case study about infrastructure

• Browse All Articles
• Newsletter Sign-Up

Infrastructure →

• 02 Jan 2024
• Research & Ideas

10 Trends to Watch in 2024

Employees may seek new approaches to balance, even as leaders consider whether to bring more teams back to offices or make hybrid work even more flexible. These are just a few trends that Harvard Business School faculty members will be following during a year when staffing, climate, and inclusion will likely remain top of mind.

• 21 Jan 2020
• Working Paper Summaries

The Impact of the General Data Protection Regulation on Internet Interconnection

While many countries consider implementing their own versions of privacy and data protection regulations, there are concerns about whether such regulations may negatively impact the growth of the internet and reduce technology firms’ incentives in operating and innovating. Results of this study suggest limited effects of such regulations on the internet layer.

• 07 Aug 2019

Big Infrastructure May Not Always Produce Big Benefits

Government spending on bridges, roads, and other infrastructure pieces does not always ignite economic good times, say William Kerr and Ramana Nanda. The key question: Are financiers nearby? Open for comment; 0 Comments.

• 29 Jun 2019

Infrastructure and Finance: Evidence from India's GQ Highway Network

In India, the Golden Quadrilateral highway network connects four major cities. This study of the relationship between the infrastructure project and development of the local financial sector finds that, in districts along and near the GQ, initial levels of financial development shaped how, and where, infrastructure investment could jumpstart real economic activity.

• 02 Mar 2018

Evidence of Decreasing Internet Entropy: The Lack of Redundancy in DNS Resolution by Major Websites and Services

Stabilizing the domain name resolution (DNS) infrastructure is critical to the operation of the internet. Single points of failure become more consequential as a larger proportion of the internet's biggest sites are managed by a small number of externally hosted DNS providers. Providers could encourage diversification by requiring domain owners to select a secondary DNS provider.

• 03 Apr 2017
• What Do You Think?

How About Investing in Human Infrastructure?

As long as we’re talking about a trillion-dollar government-industry initiative on infrastructure, why not invest in humans as well as bridges? asks James Heskett. What do YOU think? Open for comment; 0 Comments.

• 20 Jul 2015

Globalization Hasn’t Killed the Manufacturing Cluster

In today's global markets, companies have many choices to procure what they need to develop, build, and sell product. So who needs a manufacturing cluster, such as Detroit? Research by Gary Pisano and Giulio Buciuni shows that in some industries, location still matters. Open for comment; 0 Comments.

• 11 Sep 2014

Chief Sustainability Officers: Who Are They and What Do They Do?

A number of studies document how organizations go through numerous stages as they increase their commitment to sustainability over time. However, we still know little about the role of the Chief Sustainability Officer (CSO) in this process. Using survey and interview data, the authors of this paper analyze how CSOs' authority and responsibilities differ across organizations that are in different stages of sustainability commitment. The study documents the increased authority that CSOs have in companies that are in more advanced stages of sustainability. But while CSOs assume more responsibilities initially as the organization's commitment to sustainability increases, CSOs decentralize decision rights and allocate responsibilities to the different functions and business units. Furthermore, the authors document that a firm's sustainability strategy becomes significantly more idiosyncratic in the later stages of sustainability, a factor that influences significantly where in the organization responsibility for sustainability issues is located. The study also reflects on the best avenues for future research about CSOs and transformation at the institutional, organizational, and individual levels. This article is a chapter of the forthcoming book Leading Sustainable Change (Oxford University Press). Key concepts include: As a CSO gains more authority, she becomes less central in in the organization by allocating decision rights and responsibilities to the functions and business units. While most companies have fairly generic sustainability strategies in the initial stages, it is in the latter Innovation stage that different organizations more closely customize their sustainability strategy to the needs of the organization. The sustainability strategy is driven by the demands of the markets where an organization has a presence or plans to expand in the future. Closed for comment; 0 Comments.

• 03 Sep 2014

Supply Chain Screening Without Certification: The Critical Role of Stakeholder Pressure

Companies are increasingly being held accountable for their suppliers' labor and environmental performance. The reputation of Apple, for example, suffered after harsh working conditions were exposed at Foxconn, one of its key suppliers in China. Despite the possibility of major reputational risk when problems are revealed, however, companies face tough challenges managing this risk because obtaining information about suppliers' labor and environmental practices can be very costly. Furthermore, buyers can seldom discern whether the information suppliers provide a fair representation of their performance or whether it glosses over problem areas. The authors investigate whether and how "commit-and-report" voluntary programs, which require companies to make public commitments and to issue public progress reports (instead of requiring costly third-party audits), can serve as a reliable screening mechanism for buyers. Studying the decisions of 2,043 firms headquartered in 42 countries of whether to participate in the UN Global Compact, the authors find the risk of stakeholder scrutiny deters companies with misrepresentative disclosures from participating in the Global Compact. Moreover, this deterrence effect is especially strong 1) for smaller companies and 2) in countries with stronger activist pressures and stronger norms of corporate transparency. Overall, this research reveals the critical role for stakeholder scrutiny to enable buyers to use "commit-and-report" voluntary programs as a reliable mechanism for screening suppliers. Key concepts include: The potential for stakeholder scrutiny deters companies whose prior reports misrepresent their performance from joining a commit-and-report voluntary program. Smaller companies whose reports are misrepresentative are especially deterred from joining commit-and-report programs. Commit-and-report programs can serve as credible screening mechanisms, especially in countries with more activist pressure and stronger norms of corporate transparency. Closed for comment; 0 Comments.

• 26 Mar 2014

How Electronic Patient Records Can Slow Doctor Productivity

Electronic health records are sweeping through the medical field, but some doctors report a disturbing side effect. Instead of becoming more efficient, some practices are becoming less so. Robert Huckman's research explains why. Open for comment; 0 Comments.

• 31 Jan 2014

The Diseconomies of Queue Pooling: An Empirical Investigation of Emergency Department Length of Stay

Improving efficiency and customer experience are key objectives for managers of service organizations including hospitals. In this paper, the authors investigate queue management, a key operational decision, in the setting of a hospital emergency department. Specifically, they explore the impact on throughput time depending on whether an emergency department uses a pooled queuing system (in which a physician is assigned to a patient once the patient is placed in an emergency department bed) or a dedicated queuing system (in which physicians are assigned to specific patients at the point of triage). The authors measured throughput time based on individual patients' length of stay in the emergency department, starting with arrival to the emergency department and ending with a bed request for admission to the hospital or the discharge of a patient to home or to an outside facility. The findings show that, on average, the use of a dedicated queuing system decreased patients' lengths of stay by 10 percent. This represented a 32-minute reduction in length of stay—a meaningful time-savings for the emergency department and patients alike. The authors argue that physicians in the dedicated queuing system had both the incentive and ability to make sure their patients' care progressed efficiently, so that patients in the waiting room could be treated sooner than they otherwise would have. Key concepts include: This study tests the impact of a queuing system structure on the throughput time of patients in an emergency department that had recently switched from a pooled queuing system to a dedicated queuing system. Patients experienced faster throughput times when physicians were working in a dedicated queuing system as opposed to a pooled queuing system. The benefits of a dedicated queuing system may be due to greater visibility into one's workload and the increased ability for physicians to manage patient flow. Closed for comment; 0 Comments.

• 01 Oct 2013

Organizational Factors that Contribute to Operational Failures in Hospitals

Despite a pressing need to do so, hospitals are struggling to improve efficiency, quality of care, and patient experience. Operational failures—defined as instances where an employee does not have the supplies, equipment, information, or people needed to complete work tasks—contribute to hospitals' poor performance. Such failures waste at least 10 percent of caregivers' time, delay care, and contribute to safety lapses. This paper seeks to increase hospital productivity and quality of care by uncovering organizational factors associated with operational failures so that hospitals can reduce the frequency with which these failures occur. The authors, together with a team of 25 people, conducted direct observations of nurses on the medical/surgical wards of two hospitals, which surfaced 120 operational failures. The team also shadowed employees from the support departments that provided materials, medications, and equipment needed for patient care, tracing the flow of materials through the organizations' internal supply chains. This approach made it possible to discover organizational factors associated with the occurrence and persistence of operational failures. Overall, the study develops propositions that low levels of internal integration among upstream supply departments contributed to operational failures experienced by downstream frontline staff, thus negatively impacting performance outcomes, such as quality, timeliness, and efficiency. Key concepts include: To avoid workarounds or the need to keep large stocks of materials on the units, managers should create a method for customer-facing employees to request and receive patient-specific supplies in a timely fashion. Employees are unlikely to discern the role that their department's routines play in operational failures, which hinders solution efforts. Failures and causes may be dispersed over a wide range of factors. Thus, removing failures will require deliberate cross-functional efforts to redesign workspaces and processes so they are better integrated with patients' needs. Closed for comment; 0 Comments.

• 27 Sep 2013

The Impact of Conformance and Experiential Quality on Healthcare Cost and Clinical Performance

This study examines the relationship between hospital's focus on both conformance and experiential dimensions of quality and their impact on financial and clinical outcomes. Conformance quality measures the level of adherence to evidence-based standards of care achieved by the hospitals. Experiential quality, on the other hand, measures the extent to which caregivers consider the specific needs of the patient in care and communication, as perceived by the patient. These are important dimensions to investigate because hospitals may face a tension between improving clinical outcomes and maintaining their financial bottom-line. However, little has been known on the joint impact of these dimensions on hospital performance in terms of cost and clinical quality. The authors' study, which examined data from multiple sources for the 3,458 U.S. acute care hospitals, is a first step towards understanding these relationships. Results show that hospitals with high levels of combined quality are typically associated with higher costs, but better clinical outcomes, as measured by length of stay and readmissions. These results suggest that hospitals face a tradeoff between cost performance and clinical outcomes. The study also finds that the effect of conformance quality on length of stay is dependent on the level of experiential quality. Taken together, these findings underline the important synergy that exists between conformance and experiential quality with regards to clinical outcomes, a topic that has been completely overlooked in the extant literature. Key concepts include: Hospitals with high levels of combined quality are typically associated with higher costs, but better clinical outcomes, as measured by length of stay and readmissions. Integrating experiential quality into the delivery of care requires caregivers to understand that conformance quality is important, but just one part of achieving excellent clinical outcomes. Experiential quality requires ensuring that patients have a voice in their own care. This might trigger cultural resistance given the inherent bias towards conformance quality. The need for hospitals to promote such radically new representation, despite its clear health benefits, implies an inevitable cost-quality tradeoff. However, this tradeoff might diminish over time, as the culture slowly shifts and caregivers learn to better integrate both process quality dimensions in a more supportive environment. This study addresses a missing gap on the benefit for a systemic approach to learning in care delivery.h Closed for comment; 0 Comments.

