PART 1. Growth, progress and change:
why the industry needs to speak up


2 minute read

AECOM’s new research comes at a time of unprecedented complexity and transformation, complicated by rapid urbanization, demographic change, and the maturing of our digital age.

In turn, we find an industry that is unified in its belief that infrastructure will play an important role in shaping the society of the future. More than eight in 10 of the over 500 professionals surveyed agree that national prosperity depends on civil infrastructure. Strong transport connections enable urban regeneration, new job creation, and the delivery of goods and services.

Respondents also recognize the harm that will be caused if the industry cannot deliver on its promises. Congested roads, unreliable and overcrowded rail services, power outages, drought, flooding and cyberattacks cost individuals, communities and industries billions of dollars every year. Each one of us has experienced the frustrations and inconvenience of inadequate infrastructure.

We've got one of the 10 fastest-growing populations in the OECD. Some of our capital cities will see growth of 40-50 percent over the next 15 or 20 years — there needs to be a very significant infrastructure response.

Philip Davies, Chief Executive OfficerInfrastructure Australia
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Slow progress

Respondents say they have faith in the ability of government departments to select the right projects for their communities, but our findings suggest that the industry is not moving fast enough to meet requirements.

Often, this is because the importance of civil infrastructure is overlooked. A concern voiced by many respondents was that infrastructure is taken for granted by the general public. Nearly 80 percent feel that the industry’s positive economic and social contributions go unnoticed.

In the U.K., infrastructure is one of the few examples where the proportion of public spending is lower than taxpayers perceive it to be (3% actual versus 5% perceived — according to a recent government poll).1

It is little coincidence that, in many advanced economies, infrastructure investment takes a back seat to areas such as health and education. Poor public relations may be to blame. Greater media coverage has created a level of awareness and understanding around other public services that infrastructure sorely lacks.

Infrastructure's always going to have to justify the investment alongside public services such as health and education. But governments do see the value of investing in economic infrastructure. It’s about finding models that are fundable and which create a return for private investors. Governments can borrow more cheaply than the private sector but there is no shortage of people who want to invest in infrastructure.

Mark Thurston, Chief Executive OfficerHigh Speed 2
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Figure 1/

Proportion of respondents that agree with key statements about the industry

Government failure to provide clarity increases confusion around how major projects are selected and funded.

Infrastructure projects are largely publicly funded and owned, but can attract partnerships with the private sector that generate greater innovation, accountability, and long-term performance. The recent engagement of influential business figures — notably Elon Musk and Richard Branson — highlights the potential for attracting private enterprise.

There is a lack of understanding of how infrastructure is provided and maintained at a government level. People just think, ‘Why aren’t things changing?’

Therese McMillan, Chief Planning OfficerLos Angeles County Metropolitan Transportation Authority (LA Metro)

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The industry voice

AECOM’s strongly held view is that the infrastructure industry needs to become more vocal about the positive contribution that it makes to people’s lives.

When communities are properly consulted, informed and engaged in dialogue, they become powerful allies, enabling ambitious projects. When Los Angeles County passed Measure M — an estimated US$120 billion sales tax ballot measure designed to fund improvements to its highway and wider transportation network — over 71 percent of local residents voted in favor of the measure.2

Having the civil infrastructure debate openly — and on a human level — can elicit a sense of ownership among local communities and smooth the path to approving and financing new projects, as well as much-needed upgrades. Wider community engagement will also help to generate support for tariff-based payment models and other alternative funding solutions.

It is telling that many of the biggest success stories are occurring in isolation on a local or regional level. Despite plans to overhaul the United States’ infrastructure network at a federal level,3 performance across the country is inconsistent.

We also see a mixed picture when we look at the cities that are judged by our respondents to be performing well in the U.S. and the U.K.

In particular, the varied responses from U.S. participants in the survey highlight this disparity between the best-performing cities and regions and those lagging behind. Across all major areas of infrastructure, the same three cities — New York, Los Angeles and Washington, D.C. — are judged as being far ahead in terms of the progress they are making.

It is a similar picture in the U.K. Smaller regional cities, such as Sheffield and Leeds, lag behind the three largest urban centers of London, Birmingham and Manchester on transport, energy, water and resources.

Government-wide initiatives, such as the U.K.’s Construction 20254 strategy, launched in 2013, are not translating evenly across the country.

The US is a big country, and rather a mixed bag. The system is working fairly well in certain areas of the country – across the West Coast, people generally recognize the need to get out and invest in transportation expansions, especially in major metropolitan areas. However, we are not seeing the same level of support on a national or federal level.

Peter Rogoff, Chief Executive Officer Sound Transit
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Figure 2/

How respondents rank major U.K. and U.S. cities on their progress in delivering future-ready infrastructure

The U.S.

Transportation Energy Ports and waterways Water resources Wastewater
1 New York New York New York New York New York
2 Los Angeles Los Angeles Los Angeles Los Angeles Los Angeles
3 Washington, D.C. Washington, D.C. Washington, D.C. Washington, D.C. Washington, D.C.
4 Chicago Seattle Miami Chicago Chicago
5 Houston Houston Seattle Miami Seattle
6 Seattle Chicago Chicago Seattle Miami
7 Miami Miami Houston Houston Houston

The U.K.

