Mark Collins is chief executive of Bentley Project Management
With a general election looming next year, and the third round of leveling funding on the horizon, it’s crunch time for a number of major regeneration projects looking to squeeze the last remaining funds from the current parliament. But what makes a compelling business case for government money?
“Much of the funding available from central government is driven by manifesto promises – for it to be seen as a success, the spades need to go into the ground and the ribbons cut”
After four years of the current parliament and the rhetoric of leveling that has been a consistent message over time, we are now at an interesting time.
Typically, this point in the policy cycle is less about bringing in more funding and more about implementing projects that already have support. However, Prime Minister Rishi Sunak’s announcement at the party conference to scrap HS2 and redistribute some of its funding has meant there is still money to go around for the right projects.
Combine this with the likelihood of the third and potentially final round of the Leveling Up Fund (LUF), aimed at infrastructure projects in underserved areas of the country, and you can see that there is a concerted effort by the central government to push the projects . before the general election.
Despite the extra money in the pot, a scenario resembling a funding free-for-all is highly unlikely. The key to all projects that go for government cash is to make the business case add up.
Three pillars of financing
Whether it is a city centre, a brownfield or a sustainable urban extension, the business case for a regeneration project is based on three main issues: is there a strategic fit with policy ? Does it offer value for money? And is it deliverable?
While the strategic fit is often obvious, demonstrating value for money and financial viability is often more complicated. While it is local authorities who lead the funding burden, the commercial viability of a project is often determined by whether the private sector is likely to buy into the plans and bring investment to the table.
Whether it’s a housebuilder looking at the land value of a sustainable urban extension or a cinema operator dealing with plots in an urban core being regenerated with the money of the LUF, the private sector will seek a return on its investment. On the other side of the coin, those holding the funding purse strings try to make sure that the money they put into projects will create something worthwhile and benefit the public.
Proving that it can be delivered
The funding hurdle where many projects fall is showing the ability to deliver. The reality is that much of the central government’s available funding is driven by manifesto promises: in the case of the current government, its leveling agenda; for it to be seen as a success, sinks must go to the ground and ribbons must be cut. While this means that there is a common interest in these schemes being successful, it also means that attention is likely to be more focused on those projects that can be delivered in a way that reflects well on all stakeholders.
Especially for the blue-ribbon and large projects that form the heart of LUF’s successful deals, the critical part of deliverability is the ability to anticipate and mitigate risk. These large, long-term schemes naturally carry a high level of risk, so showing in the business case that you have considered how this complexity can be addressed can be a solution to making funding decisions. The role of project management in these cases cannot be understated: mitigating the challenges that inevitably arise can be the difference between time and budget, or neither.
The LUF’s third round is an opportunity for massive regeneration, but the specter of the looming general election slightly muddies the waters on that front. When you consider increased devolution to regions through combined authorities, it’s an intriguing time for those looking for funding boosts for upcoming and ongoing projects.
Knowing how the interplay between national and regional decisions will work in the long term requires crystal balling, but it is expected to lead to a renewed look at governance, a greater focus on delivery capacity and stronger momentum from the ground up for projects that work for the wider community.