• 24 Jul 2013

Detroit Files for Bankruptcy: HBS Faculty Weigh In

After a long period of economic decline, the city of Detroit filed for bankruptcy protection last week. John Macomber, Robert Pozen, Eric Werker, and Benjamin Kennedy offer their views on some down-the-road scenarios. Closed for comment; 0 Comments.

• 08 Jul 2013

Everything Must Go: A Strategy for Store Liquidation

Closing stores requires a deliberate, systematic approach to price markdowns and inventory transfers. The result, say Ananth Raman and Nathan Craig, is significant value for the retailer and new opportunities for others. Closed for comment; 0 Comments.

• 18 Apr 2013

The Impact of Pooling on Throughput Time in Discretionary Work Settings: An Empirical Investigation of Emergency Department Length of Stay

Improving the productivity of their organizations' operating systems is an important objective for managers. Pooling—an operations management technique—has been proposed as a way to improve performance by reducing the negative impact of variability in demand for services. The idea is that pooling enables incoming work to be processed by any one of a bank of servers, which deceases the odds that an incoming unit of work will have to wait. Does pooling have a downside? The authors analyze data from a hospital's emergency department over four years. Findings show that, counter to what queuing theory would predict, pooling may actually increase procesdsing times in discretionary work settings. More specifically, patients have longer lengths of stay when emergency department physicians work in systems with pooled tasks and resources versus dedicated ones. Overall, the study suggests that managers of discretionary work systems should design control mechanisms to mitigate behaviors that benefit the employee to the detriment of customers or the organization. One mechanism is to make the workload constant regardless of work pace, which removes the benefit of slowing down. Key concepts include: This research offers practical insights for workplace managers and health care policymakers. In workplaces where workers have discretionary control, the potential negative effects of designing pooled systems must be carefully considered. This has implications for designing and managing staffing structures and workflows, particularly in the context of service delivery organizations. Managers should consider implementing group incentives rather than individual incentives to motivate workers. This may encourage fast workers to reduce their speed just enough so that they will not negatively affect the productivity of others by over-utilizing shared resources. While workplaces often seek to incentivize workers through pay-for-performance programs that focus on individual productivity, a group-level approach may help counteract the negative effects that fast workers exhibit on overall productivity levels. In health care, emergency departments may benefit from implementing non-pooled work systems in which patients are assigned to a doctor-nurse team immediately upon arrival. Closed for comment; 0 Comments.

• 01 Mar 2013

Hurry Up and Wait: Differential Impacts of Congestion, Bottleneck Pressure, and Predictability on Patient Length of Stay

This paper quantifies and analyzes trends related to the effects of increased workload on processing time across more than 250 hospitals. Hospitals are useful settings because they have varying levels of workload. In addition, these settings have high worker autonomy, which enables workers to more easily adjust their processing times in response to workload. Findings show that heavy load plays a significant role in processing times. Congestion is associated with longer lengths of stay. More surprisingly, when there is a high load of incoming patients from a low pressure area (emergency medical patients), current hospital inpatients' stays are longer compared to when incoming patients are from a high pressure area (emergency surgical patients). Furthermore, high predictability of the incoming patients (e.g. scheduled surgical patients) is associated with shorter lengths of stays for the current inpatients than when the incoming patients are less predictable (emergency surgical patients). In this study, there was no decrease in quality of care for patients with shorter lengths of stay. Key concepts include: High congestion increases patients' length of stay by up to 0.81 days, which indicates inefficiency due to overloading of resources. Incoming inventory load with high predictability reduces patients' length of stay by up to 0.45 days, which is enabled by the ability of a worker to plan in advance for a new work assignment by discharging a patient to make room for the incoming one. With highly predictable incoming patients and no congestion on the day before expected discharge, there is a shift toward discharging patients currently in the hospital one day earlier than expected. A hospital would benefit from adding or allocating additional resources to the inpatient hospital units, and counter-intuitively, targeting a lower occupancy level to increase productivity. To further improve productivity, the allocated inpatient hospital resources could include adding a nurse on the hospital floors who is solely responsible for discharges and admissions. Closed for comment; 0 Comments.

• 03 Oct 2012

Can We Bring Back the “Industrial Commons” for Manufacturing?

Summing Up: Does the US have the political will or educational ability to remake its manufacturing sector on the back of an 'industrial commons?' Professor Jim Heskett's readers are dubious.

• 07 Aug 2012

When Supply-Chain Disruptions Matter

Disruptions to a firm's operations and supply chain can be costly to the firm and its investors. Many companies have been subjected to such disruptions, and the impact on company value varies widely. Do disruption and firm characteristics systematically influence the impact? In this paper, the authors identify factors that cause some disruptions to be more damaging to firm value than others. Insight into this issue can help managers identify exposures and target risk-mitigation efforts. Such insights will also help investors determine whether a company is exposed to more damaging disruptions. Key concepts include: The type of disruption matters in identifying the magnitude of a disruption's impact on a firm's share price. Disruptions attributed to factors within the firm or its supply chain are far more damaging than disruptions attributed to external factors. A higher rate of improvement in operating performance aggravates the impact of internal disruptions but not external disruptions. Management should be prudent about decisions to streamline operations and to reduce buffers and excess capacity. Some efficiency improvements may be attractive during periods of relative operational stability, but firms with high rates of improvement in operational performance could face distressing reductions in market value if they subsequently experience an internal disruption. Closed for comment; 0 Comments.

• 16 Apr 2012

The Inner Workings of Corporate Headquarters

Analyzing the e-mails of some 30,000 workers, Professor Toby E. Stuart and colleague Adam M. Kleinbaum dissected the communication networks of HQ staffers at a large, multidivisional company to get a better understanding of what a corporate headquarters does, and why it does it. Closed for comment; 0 Comments.

Economic development unlocked: a meta-analysis of infrastructure's impact

Stéphane straub, maria vagliasindi, nisan gorgulu.

In the policy arena, the debate on the impact of infrastructure investments on resilient and inclusive growth has flared up as the world economy attempts to recover from the COVID-19 pandemic. Yet, several important questions remain to be addressed. What is the most efficient way to extend access in various infrastructure sectors? Does the initial level of development of a country matter? What is the “true” impact of infrastructure investments on various development outcome categories including, inter alia, output and productivity, poverty and inequality, labor market outcomes, human capital formation, and trade?

To provide a solid answer to these questions a new study from the World Bank Infrastructure Chief Economist’s Office, “ The Impact of Infrastructure on Development Outcomes: A Meta-Analysis ,” conducted a meta-analysis of the infrastructure research done since the 1980s in the transport, energy, and digital sectors.

Why a new meta-analysis?

There have been a handful number of studies using meta-analysis to estimate the “true” impact of infrastructure, mostly focused on developed countries, relying on a broad definition of infrastructure measured through cross-sectoral, public capital figures, and production function models. Most of them do not include more recent papers, which mostly use more granular data and cutting-edge identification strategies.

To fill this gap, we created a database including almost a thousand estimates that report elasticities from 201 papers for the period 1983 and 2022. To our knowledge, this is also the first study exploring the impact of three sub-sectors of infrastructure: energy, digital, and transport.

Is there a publication bias?

Traditional meta-analyses often produce a funnel plot showing the distribution of effect size estimates plotted with their precision. Because a measure of the variability of each estimate (1/SE) is placed on the vertical axis, those estimates at the bottom have larger standard errors and are, therefore, more widely dispersed. In contrast, the more precise estimates (i.e., those at the top) will be more compactly distributed.

Although the plot of development outcome elasticities is roughly funnel-shaped, the right-hand side has more points and there is evidence of bunching above the statistical significance lines, indicating a high prevalence of studies with results just above the 5 percent significance level. This is a common finding across many topics in economics, and points to systematic positive publication bias in the infrastructure literature, which our regression results confirm. Quantifying publication bias and controlling for it is important, as it then allows us to generate estimates of “true” underlying effects.

Figure 1: Funnel Plot

Source: Authors’ elaboration

How big is the “true” effect.

The size of the effect depends crucially on the way infrastructure is defined. Moving from the initial focus on cross-sectoral studies to specific infrastructure sectors, the estimates become relatively small. Notably, from an initial value equal to 0.16 for public capital, the estimated elasticities for the individual sectors range between 0 and 0.06.

Encouragingly, the developmental impact of infrastructure is higher for developing countries, at least in the digital and transport sectors. Plotting the main effect from precision-effect estimate with standard error (PEESE) estimations focusing only on developing countries’ observations, a few differences are visible. First, the meta-analysis estimates are much larger for digital studies focusing on developing countries, with point estimates at 0.085 for micro output and 0.07 for macro output. Second, developing countries’ meta-estimates are similarly larger for transport macro output (0.06 vs. 0.05).

Figure 2: PEESE Estimates by the level of development

The developmental impact of infrastructure is also higher in rural areas, at least in the transport sector. Most notably, the average impact for rural roads is almost three times the one for the overall road subsector.

Can we leverage these estimates to produce marginal rates of return for specific sector outcomes?

These numbers provide useful indications on how different development outcomes are potentially impacted by infrastructure interventions. Deciding on which policies or sectors to prioritize would additionally require that we translate these elasticities into specific rates of return.

Given the differences in the nature of infrastructure indicators used and in the scale of underlying investments, lower elasticities do not necessarily entail smaller impacts or lower rates of return. In a broad production function framework, the marginal rate of return can be computed as the product of the elasticity and the ratio of GDP to the corresponding infrastructure stocks. This requires updated infrastructure capital stock figures for each of the dimensions covered in the meta-analysis. We are developing such indicators and exploring the question in subsequent ongoing work.

________________

#Infra4Dev is a blog series that showcases recent World Bank economic research to explore how Infrastructure is critical for development. You can access to all the previous Infra4Dev blogs here .

