360 Degrees Group Inc.

Opportunities and Risks for Infrastructure: Infrastructure As A Policy Sector

It is clear that infrastructure systems are the foundation for public services that are essential to the economy and necessary for a good life. Keeping these systems functional and secure is paramount among the nation’s policy needs. Addressing infrastructure as a sector focuses on a cluster of national needs. It shows how if we are successful at innovation in infrastructure systems, we can solve problems such as energy cost and security, better mobility on roads, high-speed trains, more effective and convenient air travel, and housing a growing population.

In explaining how infrastructure takes aim at these critical issues, this book addressed many topics, including how infrastructure is hard to define and classify, why it is difficult to measure its productivity and needs, how its finances work, and how much it costs.

Financial structures of the infrastructure sectors and how they can be used to improve public sector services were also included in the discussion. Public and private sector managers can use financial tools to assess efficiency in use of public funds and policy choices that leverage private sector capabilities to bolster government infrastructure programs.

Financial tools such as capital budgeting and revenue analysis tell us how much of each type of public facility to provide, who pays for it, when they pay, and how they pay. These questions are answered separately for the built environment, energy, transportation, communications, water, and waste management systems. All of these sectors require large capital investments, but some invest more in structures while others invest more in equipment and spend more on operations.

Performance of infrastructure systems cannot be evaluated purely on financial bottom-line results. It takes little imagination to picture how buildings, energy, transportation, communications, water, and waste management support both the economy and society. As a composite of dynamic public-private businesses, infrastructure systems require scorecards to show triple-bottom-line performance that also measures how “green” they are.

Investing in infrastructure systems offers many opportunities for businesses and individuals to profit from a productive sector of the economy, but the sums involved are so large and the stakes so high that a comprehensive approach is needed to assess the risks and payoffs. As we have shown, the sums required for both capital and operating costs are in the range of $1 trillion for annual construction spending and nearly as high for operating costs. These figures are dominated by the high costs of residential housing, but costs in other categories are hundreds of billions of dollars annually.

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