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Prioritizing infrastructure investments: Framework and forward momentum

Cledan Mandri-Perrott's picture


Editor’s Note: The World Bank Group is committed to helping governments make informed decisions about improving access and quality of infrastructure services, including, where appropriate using
 Public-Private Partnerships (PPPs) as one delivery option.  This approach is further enabled by working on: strengthening data, building capacity, developing and testing tools, promoting disclosure and encouraging engagement with all relevant stakeholders.  

The World Bank Group has tools to enable better informed decisions around PPPs. In this series of three posts for the PPP Blog, the World Bank’s Cledan Mandri-Perrott and Darwin Marcelo introduce the Infrastructure Prioritization Framework (IPF), one of the PPP Tools available for PPP professionals, as well as explain how it can help governments with competing infrastructure needs and describe its application. For more on this and other tools, please visit the
PPP Tools page.

Click here to read the previous blog posts in the "Prioritizing Infrastructure Investments" series.
 
The Infrastructure Prioritization Framework (IPF) is a quantitative tool that synthesizes and displays financial and economic as well as social and environmental indicators at the infrastructure project level. Two composite indices or dimensions are displayed in a Cartesian plane to offer a simplified picture of comparative performance alongside the public budget constraint for a particular sector.

The IPF is quantitative in essence; however, it employs information that is political or practice-based and opens space for deliberation in criteria and project selection. The approach recognizes that objective evaluation and selection of investments cannot be dissociated from the politics of project selection. Particular projects may be chiefly valued by governments and other stakeholders due to key policy goals which are non-economic in nature, or due to considerations that objective indicators cannot measure, such as upholding election promises, promoting social cohesion, or honoring culture. As such, the IPF accommodates policy and political responsiveness in two ways: through the identification and weighting of criteria (indicators) for assessment, and by leaving a degree of freedom in decision-making through provision of two references for judgment (the composite indices).

Our Motivation: Why the Focus on Prioritizing Investments?
Several observations motivated the creation of IPF. The first was the need to improve infrastructure planning and decision-making processes at the national and sector levels. Second, governments frequently face the dual challenge of assessing large numbers of small- and medium-size infrastructure projects identified in national, regional and sector development plans using very scarce public resources. Third, there is a need to meaningfully address environmental and social factors in infrastructure development, which are often difficult to monetize. Fourth, there is a desire to balance analytical efficiency, derived from standardization, with policy and political responsiveness. In this sense, the IPF is a demand-driven analytical tool that responds to a very practical and widely perceived need.   

Institutionalizing a systematic approach to prioritizing investments is justified by demands for evidence, value, and legitimacy in infrastructure decision-making. To be deemed legitimate, comprehensive, and reliable, prioritization must be based on sound evidence that affords meaningful comparison among large sets of projects. Much of this is technical in nature, and the IPF is designed to employ quantitative measures, to the greatest extent possible, in order to limit subjectivity.

Furthermore, comprehensiveness requires that project comparisons make space for multiple policy goals and facets of project selection. This means using a multi-criteria approach, with criteria selected specifically to reflect considerations of effectiveness and value, as well policy goals. The IPF captures the strengths of multi-criteria decision approaches, but also allows use of inputs from cost-benefit analysis (CBA).[1]

Establishing a clear prioritization strategy also affords legitimacy to government decisions. “Input” legitimacy requires that the processes of infrastructure selection be transparent, fair, and objective. “Output” legitimacy (or relevance), on the other hand, is determined by outcomes and performance. By providing a transparent and objective process that leads to better investment decisions, the IPF affords both kinds of legitimacy to infrastructure policy.

Finally, the process to prioritize investments must be administratively and politically feasible. This suggests that governments adopt the principle of parsimony – using the least amount of relevant information needed to inform a decision. Administrative feasibility means that approach can be implemented within limits of institutional capacity, cost, time, and data availability. Political feasibility, on the other hand, accepts that prioritization cannot be so devoid of latitude that it is rendered completely inflexible or unresponsive to political factors.
 
In summary, most infrastructure policy-making contexts demand a reconciliation of highly technical and objective policy analysis, on the one hand, and more political and practice-based inputs, on the other, all within the resource means of governments.  The IPF was created to meet these diverse needs, while keeping in mind the people who will benefit from the infrastructure investments for decades to come.
 

Notes:
[1] We recognize multiple approaches to investment decision-making, including cost-benefit analysis (CBA). For an extensive discussion of alternative approaches, see Marcelo, et al, 2015. Whereas CBA requires fully monetized information on costs and benefits, IPF makes use of available inputs. When the resources, capacity, and information are sufficient to perform full CBA, IPF can employ the outputs (e.g., benefit-cost ratios, ERR, NPV). IPF’s value-adds to CBA are in (a) directly treating non-marketed impacts in ‘natural’ units; (b) relieving the burden of making and justifying assumptions required to monetize benefits and costs; and (c) dealing directly with issues like equity and social justice.

Comments

Submitted by Ismaila A. Hassan on

How I wish policy makers in my country will have a look at these various tools, they will have learned how change is driven through infrastructural investment.

Submitted by KABA EMMANUEL KOSSE on

Hi,
My name is Kaba emmanueul, i am a PhD student in Montreal. I Red your arcticle about Prioritizing Infrastructure Investment :A Framework for Government Decision Making. It is very interesting and Do you allow me adapt your process for my PhD topic that is about prioritizing road constuction and road maintenance projects?
Your answer would be well appreciated.
Best regards

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