• Digital Development
• Extractive Industries
• Infrastructure & Public-Private Partnerships
• The World Region

Chief Economist, Infrastructure Practice Group, World Bank

Lead Economist, Infrastructure Practice Group, World Bank

Economist (ETC), Infrastructure Practice Group, World Bank

Join the Conversation

• Share on mail
• comments added

Case Studies: Lessons from Public-Private Partnerships

07 Apr Case Studies: Lessons from Public-Private Partnerships

America must address its infrastructure needs—transportation, water, power and energy, and civic structures—to meet the demands of the next generation.

The task is daunting, especially in an era of fiscal constraint, and to accomplish it public officials must think creatively about how to deliver infrastructure more efficiently and cost-effectively. One promising approach is to partner with the private sector in financing and delivering infrastructure projects.

In order to increase understanding and consideration of private-public partnerships (P3s) among public sector leaders, the Bipartisan Policy Center analyzed a number of P3 projects. We have laid out important lessons learned from these projects for public officials considering a P3 approach as well as a few core principles for success, drawing from the experiences of public and private partners across the country.

Explore the case studies below or download the full set of projects . To view the map legend, simply select the icon in the top-left corner.

Bridging the Gap Together: A New Model to Modernize U.S. Infrastructure

Virtual Private Server

With $3 trillion needed for this infrastructure over the next decade, states, cities, counties and other public and private providers of these critical services must continue their important role, and the federal commitment to infrastructure must be restored. Further, with respect to broadband, federal decision-makers should continue to work in partnership with the private sector and states to foster infrastructure deployment in remaining unserved areas.

Fixing the world's infrastructure problems

We all have a stake in the infrastructure surrounding us — the roads, buildings, power lines, and telephone networks that we rely on daily. How well they're built and operated is crucial to economic growth and is a key arbiter of an economy's competitiveness — and yet, virtually every economy faces an array of infrastructure challenges.

Just a few examples illustrate some of the pressing issues: South Africa's power distribution network has an estimated maintenance backlog of $4 billion — equivalent to half of the country's total investment in electric power generation and distribution in 2011. The U.S. Department of Transportation estimates that 15% of the country's roads are in an unacceptable condition and says that road congestion costs the U.S. an estimated $100 billion per year. In Jakarta, from 2005-2009, the number of cars rose by 22% annually, while the distance of usable roads actually declined (PDF). The UN Economic Commission for Latin America and the Caribbean estimates that investment equivalent to 7.9% of GDP (PDF) is necessary to raise infrastructure in the region to the standard of developed East Asian countries.

Just to keep pace with anticipated global GDP growth, the world needs to spend $57 trillion, or on average $3.2 trillion a year, on infrastructure over the next 18 years. That's more than the entire worldwide stock of infrastructure on the ground today — and nearly 60% more than the world has invested over the past 18 years. Tackling maintenance backlogs, future-proofing infrastructure to cope with climate change, and meeting development goals such as access to clean water and all-weather roads to transport goods to markets would cost a great deal more.

The bill for all of that looks prohibitive at a time when many governments are highly indebted and capital is tight. A focus on the huge need for additional investment and potential difficulties in financing it dominate the debate. Pessimism rules, but it needn't be that way. There are ways of cutting the bill down to size and meeting the challenge. The answer lies in improving the way we plan, build, and operate infrastructure — in other words, we need to boost its productivity.

We have analyzed 400 case studies that show that there's plenty of opportunity to boost infrastructure productivity, and in turn save 40% on the global infrastructure bill (or $1 trillion a year) and boost global GDP by about 3% by 2030 if reinvesting the savings. There are three routes to getting there:

1. We need to make better choices about the projects we're investing in. Projects need to be clearly linked to broader economic and social development, rather than being vanity exercises. Governments need to evaluate costs and benefits rigorously and prioritize accordingly. South Korea's Public and Private Infrastructure Investment Management Center has saved 35% on its infrastructure budget by rejecting 46% of the projects it reviews, compared with only 3% previously. Making more strategic choices has the potential to save $200 billion a year worldwide.

2. We need to streamline delivery. There is huge potential to speed up permits and land acquisition particularly for new transport infrastructure, to structure contracts to encourage innovation and cost savings, and to strengthen collaboration with contractors. This could save up to $400 billion a year and accelerate the timeline for the completion of projects. For example, in Australia, the state of New South Wales cut approval times by 11% in just one year.

3. Instead of rushing to build new capacity, we need to do more with what's already on the ground. This, too, has the potential save $400 billion a year. The United Kingdom, for instance, achieved reductions of 25% in journey times, and 50% in accidents on the M42 motorway by implementing an intelligent transportation system solution that directs and controls traffic flow. Smart grids could help the United States avoid $2-$6 billion a year in power infrastructure costs.

None of this is rocket science, but bringing these opportunities to fruition will require a much less fragmented way of running infrastructure policy. The many agencies involved in various kinds of infrastructure (roads, power, water, etc.) at different levels (city, state, country) need much better coordination. And the public and private sectors need to forge far deeper and broader partnerships. Most collaboration between the two is around financing and construction, but the private sector could certainly do much more with planning and delivery. This isn't an overly radical thought — Chile, the Philippines, South Africa, South Korea, and Taiwan are all developing frameworks for giving private players greater roles in project and portfolio planning.

Saving money with higher infrastructure productivity is a win-win that would be particularly useful at a time of capital constraints and anemic growth in many parts of the world. There is every incentive to be smarter about tackling our infrastructure problems.

This article originally ran in HBR Blog .

Related Articles

Infrastructure productivity: How to save $1 trillion a year

Urban world: Cities and the rise of the consuming class

Building globally competitive cities: The key to Latin American growth

Case studies

Filter by clear, 81 results found.

• share this page via linkedin
• share this page via email
• share this page via facebook
• share this page via twitter

Sponsored by

Research partner

Kitakyushu and the SDG FutureCity initiative

Key facts and figures

Sector: sustainable/smart urban development; multiple sectors

Timeline: since 2018

Location: Kitakyushu City, Japan

Key participants: Government of Japan, SDGs Promotion Headquarters, Kitakyushu City (Fukuoka Prefecture) local government, other government agencies and ministries

The city of Kitakyushu, located on Japan’s Kyushu Island, has seen a remarkable transformation. It has evolved from being an industrial town with high levels of air and water pollution in the 1960s (due to iron, steel and chemicals manufacturing) to a model in sustainable urban infrastructure and development, 1 with a strong focus on green growth, renewable energy, waste management and the circular economy.

Kitakyushu is part of Japan’s SDG FutureCity initiative, launched in 2018, which aims to advance a model of urban planning that prioritizes environmental sustainability, disaster preparedness and resilience, and improved quality of life. 2 The program selects and supports municipalities with the best proposals for creating value for the economy, society and the environment. Kitakyushu, which was also selected by the OECD as the first model city in Asia for urban green growth, 3 is a pioneering city in this initiative. It also explicitly incorporates the Sustainable Development Goals (SDGs) and their monitoring into its urban development plans.

Planning for change: achieving sustainable infrastructure through strong coordination

Japan leads all countries in the Infrastructure for Good barometer when it comes to effective governance and implementation of infrastructure. Strong coordination—exemplified in the country’s national infrastructure strategies, project-level needs assessments, and coordination and monitoring systems—are key precursors to realizing infrastructure outcomes that benefit all parts of society. And even though Japan performs less strongly when it comes to social assessments and community engagement, Kitakyushu’s successful use of collaborative planning offers a potential model for other cities to follow even when national policies are lacking.

Kitakyushu’s city-wide urban development initiative provides illustrative examples of this process in action, as it brings together a variety of stakeholders—local, municipal and national governments, private companies, educational and research institutes and civil society—to realize an SDG-based vision for infrastructure. These planning efforts are focused around three pillars of success: the economy, society and the environment.

Figure 1: Kitakyushu’s multi-pronged approach to sustainable urban development

Source: Kitakyushu City SDG Report, 2018

Notable projects and innovative outcomes

Kitakyushu’s FutureCity initiative is cross-sectoral, covering a wide variety of infrastructure projects such as digitalized transport networks, waste-to-energy and recycling projects, automation and robotics in healthcare, offshore wind energy and distributed power sources to enhance resilience, and upgrades for energy sustainability. 4 Two of Kitakyushu’s many initiatives that stand out include:

Kitakyushu Eco-Town

Kitakyushu’s Eco-Town is Japan’s first—and largest—recycling infrastructure base and is the center of all activity related to Kitakyushu’s circular economy. Built on reclaimed land, it represents the culmination of long-term plans to integrate environmental sustainability with the city’s existing industrial expertise, creating new opportunities to reuse recycled materials in a wide variety of manufacturing processes. 5, 6, 7 Eco-Town also contributes to the city’s education infrastructure as a knowledge and innovation center. It is home to several educational institutions specializing in technological and practical research related to recycling and waste management. 8

Eco-Town was pioneered by a multi-stakeholder planning group called the Kitakyushu City Environment-related Industry Committee, which brought together public, private and academic experts to formulate strategies to transform the previously polluted region into a modern hub for the green economy. 9 This cooperative process was key to the success, allowing incumbent insiders with new ideas to come together and generate pressure for change, supported by an open consultation process to gather public opinion. Over time, the collaborative networks and individual expertise developed at Eco-Town have influenced subsequent projects such as Environmental Model City and Smart Community projects. 10

Transport management

Another of Kitakyushu’s major infrastructure initiatives is to upgrade its public transit systems, making them more digitally integrated, inclusive and environmentally friendly. Using innovative technologies such as artificial intelligence and the Internet of Things is a key part of this plan. 11 For example, the city is developing a “community-based bus network”, which will provide services that respond to local conditions. These could reflect, for instance, real-time demand and traffic conditions. 12, 13

Optimizing transport networks is not just an economic need, but it represents a pressing social issue for Kitakyushu and Japan as a whole—particularly in light of demographic shifts and sustainability goals. Ensuring that public transit systems are responsive to the needs of an aging population will help the city better promote healthy lifestyles and mobility. Similarly, prioritizing more efficient routes and use of electric buses will be a key factor in reducing CO2 emissions. 14, 15, 16

After successful implementation of the digitally integrated trial system in Kitakyushu, it is set to be expanded to bus systems nationwide. 17

Financing the city’s sustainable infrastructure

A variety of funds and bonds serve as key enablers of Kitakyushu’s push to achieve positive infrastructure outcomes.

