Monday, June 17, 2024

Managing risk in infrastructure and investment activity | Local Government Chronicle (LGC)

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Councils must be sure of the suitability, coherence, affordability and alignment of capital strategies, writes Martin Forbes, senior strategy director at Local Partnerships. Sponsored opinion from Local Partnerships.

The Infrastructure & Projects Authority recently published the latest national infrastructure and construction pipeline, setting out projected investment in major economic and social infrastructure over the next 10 years. It totalled more than £700bn.

Martin Forbes, senior strategy director at Local Partnerships

This pipeline excludes the infrastructure investment that will be needed from councils, the type of critical activity that in old school parlance would be called public works. This is the money required to maintain roads and bridges, build new housing and meet challenges such as climate change and net zero targets.

Much of the funding used by councils is borrowed, and repaid over the long term, reflecting the timescales over which such investments deliver benefit. However, the sector’s confidence in using public works finance appropriately has been knocked in recent times and the scale of debt held by local authorities has come under the media spotlight.

Arguably, the issues of solvency and indebtedness have been conflated by a small number of councils who have mismanaged their commercial activity. But it is beyond question that the sector’s ability to absorb risk when it crystallises has shrunk dramatically.

Capital programme risk management

With declining resources, the choices for our political leaders are becoming harder. Housing waiting lists are growing exponentially while the impacts of climate change are becoming more apparent with every passing season. The pace of change means investing capital in emerging technologies and techniques brings commercial risks that need to be properly understood.

This places more importance than ever on councils being certain about the suitability, coherence, affordability and alignment of their capital strategies and ensuring that investments are subject to the necessary challenge and scrutiny.

Local Partnerships has experts working across the sector on the complete range of infrastructure and investment activity, both in development and delivery. We also provide assurance over the wider capital programme environment in aspects such as governance, programme management, procurement and resource planning.

Critically, we also support the management of risk associated with capital programmes. We evaluate the quality and efficacy of risk management, evaluating the organisation’s appetite for risk, assessing how programme risks are escalated and their relationship with corporate risk management processes.

If this resonates with you, and you would like to discuss the challenges you are facing, please contact me Martin.Forbes@localpartnerships.gov.uk

www.localpartnerships.gov.uk

@LP_localgov

Martin Forbes is senior strategy director at Local Partnerships

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