The cancellation of the Northern leg of HS2 is a blow to many in construction – but it also provides an opportunity to tackle the UK’s infrastructure backlog. Jeff Quantrill of InEight says an accurate, reliable data foundation will be critical to pursuing these potential avenues of growth
2024 won’t be the year that many contractors doing business in the UK will have planned.
The part-cancellation of high-speed rail project HS2, although widely anticipated, has sent a shockwave through the construction industry, with millions of pounds of work wiped off the 2024 books in an instant.
The cancellation adds to an increasingly shaky outlook for 2024, with the weakening of net zero targets in September also threatening investor confidence.
Unfortunately, it appears that the 38% of European respondents who cited political climate as a major risk to growth in this year’s Global Capital Projects Outlook were absolutely right.
Addressing the infrastructure backlog
In place of HS2, Prime Minister Rishi Sunak plans to divert £36bn into new transport infrastructure across the Midlands and North, promising that hundreds of smaller projects will be started sooner and finished faster.
The fact that many of these projects are still in the very early stages of development will mean they are of little consolation for some.
However, for others, the cancellation of HS2 may represent a window of opportunity – a silver lining, some might say – to address the UK’s backlog of infrastructure projects once and for all. Renewables projects are particularly likely to see a boost.
Indeed, the inaugural King’s Speech promised “record levels of investment into renewable energy sources and a reform of grid connections”.
That said, a continued squeeze on public funds is likely to mean greater pressure on privatedata organisations to finance and deliver on net zero with less government support than the industry has previously enjoyed.
The ‘failure’ of the latest Contracts for Difference (CfD) round to secure any new offshore wind projects may be an early indication of what is to come. The need to deliver net zero with greatly reduced subsidy will be a difficult ask, particularly if the forthcoming winter brings high energy bills like last year.
Although the forecast appears somewhat grey, there remain plenty of publicly backed projects to build. While offshore wind was not successful in the latest CfD round, a total of 95 solar PV, onshore wind, remote island wind, tidal and geothermal projects are set to share £227m. A further £65m has been allocated to bring forward five green heat projects.
On the grid connection side, the groundbreaking Xlinks project – a 3,800km HVDC sub-sea power cable that will connect Morocco to the UK – is another one to watch (especially after the Total Energies investment), with an expected price tag of £20bn-£22bn, alongside continued interest in small modular reactors from Rolls-Royce and others.
A focus on data to power AI
The industry has switched on to the power of AI this year, with ChatGPT and rival platforms creating a huge boom in use. As the initial euphoria passes, 2024 will see a new focus on its foundations: data.
Companies that use AI and machine learning can make better, more informed decisions – if they have an accurate, coherent and timely data foundation to rely on.
Much like a construction project, you can throw a building up in a matter of days if you have all the relevant materials, but if it doesn’t have decent foundations, it won’t be robust, resilient or deliver a long-term return on investment.
Indeed, those who remember the enterprise resource planning (ERP) boom of the 1990s will see similarities in the upswing of AI adoption.
To unlock AI’s full potential, organisations will need to instil enterprise-wide information management capabilities that capture data using consistent conventions.
AI has the potential to unlock growth and innovation in the sector
Right now, even if organisations have five years’ worth of data, it will almost certainly have been collected differently from project to project and team to team – making it very difficult to compare and combine. As such, a significant task lies ahead for most organisations to put the data foundations in place.
Part of the challenge to date has been the complexity of finding software solutions that can operate together without the need for lots of custom coding to share data.
In response, next year we can expect to see the rise of modular platform solutions that allow organisations to address their greatest pain points while building a database that will integrate seamlessly with additional modules deployed in future.
The shifting political landscape suggests that 2024 will be a year of uncertainty for the construction industry. While the cancellation of HS2 and the tightening of the public purse strings present significant hurdles, unwavering support for renewable energy and the integration of AI in construction processes indicate potential avenues for growth and innovation.
Jeff Quantrill
Head of account management for EMEA
InEight
Tel: +44 (0)800 058 8757