Many of Kitakyushu’s sustainable development initiatives are financed by Japan’s national government. However, a sustainability bond framework is also in place to fund many of the city’s sustainable projects. The capital raised from the issuance of these “FutureBonds” will be used for various purposes in keeping with the city’s SDG vision. The local government issued the first sustainability bond in October 2021, with the funds raised to be used for SDG-related projects that “will lead to effective improvements in the environment and solutions to social issues”. 18

The Kitakyushu SDGs FutureFund, which was set up in April 2021 with resources from the consolidation of five existing funds and local tax collection, is aimed at promoting urban greening and zero-carbon activities, providing support for SMEs and promoting community welfare, including support for childcare and greater female engagement in society. 19

Integrated planning, shared responsibilities and awareness

Kitakyushu offers a unique case study in that government ministries and bodies at all different levels are working toward the goal of building infrastructure that can help meet the SDG goals. The institutional framework and strong support provided by the national government allow the city’s government to localize SDG attainment efforts. 20 Over the past several years, these initiatives have stood out for their strong degree of both public and private collaboration, including the national and local government, private companies, educational and research institutes, and civil society.

To realize its development goals, the city government has set up a group of institutions to guide the implementation of the overall initiative. For example, in 2018 it launched an SDGs public-private partnership platform, chaired by the mayor of Kitakyushu. This brings together stakeholders from the private sector and local governments to discuss projects and proposals to achieve the SDG goals. 21 It has also established the SDGs Future City Promotion Headquarters (an interdepartmental group, headed by the mayor) and Kitakyushu City SDGs Council (an advisory expert group). 22 Meanwhile, the Kitakyushu SDGs Club provides a platform for companies, individuals and other stakeholders to discuss the UN’s Agenda 2030 and other sustainability-related development needs. 23 The club, which counts 19 financial institutions among its members, provides consulting services related to the SDGs to other companies. 24

Key learnings

As more and more cities are faced with urbanization-related challenges, Kitakyushu’s SDG FutureCity initiative offers an innovative example of how development priorities can go hand-in-hand with favorable environmental and social outcomes. Aligning these aspirations is the north star for all infrastructure development in Kitakyushu.

One key lesson for other cities looking to implement SDG goals and action plans is Kitakyushu’s development of a multi-layered progress management system, where actions and outcomes are monitored through specific key performance indicators across six SDGs, determined as part of the SDG FutureCity plan. Kitakyushu is also partnering with the OECD to develop similar SDG indicators and evaluations for both the city and regional level. 25

The city’s success thus far provides a blueprint for other urban development initiatives by highlighting how detailed planning and collaboration can result in an integrated approach to infrastructure and social progress. In particular, it provides key lessons around localizing efforts toward the SDGs in a defined and coordinated way, suggesting that cities can play a role at the forefront of sustainable development priorities. Importantly, the overarching initiative also provides a template for other countries to follow, which can be expanded from city to city, with successful elements being adopted from each.

Japan leads all other countries in Pillar 1: Governance and planning. However this rapidly-aging country suffers from a below average score in Pillar 3: Social and community impact—indicating significant challenges in this area.

Score: 62.6

out of 30 countries

Key findings from the Infrastructure for Good barometer

The inaugural edition of the Infrastructure for Good barometer gives reason for optimism. Countries have put in place strong foundations in infrastructure planning and governance as part of long-standing efforts to encourage investment. However, the barometer also identifies shortfalls: more attention is needed on the specific levers that drive social, economic and environmental progress.

Explore the full data and barometer framework

Compare scores and ranks across 30 countries and all 162 indicators and sub-indicators that form the Infrastructure for Good barometer.

• Group Subscriptions
• Terms of Use
• Cookie Policy
• Manage Cookies
• Accessibility
• Modern Slavery Statement
• Do Not Sell My Personal Information

Copyright © The Economist Newspaper Limited 2024 . All rights reserved.

Introduction to Case Studies in Sustainable Infrastructure

• September 19, 2023
• |    Case Studies , Equipment WG , Materials WG , Power WG

Digital infrastructure has experienced unprecedented growth, becoming the backbone of today’s interconnected world. As attention shifts beyond efficiency and towards more holistic sustainable practices, understanding the carbon impact of power, equipment, and materials becomes paramount and is therefore key focus area of the iMasons Climate Accord (ICA).

Therefore, the ICA launched three respective Working Groups (Power, Equipment, and Materials), led by Data Center industry leaders, who created these case studies in order to provide data and insight for the forthcoming requirements for active Climate Accord members.

Case studies serve as critical tools in this context, illuminating the path forward.

• Real-world Implications – Our case studies offer a snapshot of real-world applications and challenges, ensuring that solutions are theoretically viable and also practically effective. They offer transparency and insight into the processes for determining the carbon intensity of digital infrastructure components, from data centers to telecommunications.
• Holistic Understanding – ICA case studies holistic life-cycle impacts, addressing both operational and embodied carbon. Inclusive of carbon emissions from raw material extraction, manufacturing, transport, use, and end-of-life disposal or recycling of digital equipment and infrastructure.
• Stimulating Innovation – Detailed case studies expose gaps in current practices, driving research and innovation. Discovering high carbon emissions in certain materials or processes will push our industry to search for sustainable alternatives or more efficient methods – ultimately, guiding industry players on new best practices.
• Influencing Policy, Regulation and Reporting – Policymakers can rely on case studies to shape regulations and incentives; carbon performance reporting is becoming increasingly more important for regulatory compliance, as well as general best ESG practices. When a case study highlights significant carbon emissions reduction through a particular strategy, it informs subsidies, tax breaks, and/or regulations to encourage its adoption.
• Enhancing Stakeholder Trust – Our transparent case studies will serve as evidence to stakeholders, including customers, investors, and the general public, that organizations are actively addressing sustainability challenges. This will enhance trust and brand loyalty, as sustainability is a key concern for the future of our industry.

ICA’s progress is made by our Working Groups (WGs) and their case studies provide an invaluable path to understanding and addressing the carbon impact of digital infrastructure. As global information and communication technology continues to expand, we will provide tangible insights, drive innovation, inform best practices, and foster trust among stakeholders – all of which are increasingly critical to securing a zero-carbon digital future.

The UK Must Use Its Strengths to Respond to US and EU Green Industrial Policies—Here’s How

It’s Time for a UK Trade Strategy That Learns From the Recent Past

The Clean Hydrogen Opportunity: Growth and Climate Benefits Within Reach if UK Acts Now

A Pathway to Growth: How to Seize Opportunities for Innovation and Development

Infrastructure

/ article, reshaping british infrastructure: global lessons to improve project delivery.

By  Raoul Ruparel ,  Patrick Roche ,  Dale Williams ,  James Hollingsworth ,  Stuart Westgate ,  Tim Chapman ,  Edward Zaayman ,  Helena Fox , and  Anja Johnson

Executive Summary

• Across all forms of infrastructure, the UK faces a worrying combination of high costs and slow delivery. Unit costs for like-for-like projects are higher than European peers – on a par with US and Australia – but delivery times are in line with slower European peers.  
• In absolute terms the UK’s unit costs for road and rail projects are higher than peer countries (France, Germany, Australia and US). 
• The UK struggles to do the basics well, with the mean unit cost for flat rail construction twice as high as the global average in our dataset.  
• Delivering flat road projects in the UK is twice as expensive as in France. The average cost for a flat road in the UK is £8.45 million per lane km, compared to the European average of £5.77 million per lane km and £4.22 million per lane km in France.  
• Similarly, UK road projects face both the highest regularity (69%) and severity (66%) of cost overruns compared to peer countries. 
• The UK also performs poorly at rural projects in terms of unit costs versus comparators, though it does relatively well at urban projects. 
• The pre-construction phase in the UK is the slowest across our peer group; 65 months compared to an average of 50. For rail projects the UK is 50% slower than average, and for road and social 25% slower. Planning is a big part of this, but having to regularly repeat design phases also likely plays a role. 
• No country is perfect – all see very regular cost overruns and delays in delivering projects. 
• The government often sets multiple, conflicting objectives for a project, with only loose budget and time constraints – this drives up cost and time, since it leads to incorrect specification choices which are often more costly or need to be changed and poor design choices which have to be repeated later in the project once the real objective becomes clear. It also confuses the process of democratic approval since the public are not aware of what the project is trying to achieve.
• Risk aversion means designs are frequently changed and are often over-elaborate, with too little attention paid to value or how the project will be built and operated – there is a failure to target the minimum viable product, instead focusing on a design that will avoid any objections. There is also little leveraging of what has worked well elsewhere in the UK or globally. Those responsible for operating and maintaining the asset are not involved in design or construction, resulting in multiple iterations before the asset comes into operation. 
• The planning process is too long and complex, with multiple veto opportunities, adding process with little view on cost and time implications – permissions and approvals take far too long. Required feasibility assessments are over complicated. Consultations often take place multiple times with designs changing every time, partly as they seek to cover every stakeholder possible with no reference to which ones are most important. Early engagement can be beneficial, but mainly if it focuses on the ‘mission’ of the project and how it can unlock benefits for the public.  
• The current sourcing and contracting approach creates an illusion of risk reduction, but actually often just shifts risk rather than effectively managing it, which creates perverse incentives – too much emphasis is placed on passing risks along the supply chain, masking the location of the risk instead of taking shared ownership of it across the whole ecosystem. Contracts can never fully account for risks. They often miss the actual source of the risk and ultimately the client (usually the government) will always retain a share of that risk – all meaning incentives to keep time and cost down are limited. The emphasis is on perceived predictability over efficiency. 
• External pressure to move to construction despite repeated changes means designs are often immature and engineering risks not fully understood – repeated changes to designs (often from the consultation process) and lack of upfront investment in detailing designs, or exploring engineering risks, can drive up costs and cause delays as problems are found later in the process, with earlier stages then needing to be repeated. 
• The UK construction industry is fragmented with little incentive or opportunity to invest in capital, skills or technology – many small firms are required to deliver projects; this increases costs and complexity on individual projects and means none of the firms have the incentive or ability to invest. There is no clear strategic objective across UK infrastructure and no real process to ensure lessons are learnt across the piece and that economies of scale are leveraged. This all results in wide variations in productivity across the sector. 
• Creating an empowered Centre for Infrastructure Excellence focused on enabling government to be an effective client and providing an incentive for the supply chain to invest and innovate by reducing uncertainty and risk. Give a clear strategic approach to the entire portfolio of UK infrastructure projects. This new Centre should work right across the supply chain to help drive down costs. It will require new capability, deep industry knowledge and much better collection and use of granular cost and productivity data. Many organisations valiantly try to do this now, but they are often not empowered and some functions fall between them.  
• Reforming the planning process, including focusing on ‘least bad’ options for vital infrastructure, willingness to increase compensation if it improves delivery times and reusing data or mitigations where they have already been shown to be successful.  
• Setting clear well-defined objectives and ensuring they don’t conflict. 
• Targeting the minimum viable product (especially for design and specifications) and reducing risk averse gold plating. 
• Linking construction, delivery and operation so all responsible parties are joined up. 
• Leverage contracts with more active ownership models, focusing on more effective and collaborative management of risk across entire project rather than passing risks along the supply chain (which rarely works in reality). 
• Rethinking risk management in a quantitative way to better address the larger tail risks and avoid spurious certainty. 