Transportation Energy Ports and waterways Water resources Wastewater
1 London London London London London
2 Birmingham Manchester Manchester Manchester Birmingham
3 Manchester Birmingham Birmingham Birmingham Manchester
4 Leeds Glasgow Glasgow Leeds Glasgow
5 Glasgow Leeds Leeds Glasgow Leeds
6 Sheffield Sheffield Sheffield Sheffield Sheffield
Beyond the funding gap

In our research, inadequate funding is the largest perceived inhibitor of progress in the infrastructure industry. More than one-third of global survey respondents cite funding shortages as the number-one constraint in getting new projects off the ground.

Figure 3/

Respondents who describe these issues as major reasons why projects fail to proceed

Our respondents are not alone in this viewpoint. According to McKinsey, 11 of the world’s 20 largest economies, including the U.S. and several leading E.U. member states, have reduced infrastructure spending as a proportion of GDP since the global financial crisis.5 The consultancy finds that the world needs to invest an average of US$3.3 trillion annually to keep pace with projected growth through 2030. At the same time, the OECD says US$71 trillion is required by 2050. And the G20 believes that US$94 trillion is needed, and a US$15 trillion gap needs to be bridged by 2037.6

Our view is that the funding gap is an issue that must be solved collectively at the federal and local levels by strengthening long-term funding sources for infrastructure, while sparing private-sector investment and state and local spending.

The survey identifies ways to meet the costs of building new infrastructure and maintaining existing assets. Among the more than 500 professionals consulted, a majority say innovative funding models are highly effective as a way to mitigate a shortfall. One popular solution, gaining recent momentum in the U.S., is to use public-private partnership (P3) models: approximately four-fifths of respondents select P3s as a way to improve traditional procurement.

P3-based models are not the only game in town. Many professionals would like to see user-based funding models built on enhanced approaches to traditional toll-gathering solutions (see Figure 4).

There may well be a place for new tariff-based solutions in cities — including advanced electronic toll collection and open-road tolling — whereby users can contribute directly to the cost of maintaining and improving essential transit infrastructure. 7

The performance of privately financed public infrastructure projects is compellingly better than traditional procurement. This can be brought about by the upfront process, which has the optimism of equity, the reality of debt stapled times three, competing over who can do the best thing for the best value for the customers.

Brendan Lyon, Chief Executive Infrastructure Partnerships Australia
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It is critical to develop new channels to deliver funding to infrastructure projects. A significant proportion of survey participants also highlights the need for dedicated infrastructure funding that is protected within national budgets.

A global perspective

Infrastructure funding

While many countries face constraints on public funding, this snapshot of global opinion indicates substantial optimism around new funding solutions.

Mind the gap

A lack of infrastructure funding is a critical issue the world over, but it is especially acute in European economies.

In the U.K., only 35 percent of survey respondents say that civil infrastructure is well placed to contend with future public funding constraints, compared with 42 percent of professionals based in mainland Europe.

North America and Australia are more bullish. Nearly two-thirds of U.S. and Canadian respondents (62%), along with 58 percent of Australian-based professionals, are optimistic about facing future funding challenges.

New approaches welcome – but not everywhere

Similarly, European professionals, as a whole, demonstrate deep skepticism about adopting new funding solutions.

Just 28 percent of the region’s respondents see the use of public-private partnerships (P3s) as an effective option for bridging the infrastructure funding gap, while only 31 percent see the advantages of enhanced toll-gathering approaches.

There is greater enthusiasm elsewhere. Among North American respondents, 48 percent would like to see P3s trialed, and 45 percent support enhanced toll-gathering solutions. APAC professionals were 48 percent and 42 percent in favor, respectively.

For insight on infrastructure funding see: The Infrastructure Gap: Financing and Funding the Future

The way forward

A solution to the funding issue may be achievable, but the industry still faces many challenges as it looks to deliver the future infrastructure that society needs. In our research, respondents believe the industry is at a pivotal moment and that urgent action needs to be taken. They call for a fresh look at the process of infrastructure project delivery.

Significantly, respondents see increased support — from central government as well as local communities, businesses and environmental groups — as essential in keeping up with rapid demand for new projects. In the following sections, we explore these ideas in more detail and set out a new approach to resilience.

The consequences for all those involved in the funding, delivery and operation of infrastructure are far-reaching.

Figure 4/

Proportions of respondents that consider the following to be effective solutions to the infrastructure funding gap

A global perspective

The value of infrastructure

As part of the challenge to attract more investment globally, the industry needs to promote the economic benefits of all categories of infrastructure.

Lack of recognition offers common ground

Worldwide, the lack of recognition for infrastructure’s wider economic benefits is a common concern among industry professionals.

Eight in 10 respondents in the U.S., U.K. and mainland Europe agree strongly that their countries don’t appreciate the economic value of infrastructure development to national prosperity, and this view is shared by 74 percent of APAC respondents.

A make-or-break time for all

The regions also agree that the industry faces a transformative decade. More than three-quarters of U.S., European and U.K. respondents say that technological change will make for a critical 10 years for the sector.

Nearly three-quarters (74%) of APAC respondents are in agreement.

For insight on future infrastructure innovations read: Stranger than Fiction: A Day in the Life of Future Infrastructure.

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