Professional services firm KPMG’s vice chair James Stewart told the UK Infrastructure Policy & Investment Summit in London that the “heyday” of contractors and the services market being willing to accept large volumes of risk, “is over”.

“We are only just catching up with this trend,” he said, adding: “I would argue that High Speed 2 is in the maelstrom of this effect with the contracts they are trying to negotiate on phase one of that project.”

He highlighted that the trend will require greater intervention and risk taking by governments, noting: “I think we always have to remember that if governments don’t intervene and take a bigger position the projects will not happen.”

James Stewart’s presentation at the event, organised by City & Financial Global, focused on comparing the different models of private infrastructure investment across the globe.

He also emphasised the problem of delays to major infrastructure projects – including Crossrail – and called for the development of better private sector investment models that deal with this risk.

“If you look at the UK, the PFI and public-private partnership (PPP) models have been very successful in delivering projects on time and that’s because there are massive incentives for the private sector to deliver that.”

However the Chancellor of the Exchequer Philip Hammond called an end to PFI and its successor PF2 last year. PPP, added James, is “pretty much dead” in the UK.

In conclusion, James said: “We are at a pivot point in the whole infrastructure market. I think PPP is going to survive but will become a minority player and Regulatory Asset Base models will spread.

“Alternative models have to emerge alongside, many of which exist already, and I think at the heart of that will be joint risk taking, joint investment model.”

(Photo: High Speed 2 / Grimshaw)