The UK is approaching a crossroads when it comes to its infrastructure . Over the coming decades, the energy transition and impacts of climate change will require larger and, in many cases, more complex infrastructure. This is true for most developed economies, but the UK approaches this having significantly underinvested in infrastructure compared to peers. UK overall investment averaged 19% of GDP in the 40 years to 2019, the lowest in the G7. 1 1 National Infrastructure Commission, Second National Infrastructure Assessment Notes: 1 National Infrastructure Commission, Second National Infrastructure Assessment

The National Infrastructure Commission (NIC) has estimated that both public and private sector infrastructure investment will need to increase by 30% to 50% over the next decade. 2 2 National Infrastructure Commission, Second National Infrastructure Assessment Notes: 2 National Infrastructure Commission, Second National Infrastructure Assessment We at the Centre for Growth think this is a conservative estimate. It is also high by historical standards. Never before has public sector capital investment increased so quickly. Private sector capital investment has only grown at this rate in unique circumstances which will be hard to replicate – such as the 1950s post-war boom or during privatisation in the 1980s. 3 3 World Bank, World Development Indicators Notes: 3 World Bank, World Development Indicators

All this comes at a time when there is mounting evidence that the UK’s infrastructure is not working as it should. Our infrastructure underpins everything we do. From energy prices to the cost of housing, if the UK’s infrastructure is not functioning well, economic growth, productivity and our standard of living will suffer. On the flip side, delivering infrastructure projects on time, at reasonable cost and as part of a stable long-term pipeline can be a boom to the economy across the UK. If we have any hope of improving economic growth and meeting the needs of future generations, we must improve our approach to infrastructure delivery. 

Understandably, there has been much focus on what infrastructure the UK needs to build, whether it is part of the energy transition or to promote regional economic growth. But we believe this is not the right starting point. First, we must understand the extent to which the UK’s delivery of large infrastructure projects has strayed off track, why this has been the case and how we can begin to fix it. Pushing more money and projects into a failing template is not a solution.

Section 1: Benchmarking UK Performance

To understand what we need to fix, we need to understand the scale of the challenge. The UK’s performance in the infrastructure space is much maligned – understandably so. But no developed democracy is perfect in its delivery of infrastructure. All must grapple with similar challenges around high labour costs, expensive real estate, dense urban populations and complex public approvals. For example, Germany is renowned for its engineering prowess, yet the recently opened Berlin Brandenburg Airport came in three times over budget and nine years late. 4 4 Euronews, Berlin airport opens 10 years late and three times over budget ; Euronews, Nine years late and x3 over budget due to problems, Berlin‘s Brandenburg Airport finally opens during a pandemic Notes: 4 Euronews, Berlin airport opens 10 years late and three times over budget ; Euronews, Nine years late and x3 over budget due to problems, Berlin‘s Brandenburg Airport finally opens during a pandemic

There is a wide-ranging set of academic literature on infrastructure delivery. It reveals a common picture of near-ubiquitous overruns for both cost and schedule – but is highly varied on the extent and drivers of these overruns. For example, Flyvbjerg, et al. 2016 used a dataset of 1,603 projects globally and estimated an average cost overrun of 39% across all infrastructure projects, 40% in rail projects and 24% in road projects. 5 5 Bent Flyvbjerg and Dirk W. Bester, The cost-benefit fallacy: why cost-benefit analysis is broken and how to fix it Notes: 5 Bent Flyvbjerg and Dirk W. Bester, The cost-benefit fallacy: why cost-benefit analysis is broken and how to fix it

In the UK there have been several reviews looking at performance in infrastructure delivery. The UK government’s own figures on National Significant Infrastructure Projects show that between 2012 and 2021 delivery time increased by 65% – much of this due to the long and cumbersome pre-application process. 6 6 EDIE, New fast track pathway in the works to tackle energy development bottlenecks Notes: 6 EDIE, New fast track pathway in the works to tackle energy development bottlenecks The National Infrastructure Commission (NIC) has released two reports calling for a step change in modernising UK infrastructure. They highlight issues such as slow and uncertain project delivery, the need for a long-term vision for stable and resilient growth and changes to planning and regulatory models to support future strategic government direction. 7 7 National Infrastructure Assessment, Second National Infrastructure Assessment ; Institute for Government, How to transform infrastructure decision making in the UK Notes: 7 National Infrastructure Assessment, Second National Infrastructure Assessment ; Institute for Government, How to transform infrastructure decision making in the UK In 2010, HM Treasury carried out an Infrastructure Cost Review focusing on ways to reduce cost of delivery for major infrastructure projects. It surveyed over 300 organisations and identified £3.4 billion in annual savings, highlighting behavioural changes and improved collaboration between government and industry as ways to sustain cost and delivery efficiency. 8 8 HMT, Infrastructure Cost Review Notes: 8 HMT, Infrastructure Cost Review In 2018, Project 13 was set up by the Infrastructure Client Group as an industry-led shift away from transactional construction business models and disjointed supply chains to more collaborative and outcomes-focused ways of working. 9 9 Project 13, What is Project 13? Notes: 9 Project 13, What is Project 13? Their enterprise-based approach prioritises integrated and collaborative delivery teams, restructuring narrow price and cost incentives to focus on a broader contribution to the ‘why’ over the ‘what’ – e.g. delivering healthcare rather than a hospital. The Department for Levelling Up, Housing and Communities launched a review last year into simplifying the overcomplicated Environmental Impact Assessment process, proposing a pivot to an outcomes-based approach. 10 10 Gov.UK, Environmental Outcomes Report: a new approach to environmental assessment Notes: 10 Gov.UK, Environmental Outcomes Report: a new approach to environmental assessment It is on these many important reviews and responses that we look to build – specifically by bringing fresh and up-to-date data to this issue and looking across the lifecycle of infrastructure delivery.

Exhibit 2 compares the UK delivery of road, rail and social infrastructure to a peer group of countries to benchmark its performance across several key metrics: unit cost, time to delivery, time overruns and cost overruns. The data is drawn from BCG’s in-house Prism database which includes detailed information on 2,300 infrastructure projects from 16 countries.

Exhibit 2 shows that, across all types of infrastructure projects, the UK is neither the worst performer nor the best. The median infrastructure project in the UK, when compared to like-for-like projects in peer countries, experiences unit costs which rank in the 52nd percentile. This means it falls roughly in the middle, in terms of unit cost relative to similar projects across similar countries. Notably, however, UK projects tend to come in at higher unit costs compared to European peers, but below the US and Australia.

Digging deeper into specific types of infrastructure shows that when it comes to social infrastructure the UK performs better, coming in above France and the European average, but below US, Australia and Germany (Exhibit 3). However, the UK performs poorly in terms of unit costs when it comes to rail and road: the UK’s absolute unit costs are higher than all other peer countries in our dataset.

The data can also tell us something about the drivers of these higher unit costs, though there are plenty of areas for further exploration given our data focuses primarily on time and cost. Building rail tunnels is significantly more costly than at-grade or bridge construction – highlighting the fact that choosing tunnels to placate public concerns over changing the look of the countryside, or similar reasons, does incur very real costs. But even at-grade rail construction in the UK is costly – in fact it is twice as high as the global average in our dataset. This suggests that even the most basic forms of construction are costly in the UK. We need to do the basics much better. 

It is worth noting here that two very large and complex urban rail projects for the UK, Crossrail and the Northern Line extension, mean that the performance for high-cost rail projects is significantly worse than every other country. If these are removed, the UK is in line with peers. Both these projects delivered significant net benefits, so it is important to remember the context. But it does highlight that choosing complex, underground, heavy rail projects involves significantly more cost than light rail or tram projects, for example.

The story for road projects is similar. UK at-grade road projects came in at the second highest amongst peer countries, below only Australia. Germany, the top performer, delivered all their at-grade road projects on time while the UK delivered 64% late. UK projects were on average twice as expensive than Germany’s. Furthermore, smaller road projects in the UK are significantly more costly than peer countries. Once again, this reinforces the need to do the basics better. There are, of course, other issues which our data doesn’t cover in depth which could explain some of the higher unit cost for roads. For example, the number of turns and curves in a road will have an impact on its cost. 

Copy Shareable Link

Unlike all other peer group countries, the UK also sees relative unit costs increase for rural projects compared to urban ones. UK rural projects tend to be more costly compared to similar projects in other countries (Exhibit 5). This surprising result is driven partly by the UK performing relatively well on urban projects but also by poor performance on rural road projects, combined with the fact that the UK delivers very few non-road rural projects. As we can see, there is already an emerging trend whereby the UK performs poorly at projects where actual construction costs and complexity are expected to be relatively low.

For infrastructure projects, time is just as important as money – probably more so. Exhibit 6 shows the median UK project lies at the 65th percentile, meaning it takes longer than 65% of similar projects. This is broadly in line with the rest of Europe where projects are consistently delivered more slowly. By contrast, the US and Australia complete their projects relatively much more quickly. Taken alone, this isn’t concerning; but when we link it to our cost data above it paints a worrying picture for the UK. Generally, European countries deliver at lower cost but over longer timelines, whereas the US and Australia have higher unit costs but shorter delivery timelines. The UK has the worst of both worlds: US and Australian levels of unit costs, with European timelines for delivery.

