Mark Collins is executive director at Bentley Project Management
With a general election coming in the next year or so, and the third round of levelling-up funding on the horizon, it’s crunch time for a host 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?
“A lot of the available central government funding is driven by manifesto pledges – for it to be seen as a success, spades must go in the ground and ribbons cut”
After four years of the current parliament and the levelling-up rhetoric that has been a consistent message throughout, we now sit at an interesting juncture.
Typically, this point in the political cycle is less about introducing more funding and more about delivering on projects that already have backing.
However, prime minister Rishi Sunak’s party-conference announcement about the jettisoning of HS2 and the redistribution of some of its funding has meant that there is still money to go around for the right projects.
Combine that with the recently announced third and potentially final round of the Levelling Up Fund (LUF), aimed at infrastructure projects in poorly served areas of the country, and you can see that there is a concerted effort from central government to get projects moving ahead of the general election.
Despite the additional money in the pot, there is highly unlikely to be a scenario that resembles a funding free-for-all. Key for all projects going for government cash is to make the business case stack up.
Three pillars of funding
Whether it’s city centre, brownfield or a sustainable urban extension, the business case for a regeneration project relies on three main questions: is there a strategic fit with policy? Does it provide value for money? And is it deliverable?
While strategic fit is usually self-evident, demonstrating value for money and financial viability is often trickier. While it is local authorities that are leading the charge for the funding, the commercial viability of a project is usually determined by whether the private sector is likely to get on board with the plans and bring investment to the table.
Whether it’s a homebuilder looking at land values on a sustainable urban extension or a cinema operator perusing plots in a town centre that’s being regenerated through LUF money, the private sector will be looking for a return on its investment. On the other side of the coin, those holding the funding purse strings are trying to ensure that the money they put into projects will create something that is worthwhile and that benefits the public.
Proving it can be delivered
The funding hurdle where many projects fall is in showing deliverability. The reality is that a lot of the available central government funding is driven by manifesto pledges – in the current government’s case, its levelling-up agenda; for it to be seen as a success, spades must go in the ground and ribbons cut. While this means that there is a common interest to have these schemes succeed, it also means attentions are likely to be focused more keenly on those projects that can be delivered in a way that reflects well on all concerned.
Especially for the blue-ribbon, big-ticket projects that make up the heart of the successful LUF bids, the critical part of deliverability is the ability to foresee and mitigate risks. These major, long-term schemes naturally come with a high level of risk, so showing in the business case that you have considered how this complexity can be addressed may be make-or-break for funding decisions. The role of project management in these cases cannot be underestimated: mitigating the challenges that inevitably crop up may be the difference between on time and on budget, or neither.
The third round of the LUF, which will move away from the competitive nature of the previous rounds and award funding to high-quality bids from the second round, is a massive regeneration opportunity. But the spectre of the looming general election muddies the waters on this front. When you factor in increasing devolution to the regions through combined authorities, it is an intriguing time for those looking for funding boosts for upcoming and ongoing projects.
This third round has seen central government take into account feedback from local authorities, recognising the ambition for a simplified funding landscape, as well as the number of high-quality projects that weren’t selected in the previous round. In the long term, knowing how the interplay between the decisions at national and regional level will work out requires a crystal ball, but hopefully it will lead to a renewed look at governance, a greater focus on deliverability and a stronger drive from the grassroots level for projects that work for the community at large.
