The gap between the projected need for global infrastructure investments through 2030 and projected spending is expected to reach $25 trillion.
In the face of budgetary pressures, governments have to find ways to drive effective infrastructure improvements. Tomorrow’s cities need to harness smart technologies, link to rural areas and other cities, and become financial and social hubs that will attract more private sector investment, which in turn can fund further infrastructure improvements.
There is an estimated $25 trillion gap between the projected need for global infrastructure investments through 2030 and projected spending. But capital alone will not solve the challenges that exist today. Cities should also rethink the way new infrastructure projects are selected, executed, and managed.
Cities can narrow their infrastructure gaps by transforming the efficiency of the entire infrastructure lifecycle. This requires action in four key areas:
Targeting the right investments is the foundational first step. It demands an institutional solution with several components, including a rigorous, transparent, and independent review of all proposed investments, as well as a performance tracking mechanism. Decision-makers must also identify any assets that could be more efficiently managed under a privatized model.
An effective infrastructure strategy is focused on broadly meeting the needs of the public rather than delivering a specific asset or financial outcome. This requires new revenue models and better collaboration with the private sector.
Governments should embrace the lean processes typical of large efficient manufacturing operations. This includes dividing construction into small subprojects, managing logistics to ensure efficient material and resource flow, and creating a process that detects defects early and allows for quick corrections.
The first three steps won’t succeed unless done in a stable macroeconomic, political, regulatory, and business environment. To build such an environment, cities need to establish strong governance of and coordination among public-sector institutions, facilitate investment by private sector players, and support the development of robust capital markets.
In the end, countries that invest in and manage their infrastructures effectively stand to reap significant gains in economic growth and the quality of life of their citizens.