This begs the question as to whether the UK’s high unit costs and long timelines are the result of consistent time and cost overruns for projects.

Looking at cost overruns, there is a surprising amount of consistency across our country group (Exhibit 7). Essentially, apart from the US, no other country does particularly well. Cost overruns are incredibly common – in fact they are by far the norm for the UK, Germany, France and Australia. Furthermore, when costs do overrun, they are consistently large. France performs best with an average cost overrun of 47% (for projects that go over budget), an astonishingly high level for the best performer.

There is an important caveat here, however. Typically, for large-scale infrastructure projects, they will use a ‘P50 schedule’ when it comes to cost estimates: this means it has a 50% probability of being exceeded. As such, we would expect around 50% of projects to run over budget. It also means that if, as in the case of the US, the number of projects coming in above budget is significantly below this, it may suggest that infrastructure budgets are overinflated and capital is being deployed inefficiently. While cost overruns are very common and very large when they do occur in the UK, the UK is not an outlier here.

There is more nuance to the picture when looking at different types of infrastructure. For rail projects the US is again an outlier in terms of reducing how often costs overrun; however, when they do overrun, they overrun significantly. For rail projects the UK is middle of the pack in terms of how often costs overrun, but comes in second (just behind France) for the size of the overruns.

When it comes to road projects, the UK sees the highest regularity of overruns along with Australia, although Germany is close behind. But here the average size of overrun is largest for the UK at 66% of original budget. Clearly, the combination of 69% of road projects overrunning and the average overrun being 66% of the original budget is a major problem for the UK. This also probably goes some way to explaining the UK’s high unit cost for road projects.

For social infrastructure, the UK is approximately average for the proportion of projects over budget (61% vs 57%). But as with road, the UK is poor at mitigating the extent of overruns (56% vs 46% average, 32% for Germany).

When it comes to time overruns, the story is again one of a fairly consistent problem across all countries – albeit to a lesser extent than cost overruns (Exhibit 8). 

Although the UK’s performance isn’t out of line with expectations, given the approach to scheduling, it is still comparatively worse than peers regarding time overruns. The US and Australia are best at preventing overruns, but worst when they do occur. Just as with cost, France performs best at limiting the size of overruns. 

The UK has the second lowest length of time overruns for rail projects when they occur (after France) and is in the middle of the pack for how often rail projects are delayed. It is interesting that the UK does not perform poorly on time or cost overruns for rail projects, yet has the highest unit cost of our country group. This suggests that some project fundamentals are causing higher costs rather than delays or running over budget.

The story for UK road projects in terms of delays is similar to that for cost overruns. Delays in the UK are more common than elsewhere, with 58% of projects finishing late. However, they are on average 29% later than estimated, in line with the overall average in our dataset.

Finally, on social projects the UK ranks third in terms of how often delays arise – but when there are delays, they are on average the longest. When social infrastructure projects in the UK are delayed it is on average by 48% of original time estimated to completion, ten percent above the next highest, Australia. 

All this paints a concerning picture for the UK in which we struggle to do the basics – such as delivering at-grade road projects at a competitive cost – and struggle to deliver large complex projects such as urban heavy rail. While we are not the worst on either time or cost, when the two are combined, we perform uniquely poorly on both.

Section 2: Why Does UK Infrastructure Face High Unit Costs and Long Delivery Times?

This benchmarking can only take us so far. We still need a more granular understanding of why the UK incurs higher unit costs than European peers, yet still delivers on similar timelines.

This is often put down to fundamental economic differences such as labour cost, labour productivity, land cost and population density. It’s true that these can play a role but, as Exhibit 9 shows, the UK is not subject to substantially higher construction labour costs than European peers – it is in the middle of the pack and actually below France and Germany. While all countries have seen construction productivity struggle over the past two decades, the UK actually does reasonably well when looking at the post-financial crisis trend. Our dataset highlights the fact that more infrastructure projects in the UK end up being classified as urban or suburban due to the regularity with which they come into contact with denser populations. But as we noted above in Exhibit 5, the UK actually does quite well on its relative unit costs for urban projects, while France has significantly lower unit costs across infrastructure in all locations. Both suggest that the performance gap isn’t down to density. This also suggests that land prices are not a fundamental driver, given that urban land in the UK is likely to be the most expensive.

The UK’s slow and costly planning system is well documented and is rightly identified as part of the problem. But the UK is also not alone in facing this challenge. Exhibit 10 shows the amount of time spent on pre-construction (of which planning is a major part) and construction phases for infrastructure projects. It highlights the fact that across all project types the UK is the slowest at pre-construction. For rail projects it takes 50% more time than the average, for road and social 25% more. 

While lengthy timelines can be an indicator of delays and inefficient planning processes, it is not as simple as just shortening the time taken; rather it is a matter of how effectively the time is used. French roads are a good example of a longer but more effective use of time. Their pre-construction phase is 40% longer than average but their unit costs are the lowest across all peer groups and nearly half that of the UK (£4.24 million per lane/km compared to £7.77 million per lane/km). France focuses on early feasibility stages for major infrastructure projects prior to any formal consenting process. This involves an extensive consultation on the fundamental objectives of the project rather than purely specific designs.

While economic fundamentals are part of the problem, these alone cannot fully explain why we see a combination of high unit costs and slow delivery times in the UK compared to peers. There are a wider range of issues in project delivery that drive up unit costs and cause time and cost overruns. 

To fully understand these, we analysed four case studies across four types of infrastructure (road, rail, nuclear and social), using a common project lifecycle framework. The framework highlights each key stage of the process from the inception of a project to its operation. We then identified a series of common issues at each stage of the project lifecycle which increase cost and delay delivery, as well as introducing uncertainty more broadly. To develop the case studies, we interviewed experts and conducted desktop research using publicly available sources. All information used is in the public domain.

Standardised framework for comparing case studies

As highlighted by the fact that more time is often spent on pre-construction phases than construction itself, the importance of the four phases before construction and delivery are commonly underestimated. The approach taken in these phases is equally important, if not more so, than the delivery and construction phase. By the time the construction phase is reached, a large portion of the cost of the project is usually already fixed – so any changes after this point therefore become incredibly costly and time consuming. 

Exhibits 11.1-11.4 below show our four case studies: Crossrail, the A27 bypass at Arundel, Hinkley Point C and the Royal Liverpool Hospital. All of these are important and worthwhile projects. We have chosen them precisely because they are projects which, in our view, were important to pursue and which deliver net positive impacts. However, all displayed well-documented challenges and issues, as well as many positives. The case studies are designed to draw out key learnings and lessons from different stages of these projects.

There are several common themes that begin to emerge across these case studies. Combined with our learnings from the benchmarking above, Exhibit 12 brings these together to give a summary of why we believe UK infrastructure projects see higher unit costs and long delivery timelines. These are common across most, if not all, types of infrastructure.

Section 3: Learning From Best Practice Globally

Having identified some of the common causes of high unit costs, long delivery timelines and projects coming in late and/or over budget, we have brought together a series of best practices in the UK and globally to examine how these challenges can be overcome or avoided altogether.

3.1 Need and outcomes

Poorly defined outcome/objectives: Too often there is a failure to work out exactly what the objective is before starting the design process. Frequently, large projects are burdened by so many conflicting aims that they are pre-destined to fail on some of them. This can have significant knock-on effects.

• First, it means the focus is often on the wrong aspects or priorities. A good example of this is High Speed 2 (HS2). The original HS2 Ltd held the following key objectives: improve transport capacity, create the highest ever high-speed rail specification (capable of 400kph), drive regional regeneration, stick to a tightly constrained budget, grow the UK’s construction sector and increase employment. 11 11 HS2, HS2 Corporate Plan 2021-24 Notes: 11 HS2, HS2 Corporate Plan 2021-24 While these are relatively clear objectives, there were too many of them and they were often conflicting. In the end, too great a focus was placed on pure speed, above building capacity along a key transport artery for the UK and improving connectivity between different parts of the UK economy. This created knock-on effects for the design and specification process, with more costly decisions being made in the pursuit of higher speeds. As the National Audit Office noted, “the relationship between savings (with the Department for Transport putting a high emphasis on journey time savings) and the strategic reasons for doing the programme, such as rebalancing regional economies, was unclear”. 12 12 National Audit Office, Let’s get down to business Notes: 12 National Audit Office, Let’s get down to business
• Second, if the objective is not clear from the outset, it can often change during the process. For example, an unclear objective means it is easier to make concessions and change the scope in response to stakeholder feedback, even if there are conflicts. This means parts of the project lifecycle need to be repeated multiple times, significantly increasing costs and time spent.
• Third, the lack of a clear objective also makes it more difficult to build democratic support. People, rightly, want to understand why they may be facing disruption in their local area for a large infrastructure project (as well as understanding the significant time and cost invested by taxpayer-funded entities). Flip-flopping on objectives only serves to confuse and undermine public support, as does being unrealistic about the costs, benefits and time involved.

