Good infrastructure projects start long before laying the first brick. Let’s do better.
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Not infrequently, we hear news of long delays and budget overruns in delivering publicly funded projects, not to mention failures of PPP projects. Of course, no news tends to be good news; many important infrastructure assets are successful (and unreported). However, when we see problematic projects in the news, we can’t help but wonder what went wrong.
Of course, infrastructure development is complex, and many factors impact its implementation. Circumstances are even more likely to change during the long-term operation of PPPs. Among the most prevalent sticking points are: demand, cost and time misestimations, misallocation of risks among parties, and having to face difficulties that could have been foreseen and mitigated.
All these factors need to be assessed carefully by public authorities before fully committing to any given infrastructure asset. This is critical for projects undertaken as PPPs, as they imply long-term commitments from many stakeholders, but equally relevant for public investment projects where governments commit a large amount of public resources.
The basic principles governing the project’s development and future relationship between parties are established at a very early stage. Here, public authorities identify, select, and prioritize potential projects that are aligned with integrated infrastructure plans and strategies. From these, they should gauge their viability and the most adequate delivery mechanism through rigorous assessments in order to make informed decisions. While this is not a full guarantee of success, sufficient due diligence acts as a sound basis for the next steps in the project lifecycle—and allows mitigation strategies to better face unforeseen circumstances that the project may see.
The World Bank looks at how well public authorities are doing at this critical stage via its Benchmarking Infrastructure Development 2020 initiative that assesses the quality of regulatory frameworks worldwide to develop large infrastructure projects, comparing them with internationally recognized good practices. Among the areas we look into are precisely the steps governments take to properly prepare infrastructure projects.
We started this initiative focusing on PPPs, but our latest edition also expanded to cover the assessment of conventionally procured infrastructure. This newly available dataset offers a great opportunity to uncover areas for improvement of existing regulatory frameworks, particularly in order to embed adequate infrastructure project preparation.
What did we find? (see figures). Fortunately, in the case of PPPs where we had historical data, we noticed this also is the area where more countries are adopting reforms that move in the right direction. That’s the good news.
A more nuanced look shows that adopted reforms usually focused on already widely established good practices, with room for additional improvement in many aspects. For example, market sounding—despite its importance to establish whether there is enough private sector appetite and capacity for a given project—is still rare. In our data regarding traditional public investment, we also assessed more broadly the infrastructure planning process, identifying many areas for enhancing prioritization and budgetary processes.
Our report provides a few more insights on this and the other areas covered by the initiative, but even there we could barely scratch the surface. The dataset is much more granular: issues covered in detail for the preparation stage go from whether the Ministry of Finance has a gate-keeping role to control the fiscal sustainability of PPPs, to whether standardized contracts and project documents have been developed, and including the all-important issue of proper project feasibility assessment.
For each of these issues and more our dataset, fully available on our interactive website, helps both identify them as potential areas for improvement in a particular country and uncover the approach that more mature markets have taken to tackle those issues. We even note the specific provisions adopted, enabling true peer learning across countries.
The information is there, at governments’ fingertips. Now, how can we do better?
We’re eager to engage more on this and welcome your comments below.
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Measure it to improve it: How benchmarking government capability for PPPs can help improve infrastructure delivery
This blog is managed by the Infrastructure Finance, PPPs & Guarantees Group of the World Bank. Learn more about our work here.
Good article. The better the preparation by government the smoother the construction and operations
Very informative and concise article. The PH local government units need to be educated /informed and guided throughout the PPP implementation program
Social activist struggling against hunger, poverty, injustice and for providing basic needs to poor's.
Fantastic article, this is the problem all over the world. PPPs have a big role to play.
Infrastructural development is one of the itching problem of Africa. Some programmes need to be in place as an immediate response to African infrastructural problems. Also in Nigeria short of infrastructural development has become one of the problems that generate fulanis herders farmers conflict with is transforming into ethenics & political conflicts. In order to save the situation I think there is need for world Bank & other responsible bodies should intervention in identifying & Development of grazing areas, ranches, stock roads etc. Which will provide peace, political and economic atmosphere.
Could procurement laws also be a factor that impact underperforming PPP infrastructure projects?
A resounding yes! The preparation of PPPs is just the first stage on the proper development of a PPP. But of course, the procurement process in which the private partner is selected is equally important, as it is how the PPPs are managed in the implementation stage. Similarly, the procurement process and contract management are also critical in the development of large infrastructure .
In fact, our Benchmarking Infrastructure Development covers these areas in the same way it covers the preparation of phase: it assesses whether laws are in place that adhere to internationally recognized good practices in those areas. For procurement, we know that a fair and transparent process that fosters competition is key. Our data shows, in particular for PPPs, that while higher income economies have adopted more robust and modern procurement frameworks that align with recognized good regulatory practices, there are still plenty of areas for improvement in this phase in particular in low and lower-middle income economies. Stay tuned to our blog for more on this as we keep exploring this important data resource.
Poor Market Sounding, lack of detailed feasibility studies, and predetermined use of PPP vs. Conventional Procurement without value for money analysis are the biggest pitfalls for PPPs in developing countries. Most times government require support in funding this very crucial preliminary activities. The financing institutions should do more. Poor human resource in managing PPPs in the public sector is also another challenge, the good guys don't stay.
Thank you for the article and invitation to leave the comments. My experience in health sector shows that establishing the projects pipeline and pre-feasibility work are very important and in many cases neglected steps. They are indeed account for further success and as mentioned below by one of the commenters, basis for smoother project preparation and implementation. Those steps usually are in total responsibility of the national governments. Question here is - do they have capacities, time and understanding? Even in developed countries those capacities are bought from outside consultants, whereas everyone expects the governments in low-income countries to rely on their own during the preparation of the pipeline. At least in health sector, and that is where the infrastructure projects are mostly needed and lacking behind, additional support, but also more in-depth understanding of the processes are needed.