67 million.

However, overshadowing all of these is now the compelling case for a new Forth crossing to replace the existing stressed-out road bridge. Estimates of the cost of a replacement bridge range upwards of 670 million.

Grand total, assuming all these projects do not exceed initial estimates (surely not?): 3.5 billion.

Even before the Forth crossing, it seems there have been more transport projects streaming out of the Scottish Executive than from the Department of Transport in London. Each one of these projects presents huge logistical and financial challenges. How are they all going to be financed without crippling the taxpayer or burdening future generations with debt under Public-Private Partnership schemes?

How are they going to be managed in the wake of the debacle of the Scottish Parliament building, which ran ten times over budget and came in more than two years late? And how are they going to be built, bearing in mind that the employment rate in Scotland, as the First Minister proudly reminds us, is already at an all-time record and higher than that for the UK as a whole? And when many business organisations are publicly complaining about skills shortages? We will need every Bulgarian brick/steel worker and Romanian welder we can get.

These problems will be compounded by the demands of the massive 2012 Olympic Games project in the East End of London. Ominously, this has already run into a funding furore, barely a year after London won the bid. Even before the work has started on clearing the site, the cost has risen from 2.4 billion to 3.3 billion, with projections as high as 5.5 billion. The increase in the official estimate this week was due in part to a 400 million bill for consultants. Assuming that a consultancy charge normally works out at between 4 and 5 per cent of a project, this suggests that the capital cost of the Games could be on its way to 8 billion.

The coincidence of this "Big Leap Forward" for Scotland's transport infrastructure with the Olympic Games project suggests boom times ahead for Britain's construction industry - though a potential bust for those on whom the bill will ultimately fall.

The danger is that the cost inflation index of the construction industry - the flying curve that humiliated those ostensibly in charge of the Holyrood debacle - could be set for another torrid rise, with civil engineers, architects, project managers and consultants set to enjoy a return of that highly rewarding industry game: "Name Your Price".

EVEN if the Executive can afford the starter cost estimates, can it afford the project risks? The transport minister, Tavish Scott, takes pride that the transport budget has been jacked up from 345 million in 1999 to 1.6 billion this year, and that these mega projects (with the exception of a new Forth crossing) have been fully costed.

But they are vulnerable to protracted delay in start dates (the Borders rail link took five years to get through parliament) and are subject to ferocious cost escalation. The detailed project costings for 2007 and beyond await the publication of the 2007 budget, which the finance minister, Tom McCabe, will not be publishing until after the election: hardly helpful, even less reassuring.

In addition, the Executive faces a logistical logjam in undertaking so many projects at once. And it is hard to see how room can be made for a new Forth crossing without cancelling or delaying some of the other projects.

Among those vulnerable to delay/cancellation would be the Borders rail link, the Edinburgh trams project and the Edinburgh Airport rail link. Ironically, details of the connecting airport tunnel were revealed for the first time today.

The economic argument for EARL is compelling. Air passenger numbers are set to rise from nine million now to 22 million by 2030 and the capital's financial sector desperately needs such infrastructure to stay internationally competitive. In addition, a total of 60 stations across Scotland would be linked directly to the airport.

However, others prefer a cheaper plan that would drop passengers near the airport, with buses providing transport for the last mile. The SNP is not keen on the project, preferring transport improvements in the north. And as the party has low political representation on Edinburgh Council, it could kill off EARL with relative impunity.

In any event, no matter who wins at Holyrood next May, the Executive needs to be sure it is not biting off more than it can chew. It will need to appraise projects not just on their economic benefit but on whether it has the logistical muscle to undertake them, and can do so without igniting a construction cost explosion.

As things stand, the Executive's planning looks to have gone down with Lothian Buses disease: a long period of nothing and then six come along at once. I fear it may end not in a Great Leap Forward, but a Great Construction Smash.