Best practice example – CityRingen, Copenhagen

Copenhagen’s new metro, CityRingen, is a key part of the city’s plan to be the first carbon-neutral capital by 2025. 13 The objective was clear: increase capacity on the metro and reduce the city’s use of high-emission transport modes such as cars – all with a view to cutting long-term energy use. With a capacity of 72 million extra passengers a year and just 90 seconds between trains, CityRingen means three-quarters of all journeys in Copenhagen will be taken by foot, cycle, or public transport by 2025. 14 Nearly 90% of Copenhagen’s residents are now within 600 metres of a train or metro station. 15 The project’s well-defined environmental objectives drove choices throughout the process. For example, before and after every station there are strategic inclines and declines in the track to produce natural acceleration or deceleration and lower each train’s energy consumption. Whilst this was slightly more expensive to construct, it has reduced operational expenditure and energy use in the long term. The network also integrated bicycle and public transport more closely to allow seamless low-carbon transport before and after journeys, while large ground-level skylights flood each metro station with light, reducing the need for artificial lighting. There is no mechanical ventilation in the stations, which significantly reduced the additional equipment needed and associated costs and allowed engineers to keep stations more compact.  CityRingen was completed in eight years, opening just under a year late and €370 million over budget. In total it cost €3.3 billion for 17 new stations and 1.5km of track. 16 With a unit cost of £82 million per track km, this puts CityRingen in the 73rd percentile of rail projects. Given the number of stations (which tend to add substantial cost to a project) and its core sustainability aims, the fact that it did not come at the very top of the unit cost bracket for similar projects is impressive. 13. Urban Development, The CPH 2025 Climate Plan 14. We Build Group, Copenhagen: The queen of Denmark inaugurates metro line built by Salini Impregilo 15. LSE Cities, Copenhagen: Green Economy Leader Report 16. Eno Centre for Transportation, Eno Selects Final Case Studies for Ongoing Research into Transit Cost Delivery

Incorrect valuation approach: Too often the valuation approach taken focuses on the benefits which are easiest to estimate, even when they may not actually be the primary objectives. This has three impacts which can drive up time and costs:

• First, it can lead to poorly targeted design and specification choices later in the project lifecycle, which reinforce the easy-to-estimate benefits but may not be the actual core strategic objectives. Focusing on speed over connectivity is a common one for rail projects, since valuations can easily estimate time saved but struggle to capture the economic agglomeration impacts of connectivity.
• Second, focusing on the benefits which are easy to value can often lead to a very small or narrow benefit-cost ratio. While the wide strategic case may be convincing, a narrow benefit-cost ratio can often cause political uncertainty over whether a project will progress or not. Hinkley Point C is a good example here. The 2017 value for money assessment (the tests for which were agreed in 2011) did not properly consider scenarios in which fossil fuel prices might rise significantly; nor did it pay sufficient attention to strategic issues such as the UK’s energy security. 17 17 Gov.UK, Hinkley Point C: Value for Money Assessment Notes: 17 Gov.UK, Hinkley Point C: Value for Money Assessment The result was significant uncertainty over the business case, both at the time and in subsequent years. However, recent developments have only served to make the economic case stronger.
• Third, the lack of a clear cost and benefit constraint can bleed through to poorly defined budgets, which often causes confusion and reduces incentives to keep costs down.

Best practice example – A14 Cambridge to Huntingdon

The A14 between Cambridge and Huntingdon carries 85,000 vehicles a day, of which over a quarter are HGVs. 18 It would be easy to value improvements to this road system based solely on increased capacity or time saved. Instead, Highways England understood that work on this strategic link would bring broader benefits if they were incorporated into their plans. This wider perspective on benefits fed through to design choices in a positive way and has helped improve the surrounding area as well as provide a solid platform for long-term support. For example, the project employed over 14,000 people for 14 million construction hours, providing a significant boost to the regional economy. 19 The project prioritised local sourcing, spending £120 million on local goods and services from 50 businesses. 20 Aggregate Industries invested £3.5 million in an asphalt plant exclusively to supply the project. 21 As part of the valuation approach, the team also assessed potential future population shifts. The road upgrade is forecast to support a 26% increase in traffic growth by 2026 and employment growth of 16% across Cambridgeshire by 2031. 22 This was all in addition to cutting peak journey times by 20 minutes, reducing traffic incidents by 3,000 over the next 60 years and saving £70 million per year by transporting goods more efficiently across the country. 23 The project is expected to create £2.5 billion of wider benefits to the UK economy – demonstrating the success of a broad approach to valuing the wider impact of the project. 24 18. Highways Agency, Cambridge to Huntingdon A14 Improvement Scheme: Technical Review of Options 19. Highways England, Delivering the benefits: A14 Cambridge to Huntingdon improvement scheme 20. Highways England, Delivering the benefits: A14 Cambridge to Huntingdon improvement scheme 21. Cambridge Network, Aggregate industries invests £3.5m in new asphalt plant for A14 road improvement project 22. Highways England, Delivering the benefits: A14 Cambridge to Huntingdon improvement scheme 23. Highways England, Delivering the benefits: A14 Cambridge to Huntingdon improvement scheme 24. Highways England, Delivering the benefits: A14 Cambridge to Huntingdon improvement scheme

3.2 Options and spec

Lack of alignment of specifications with objectives: Poorly defined needs and outcomes often lead to a lack of alignment between the specifications used and the project objectives. The minimum viable product is often not set out clearly. This means decisions around specifications don’t centre around what is actually needed (as opposed to ‘nice to haves’), leading to misaligned and often unnecessary additions. The decision to design large bespoke stations for Crossrail is an example. These large and, at times, elaborate designs were costly compared to the Docklands Light Rail (DLR) stations, which are far more functional. The bespoke nature also significantly reduced repeatability and scaling. Some stations established large-scale offsite construction of platforms to avoid disruption on site, but this was not joined up across the piece, meaning each station approached this type of construction individually.

Best practice example – Sydney Metro

Sydney’s Metro is the largest public transport project in Australia and the first fully-automated driverless metro in the country. The Australian government’s original design was for eight-car trains at five-minute intervals. However, the consortium that won the contract proposed six-car trains at four-minute intervals instead and included future-proofing for eight-car trains, should they be needed. 25 Ahead of construction, the decision was made to change from crawler cranes – the traditional approach – to tower cranes to build the stations. Crawler cranes would have required station walls to be thicker, reducing available station size and increasing costs. Instead, tower cranes meant 80% of the main structural elements could be prefabricated, resulting in a 40% reduction in steel weight used. 26 By assessing what was really needed from the stations, planners could adapt construction approaches to optimise designs – rather than allowing construction practices to dictate a suboptimal asset design. This approach allowed the stations to be built more quickly, safely and cheaply. Alignment of specifications and design choices with overall objectives meant that a better service was delivered for a lower upfront cost. 25. Sydney Metro, Final business case summary 26. Engineering News-Record, Best Project, Rail: Sydney Metro Northwest

Over-speccing and gold plating: A common theme across UK infrastructure is that specifications and standards go beyond what is necessary. This again largely comes back to risk aversion. It can be due to an abundance of caution, often linked to the fragility of public support and the planning approvals process. While it is also usually easier to design assets to go ‘above and beyond’ to pre-empt or respond to planning concerns than to set out a more economical design and defend it. Any risk is seen as something to be eliminated to avoid any potential blowback. Of course, risk is unlikely to ever be fully eliminated and this approach can add significant time and cost delays. Comparing HS1 and HS2 is useful here: given the link to the Channel Tunnel, HS1 adopted the existing French specifications and standards when it came to high-speed rail. This off-the-shelf approach was tried and tested, with materials and construction methods fully understood, as well as plenty of suppliers already in place. Contrasting with this is HS2, which sought to design its own specifications and standards. PWC’s 2016 review of HS2 against international benchmarks found that design standards and specifications could be reduced to be less severe without major risk. 27 27 PWC, High speed rail international benchmarking study Notes: 27 PWC, High speed rail international benchmarking study For example, the slopes of embankments and the need for extensive piling, as well as the width of tunnels, could be reconsidered to provide lower costs and more efficient construction.

Best practice example – France TGV programme

As our benchmarking showed, France has by far the lowest unit cost for all types of rail infrastructure. In 1992, the French government approved a strategic high-speed rail plan, setting out the country’s vision for expanding its network. This long-term outlook has meant organisations across the value chain, from the French government to train operators, have collaborated to develop long-term capabilities. Supply chains have felt comfortable investing, in the knowledge that there will be long-term demand. Using established specifications and technical standards means there is limited scope for non-standardised changes in the design of French high-speed rail projects.  The continued use of existing standards in France has also facilitated greater integration between new and old train networks and allowed the network to be built in successive phases using existing tracks in many places. For example, when Tours to Bordeaux TGV (a 302km high-speed rail project) opened in 2017, the French rail sector could rely on more than 20 years of experience building high-speed networks. Instead of having to develop brand new standards like HS2 did, French contractors could ‘copy and paste’ the country’s well-established high-speed rail specifications. The result was that the Tours to Bordeaux line was completed in just five years with a unit cost of £15.6 million per track kilometre, making it cheaper than 60% of projects in the same reference class.

3.3 Planning and sourcing

Planning/consultation: While hugely important in terms of assessing a project’s impact as well as gathering stakeholder viewpoints, the planning and consultation process is often cumbersome. Required feasibility assessments are arduous and unnecessarily complicated and consultations provide multiple opportunities to object, delay and force changes (even late in the process). This means project scopes are expanded in an effort to reduce resistance and risk, resulting in unwieldy designs. This is well documented in the UK: for example, see the Lower Thames Crossing, where costs have already reached £800 million but construction is yet to begin. 28 28 The Times, £800m spent on Lower Thames Crossing before work even starts Notes: 28 The Times, £800m spent on Lower Thames Crossing before work even starts To put this in context, the planning application alone has cost twice as much as building the world's longest road tunnel in Norway. 29 29 New Civil Engineer, Lower Thames Crossing application’s £267M cost highlights complexity of planning system Notes: 29 New Civil Engineer, Lower Thames Crossing application’s £267M cost highlights complexity of planning system

Best practice example – Dutch planning reform

Facing increasing time and cost overruns for infrastructure projects, the Dutch government decided to review planning and permitting processes in the early 2000s. A 2008 spatial planning act devolved responsibilities across all three layers of government, giving provincial and municipal governments greater powers outside of 13 priorities set at a national level. 30 The central government retained the ability to assume responsibility when issues transcend provincial or national boundaries (for example on key road, rail or water networks).  Today, reduced layers of bureaucracy in individual planning decisions have facilitated greater innovation in development projects, as in the case of Buiksloterham in Amsterdam. Formerly a decaying industrial site home to an oil laboratory and an aeroplane factory, the municipal government sparked its rejuvenation by changing the area’s zoning to allow for a mix of uses, granting permits to developers to fill the space with residences and offices in a bottom-up manner. 31 Municipal control over this area facilitated a more experimental approach, rather than the safer option of turning the land over to a large developer. Now not only is Buiksloterham thriving in terms of construction and activity, but it has also become the centre of a ‘living lab’ circular economy, filled with sustainable offices, cafes and workspaces. 32 The Dutch approach struck a balance between national priorities and local consent plus needs. At the local level there is more responsiveness and agility to innovate when needed. This takes place within a clear set of national priorities and the central government retains the ability to direct in the national interest where needed. 30. Dutch Government, Spatial planning in the Netherlands 31. Metropolis, This Tiny Amsterdam Neighborhood Is a Prototype for Grassroots Urban Planning 32. Metabolic, Circular Buiksloterham

Contracts include the wrong incentives: Contracts in UK infrastructure projects often include the wrong approach to risk management and delivery incentives. There is too much emphasis on using contracts to pass risks along the supply chain, instead of taking shared ownership across the whole ecosystem. Given that contracts can never fully account for all risks and the fact that the ultimate client (usually the government) will always retain a share of the risk, these attempts to pass it on often fail. The Royal Liverpool Hospital is a good example: while contracts attempted to pass on every risk that could be imagined, there was no plan for the collapse of Carillion, the key contractor. The cost and risk then rebounded on the government. Furthermore, when designing and implementing contracts the assumption is that projects will fail. This has resulted in an obsession with anticipating and shifting blame before activities have even begun. Instead, the client and contractors should work together to deliver against a clearly defined outcome, sharing the risks along the way.

