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Why we need indicators for infrastructure management

Rui Monteiro's picture

Business management requires the collection of a set of indicators — for instance, financial indicators (including full reporting on costs and revenues) and marketing indicators (including volume of demand and its trend, and non-financial performance indicators such as clients’ perceptions). Those indicators will inform day-to-day managerial decisions and strategic options.

But curiously, infrastructure management usually lacks the kind of strategic information that top managers always require. Public sector information systems typically focus on how much was spent on infrastructure (i.e., on roads, airports, ports, hospital building, school buildings), but rarely present data on the performance of that infrastructure. Only a few jurisdictions collect data on the quality of infrastructure, typically addressing more “visible” types of infrastructure, such as highways (levels of service) and bridges (structural soundness).

The procurement of public-private partnerships (PPPs) brings to public authorities the challenges associated with contract management, including monitoring performance.

Many contracts provide for PPP operators to deliver self-reporting, in many cases using information systems that are fully accessed by public authorities—and then these authorities have those information systems (and data collection) audited, and performance closely monitored. Some authorities have public sector entities directly monitoring the performance of PPP operators, others hire specialized engineering firms to do the monitoring. In all cases, the efficiency of PPPs requires public partners to have access to reliable information on public service performance, in terms of quantity and quality.

Some public authorities, concerned about their own ability to define performance levels—and aware that their stipulated standards are utopian and probably too costly to implement—have designed performance monitoring mechanisms in which a PPP is compared to a set of reference projects (publicly or privately managed), forcing the PPP operator to outperform the reference group average or face penalties. These mechanisms reduce the risk of arbitrariness in the definition of reference performance levels. They also induce the measurement of the performance of other projects—creating an extra monitoring cost, but also creating a great opportunity for comparing the costs and performance of infrastructure projects. This offers an opportunity for better understanding the relative performance of PPP and non-PPP projects in different sectors, and under different PPP schemes.

Data on PPP and infrastructure are still too focused on numbers of projects and volumes of investment and costs. It is probably time to bring to the databases data on project performance. It is not an easy task—costs can all be presented in monetary terms, but quality cannot easily be reduced to a composite indicator, or even to a set of cross-sectoral indicators.

However, for certain sectors (for example, highways, or hospitals) in certain countries, performance can be measured, and is actually measured to satisfy the needs of contract management. Let that information be published, and researchers will produce new analyses that can guide infrastructure policy.
 
For more information on data for infrastructure PPPs and the importance of monitoring and other data-focused indicators, please see the new edition of Handshake.
 

Comments

Submitted by Cesar Queiroz on

Rui, interesting note.

It would be helpful if you can provide example of "performance monitoring mechanisms in which a PPP is compared to a set of reference projects (publicly or privately managed), forcing the PPP operator to outperform the reference group average or face penalties."

How would such performance indicators be included in the bidding/contractual documents if the data for the "set of reference projects" is not available during the bidding process?

Thanks, Cesar

Submitted by m8trixcommunications on

This post is very perfect and useful information post. Thanks for sharing this post.

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