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Infrastructure That Delivers the Highest Public Good 3 strategies to help maximize the impact of government spending

merica’s public infrastructure is aging, cost modeling and an objective assessment SPOTLIGHT: LEVERAGING A and it will require a huge investment to of business case factors to identify the NEW TECHNOLOGIES renovate or replace it. In fact, the American projects that will likely achieve the best Society of Civil Engineers estimates a $2 trillion investment objectives. Once construction is underway, investment will be necessary by 2025 for new Together, the assessments produced by several new technologies can and upgraded infrastructure across the country. the business case and comparative analytics help agencies improve project This eye-opening level of need continues to help decision-makers evaluate tradeoffs and tracking and ROI: drive the public sector’s focus on infrastructure improve resource allocation among projects. projects that produce high levels of financial These activities also help governments select Construction analytics value and public benefit. Whether receiving and prioritize projects in an outcome-focused tools can gather funds or financing, these types of projects can process that is transparent to the public. information from be easier to sustain when government leaders Virginia uses a portfolio-based process to multiple systems and apply three strategies for project selection, score transportation infrastructure projects. public data to identify financing, and delivery. State officials have replaced politically driven issues and predict wish lists with an objective, data-driven, and risks early. STRATEGY 1: transparent decision process, making the CREATE A PORTFOLIO best use of limited state funding. Projects Drones enable VIEW OF PROJECTS are scored and evaluated objectively based managers and Government entities often struggle to on improvements to safety, congestion workers to see details develop a comprehensive portfolio view of reduction, accessibility, land use, economic of the project that infrastructure needs, making it difficult to development, and the environment. The were not previously prioritize competing projects. Due to this, the criteria for prioritizing projects and the scoring visible. projects that proceed are often those with the results are available to the public online. most powerful political support. In contrast, Wearables such as a portfolio view enables governments to STRATEGY 2: glasses and safety prioritize projects based on factors such as IDENTIFY POTENTIAL vests collect and critical need and anticipated economic benefit. FUNDING AND FINANCING upload valuable Developing a full view of the infrastructure The question of funding has delayed many project data, including portfolio is challenging because typically no infrastructure projects in recent years as safety metrics and single agency looks at all infrastructure within governments focus on serving increasing construction progress. a jurisdiction. This means the government or citizen needs with limited growth in budgets. agency cannot optimize overall infrastructure To move forward on infrastructure projects, 3D printing spending or maximize the use of available governments can look to new options for boosts jobsite federal funding. However, overcoming the funding such as private global investment productivity and challenge is worth the benefit of having a funds and private equity markets. improves worker portfolio view that enables stakeholders to To leverage capital investments from the safety. identify the big picture of infrastructure needs private sector, infrastructure projects need to and best areas for investment. generate a certain and robust funding stream. Once the portfolio view is in place, the next In many cases, that funding will require some step is to create a business case analysis for type of tax increase. A strong business case projects will increasingly rely on innovative each infrastructure project. The business case may help leaders educate the public about the financing, including equity involvement should include a quantified scoring of project project need and gain support for new taxes, through design/build contracts and public/ risks and benefits. fees, or tolls. private partnerships (P3s). Governments can Running comparative analytics on the Whether the initial funding comes from a also discover financing options by taking business case data also helps officials tax levy or private investors, the next step is to a new look at how project roles, risks, and prioritize the projects for planning, funding, arrange the project financing, traditionally by rewards can be allocated among multiple and delivery. These analytics encompass issuing municipal bonds. Future infrastructure partners (see figure 1). DESIRED PROJECT Project STRUCTURE Quantitative & Qualitative Analysis Components DETERMINE DEFINE PROJECT ANALYZE  Design DESIRED “OWNER” NEEDS AND PUBLIC OF EACH PROJECT PRIORITIES AUTHORITY  Build COMPONENT What do I want to do? What am I  Finance Who can and What are my objectives? allowed to do? should do what? • Speed • Legal  Operate • Capabilities • Efficiency framework • Financial • Degree of certainty • Political  Maintain • Risk transfer • Innovation realities  Own Figure 1. Elements for designing new project structures

STRATEGY 3: • Improving the organizational structure, EXPANDING THE VIEW TO CLEAR A LEADERSHIP PATH systems, and controls in planning and MAXIMIZE THE BENEFIT FOR PROJECT DELIVERY managing capital projects By viewing infrastructure projects as a whole, all Governments need to increase public • Implementing alternative procurement stakeholders can participate in meaningful discus- confidence about their ability to deliver an practices sions about priorities and the trade-offs of financial infrastructure project without delays and cost • Adopting innovative methods for costs and investment for economic benefits. This overruns. As a starting point, agency leaders construction planning and management approach can help governments move beyond se- need practical resources and political backing lecting projects based on what is politically palat- to clear a leadership path for accomplishing These tools can help complete projects able to decisions based on obtaining the greatest the project according to plan. faster, with better quality, and at a lower cost. public good. Using new tools such as construction An ever-growing suite of tools is available In turn, the success of one project improves analytics can give government the confidence it to support this path through renewed public confidence about subsequent projects needs to promote critical infrastructure projects, capabilities for: in the pipeline. and help deliver them on time and budget.

AN INFRASTRUCTURE PLAN FOR MICHIGAN Michigan, like most states, is working on its long-term infrastructure planning. To accelerate action on addressing critical infrastructure needs, Governor Rick Snyder created the 21st Century Infrastructure Commission in 2016. In a parallel effort, the CEO roundtable in Michigan, Business Leaders of Michigan, commissioned Deloitte to study the state’s infrastructure performance and practices in comparison to other governments, then recommend strategies for improvement. The study findings should help Michigan leaders across the public and private sectors understand the overall level of infrastructure investment needed, prioritize projects, coordinate project planning and procurement, and explore new approaches to project funding and financing.