Flood projects face value test

The Environment Agency (EA) is to revolutionise the way it decides future capital works programmes for flood defence projects.

Speaking at the Department for Environment Food and Rural Affairs’ (DEFRA) 41st Flood & Coastal Management Conference 2006 in York, EA head of investment and funding John Parker said a new "ranking system" would be introduced to select projects "which offered the best value for money".

"Traditionally, projects were approved if they met the priority score threshold released by DEFRA each year. Now we will be looking to compare capital projects against a suite of around nine Outcome Measures (OM). This is a move which is really going to change the landscape of how we do things."

The OMs are currently in draft form and have to be finalised. In their present form they fall under the main headings of: overall risk, probability, consequences and sustainable development.

However, Parker said the challenge was now to determine where schemes should be ranked as part of a £450m annual spend on capital and maintenance works.

"We have to look at what offers best value. Is it a scheme that pulls 20 houses at high risk of flooding out of danger, or should it be a scheme that has environmental impacts?"

Parker said the final ranking would be determined by the points on meeting the OM targets, divided by the costs of the scheme in question.

Schemes will then be ranked in priority before being plucked out of the list and fitted within capital budgets. The EA believes the move will ensure that investment decisions are transparent and equitable.

Capital projects will be the first to be radicalised. However, the principles might be spread over to maintenance when the EA gets a better grip of whole-life costing.

The EA will now be spending its time looking at data from 60 capital projects to see how the ranking system will work. This will be followed by a consultation with an aim to use the OMs to help determine funding plans next year. The OM system is expected to go live in 2008.

However, civils contractors are sceptical about the move. "This is about the agency getting a better grip of its assets," said one contractor. "What concerns us is that the new process will be too long-winded to implement. And what happens to schemes which have already had work started? Some of these schemes can take years to unfold, especially using the early contractor involvement model."

An EA official told CJ the agency would do all it could to carry out a smooth transition of the new process. However, he admitted that some schemes already underway might need to be "shelved and revisited" at another time.