Joint construction to create cost savings for network investors

The Finnish Transport and Communications Agency Traficom reviewed the cost effects of joint construction by collecting information on realised costs and interviewing network operators. The objective of the review was to examine the cost effects of the joint construction of power networks, communications networks, street lighting and bicycle and pedestrian traffic routes and identify the possibilities and risks associated with joint construction. The objective was also to determine the prevalence of joint construction in Finland and the fees charged by municipalities for placing infrastructure in their area in joint construction.

This is the first time that the cost effects of joint construction have been determined in Finland. The review was conducted by Despro Engineering Oy for Traficom. Determining costs is not a simple task, because there is no direct comparative data on the costs of constructing similar projects independently. Projects are constructed either jointly or independently, but comparing the costs of these different projects directly will not provide information on which method is more cost-efficient.

Compared to independent construction, joint construction often involves changes in the project plan due to combining the investment needs of different networks, which increases costs. “Even though unit costs are likely to be higher in joint construction than independent construction, the investment will be more affordable for network operators, because the costs are split between several operators," says Chief Specialist Päivi Peltola-Ojala. “The old saying about the early bird catching the worm is also true for joint construction, because the earlier the joint planning starts, the more successful the implementation will be," Peltola-Ojala elaborates.

Other benefits of joint construction more important than cost savings

The positive effects of joint construction on the network operators’ public image were seen as a benefit. Repeatedly digging streets up disturbs residents, and the better any construction projects are coordinated, the more positive the image of the project and the operators involved will be from the point of view of local residents and street users. Networks have also been constructed and renewed ahead of schedule in joint construction. “In some areas, joint construction has made fibre-optic cables or street lights possible in the first place,” stresses Chief Specialist Pertti Hölttä. “If these projects were separate construction projects, they may have never been implemented," continues Hölttä.

Fees for placing infrastructure vary greatly between cities

As part of the report, the fees charged by municipalities and cities from network operators for constructing infrastructure in their land areas and the related processing fees and similar charges were also examined. Data was collected from the websites of more than 50 of the largest cities. Fees varied greatly, and in order to clarify the overall picture, the prices were standardised with the help of an example project.

The example case involved comparing placement fees for a project with a length of 100 metres within the town plan area. Fees charged by municipalities also varied greatly between municipalities of roughly the same size. The range of variation in fees charged by the ten largest cities was more than 2,900 euros (VAT 0%). The smallest fee in large cities was 695 euros. Smaller cities charged slightly less on the whole, as little as 127 euros, but the range of variation was nevertheless nearly 2,400 euros (VAT 0%). This review included the next 35 cities in descending order from largest to smallest.

The review also found that municipalities and cities use differing terminology. The passive infrastructure expert team headed by Traficom will determine the ways in which the situation could be clarified.

Report (in Finnish) (External link)

Enquiries

Päivi Peltola-Ojala, Chief Specialist, tel. +358 29 539 0539, paivi.peltola-ojala@traficom.fi

Pertti Hölttä, Chief Specialist, tel. +358 29 539 0491, pertti.holtta@traficom.fi

The Finnish Transport and Communications Agency Traficom promotes joint construction and use. In order to facilitate agreements on joint use and construction, Traficom provides the Verkkotietopiste.fi service, which includes information on local network operators and upcoming construction projects. Traficom’s yhteisrakentaminen.fi website will provide further information on the subject, useful examples of good operating models and help in case you have any issues with agreeing on joint construction and use or the related terms and conditions.