Infrastructure Diagnostic: Measuring Performance Helps Governments
Our research suggests that up to $67 trillion will need to be spent on transport, power, water, and telecommunications infrastructure by 2030 to keep pace with the demands of growing economies—a bill that many governments will struggle to finance given their fiscal constraints. Only a leap in the performance of infrastructure investments will close this spending gap so that governments get more for their money. Yet, to date, there has been no reliable way to measure performance in the delivery of infrastructure.
Our infrastructure diagnostic will help. It describes international best practice and enables governments and other stakeholders to assess their own performance against it and pinpoint where the need for fundamental improvements lies. The diagnostic first establishes a baseline view of a country’s infrastructure assets. How much infrastructure does it have, what state is it in, and what more needs to be spent to meet economic-growth targets? Comparisons can then be made with other countries to give an initial perspective on these numbers. The second step is an assessment of how a country or region performs on delivering infrastructure in five areas:
Project selection. Too often, governments fail to set clear priorities and can end up wasting resources. The diagnostic assesses whether infrastructure strategy is linked to clear socioeconomic aims, for example, or whether spending across asset classes is coordinated.
Funding and finance. Does the regulatory environment support investments? Is public funding stable? Is there an effective framework for public-private partnerships? The less investment-friendly the environment, the higher the investment costs are likely to be.
Streamlined delivery. The diagnostic looks at the many factors that influence whether projects come in on time and schedule, including permitting and land-acquisition processes, procurement, tendering, and construction-contracting practices.
Use of existing assets. The diagnostic assesses whether assets owners are doing all they can to improve existing assets, rather than rushing to build expensive new ones. Are they, for example, using intelligent systems to manage traffic congestion rather than building new highways?
Governance and capabilities. Efficient project delivery depends on strength in both areas. Whether an organization attracts top talent and whether there are processes to combat corruption are just two assessments made.
In all, the diagnostic scrutinizes and scores 78 aspects of performance within these five areas. Our results indicate that even the most advanced economies have significant opportunities to raise their game relative to best practice. The final step links delivery performance with actual outcomes by looking at whether projects come in on time and on budget. The results can be revealing. For example, if a high-performance government has relatively low outcomes, is it over-estimating its performance?
Fundamental change is hard to achieve without a clear view of current performance compared with best practice—the result would probably be a series of small improvements unequal to addressing today’s infrastructure challenge. Our infrastructure diagnostic is helping governments around the world deliver the substantial improvements that will add up to transformational change.