Best practice example – Grange University Hospital

There are examples of the UK doing this right. Grange University Hospital, Wales’ biggest health infrastructure project, was less than a third complete when the Covid pandemic hit. With concerns around hospital capacity growing, the project team were asked if they could accelerate delivery of the facility. Using a contract alliance, the team rapidly reprioritised site activities and designed a new commissioning strategy that zoned areas and reallocated resources rapidly. Within four weeks they opened half of the floor area and 75% of the bed capacity, with some areas of the hospital opening a year earlier than planned. 33 Not only did the entire hospital open early but it also came in under budget – a first for a project of its scale in the UK. The use of New Engineering Contracts (NEC), whereby the client and contractor share the benefits of delivering ahead of schedule/cost, was at least partly behind this success. Under the NEC, a Project Execution Plan (PEP) was developed by key stakeholders at the start of the project which outlined delivery structures and roles/responsibilities across the entire project lifecycle. The contracting rules stated the PEP was to be reviewed and updated monthly with the activity schedule adjusted to suit. This meant decision-making could be fast-tracked and supply chains were adapted in response to the accelerated delivery plans. As the project and health board team worked together on site, they were able to condense commissioning periods from 12 to four weeks. The NEC contract used for Grange Hospital included mechanisms for sharing risk and rewards, often referred to as ‘pain/gain’ clauses. There was a focus on making the project succeed, rather than on sharing out risks and accountability on paper, and by doing so, innovation was heavily promoted. Nearly three-quarters of the site was constructed offsite, resulting in a 60% improvement in productivity and a reduction in time by nearly a third. 34 33. Wales Online, Wales' new £360m Grange University Hospital to open four months ahead of schedule in November 34. Building, How the Grange University Hospital opened four months early; Construction News, Lang O’Rourke delivers factory-made hospital in Wales

3.4 Design and engineering

Regular redesign: Continual rescoping and redesign of projects, sometimes after construction has begun, leads to cost increases and delays. This is exacerbated by frequent amendments following consultations and initial designs created with incomplete information and thus lacking detail. All this is largely driven by risk aversion, once again.

Best practice example – Queensferry Crossing, Scotland

The Queensferry Crossing in Scotland is the longest three-tower cable-stayed bridge in the world. The bridge’s complex and record-breaking design was only possible through investment in the up-front design process: advanced computer models and additional 3D models were created to analyse its overall design. 35 Traffic loads, weight changes and all manner of weather scenarios were simulated to understand the impact. Having surveyed the estuary floor, engineers identified a rock formation that stuck out from the waterline to use as the foundation for the bridge’s centre tower; identifying this early meant a more efficient, slender and cheaper design could be used. Further simulations allowed engineers to design weather breaks across the bridge and these mean that unlike other crossings Queensferry doesn’t need to close in high winds. Through such detailed processes, designers realised that with minor changes to the original designs, the ferry toll viaduct on the crossing’s northern approach could be re-engineered to create significant cost and resource benefits. These early changes significantly simplified construction, reduced traffic disruption and saved 7,000 tonnes of embodied carbon. 36 Although the project concluded nine months behind schedule due to high winds, it was delivered 25% under budget. 37 35. Ramboll, Queensferry Crossing: huge carbon saving 36. CECR, The Queensferry Crossing 37. CECR, The Queensferry Crossing

Lack of understanding of engineering risks: Often a desire to begin procurement or construction as quickly as possible means there is a lack of upfront investment to scope out engineering factors. Risks are not properly understood as part of the design package, resulting in exposure to tail-end hazards. Taking the time to properly understand and integrate engineering risks into the design pays dividends later on.

Best practice example – Waterview Connection, New Zealand

The Waterview Connection is New Zealand’s longest road tunnel and is considered the country’s most challenging infrastructure project due to significant geotechnical constraints. To deliver this project, a joint venture that integrated specialist tunnelling skills with technical experience and local knowledge was established. Half of the road would be 45 metres underground and required drilling through a 15 metre-thick shelf of rock-hard basalt. The joint venture conducted detailed geological investigations to understand engineering risks, mapping out the layers of rock and basal lava flow to ensure the exact depth and positioning of the road avoided weaker layers. Using 3D models significantly de-risked the construction phase and ensured the project was designed appropriately from the outset. As a result of data points gathered, planners could choose the best tunnel boring machine for the challenging seismic conditions, further managing project risks and reducing overall costs. It was completed on time and within budget despite the complexity of the project.

3.5 Delivery and construction

Lack of large construction firms and disjointed supply chains: The fragmented nature of the UK construction sector often means multiple small construction firms are required. This not only increases costs and complexity on individual projects, but also means none of the firms have the incentive or even ability to invest in capital/technology improvements that would benefit the industry at large. For example, the construction of Hinkley Point C involves 3,500 British firms alone – managing such a complex supply chain requires significant time and investment. 38 38 Independent, Hinkley Point C nuclear plant ‘could cost up to £35 billion’ Notes: 38 Independent, Hinkley Point C nuclear plant ‘could cost up to £35 billion’ The Infrastructure and Projects Authority (IPA) does try to provide some guidance on projects coming down the line in the UK, however, it often lacks sufficient information. While a list of projects is published, the exact size and timing of projects is not set out and the list is not updated often (as of publishing it had just been updated, two and a half years after the previous update).

Best practice example – South Korea nuclear programme

South Korea’s approach to building nuclear is a great example of how to develop cohesive supply chains. South Korea has the lowest average construction cost for nuclear plants globally, whilst the UK is nearly four times as expensive with the second highest unit costs. 39 The biggest differentiator between both approaches is not material or labour costs, but rather South Korea’s utilisation of economies of scale. South Korea builds ‘fleets’ of reactors rather than individual ones as in the UK, working on between eight and 12 reactors in a row. 40 This enables a solid supply chain and invaluable skills and expertise to be developed. Private construction firms are able to invest in capital and skills, knowing there will be long-term work available. It also allows firms to spread the cost of investments and incentivises contractors to train specialists instead of importing knowledge. The result is that construction is cheaper and more efficient, while South Korea nurtures domestic knowledge and capability at scale. 39. Notes on Growth, Infrastructure Costs: Nuclear Edition 40. Notes on Growth, Infrastructure Costs: Nuclear Edition

Low tech on sites: Relative to peer countries (e.g. France), the UK can sometimes use inferior processes for on-site work such as scheduling, multi-function teams, sequencing work and capital deployment. Specifically, there is a long tail of less productive firms in the UK. This is out of line with the strength of digital capabilities the UK can offer and leads to missed opportunities to improve innovation and productivity through technology investment and capitalising on economies of scale. Due to sub-optimal contracting and fragmented supply chains, delivery partners are not incentivised to invest in new practices or technologies, as they will bear the burden of increased capital expenditure with little or no returns for improving productivity or delivery across the project. Although there are examples of world-class approaches in the UK, these are not wholly consistent across the sector. Part of the problem is that where there are improvements or innovations in individual firms or on specific sites, there is unfortunately limited sharing of this across the supply chain/industry.

Best practice example – Pacific Highway upgrade, Australia

The Pacific highway upgrade from Woolgoolga to Ballina in Australia was delivered using a digitised construction management approach. This allowed risks to be identified and work schedules to be adapted in real-time. A digitised approach was used to automate previously repetitive low-value tasks, freeing up firms’ resources that could be dedicated to construction activities. Drones were used to improve update imaging for Geographic Information Systems (GIS) mapping. 41 An all-encompassing digital portal was created that held data points across the project lifecycle and gave everyone instant access to the latest information on design and construction, plus environmental and community site issues. 42 This high-tech data driven approach proved significantly more efficient and cheaper than typical manual processes and ultimately meant Australia’s largest concrete infrastructure project could be delivered on time. A significant portion of the road was built on soft ground, while more than 1,500 instruments were installed to record 10 million measurements relating to slope stability and settlement. 43 Data was fed into the real-time data platform, which also incorporated a trigger-level response process alerting key personnel in the event of an unexpected instrument reading. As a result, zero geotechnical failures were registered. 44 A mobile app was also deployed to track and record sightings of threatened species along the Pacific Highway. 45 The project was delivered at a unit cost of £3.6 million/km – well below the Australian average for at-grade roads of £13.13 million/km. 41. NSW Government, Woolgoolga to Ballina Pacific Highway upgrade: technical paper 42. NSW Government, Woolgoolga to Ballina Pacific Highway upgrade: technical paper 43. Australian Geomechanics Society, An innovative geotechnical monitoring system for soft ground treatment on the W2B Pacific Highway upgrade project 44. Australian Geomechanics Society, An innovative geotechnical monitoring system for soft ground treatment on the W2B Pacific Highway upgrade project 45. Pacific Highway Upgrade, Threatened species

3.6 Operation and maintenance

Lack of alignment/connection between construction and operation: Many countries set up a project lifecycle such that the role for those involved in construction extends into operation. While not always necessary, the existence of at least some type of link bridging different phases can help ensure designs are correct, that there is a consistent understanding of what is needed going forward and also creates incentives to keep costs on budget and delivery on time. In the UK we often see a failure to define responsibilities regarding management of assets post-construction. This creates uncertainty towards the end of the project lifecycle and can remove some of the responsibilities of stakeholders in the pre-operation phases, once they know they won’t be involved with the running of the end product. The UK government has tried to address this with the creation of the ‘Soft Landings’ programme, but it is yet to fully translate into large infrastructure projects (though we are in relatively early days). 46 46 BSRIA, Government Soft Landings Notes: 46 BSRIA, Government Soft Landings Additionally there is often a trade-off or balance between the capital expenditure and operational expenditure of a project. This must be understood in order to make decisions on value across the asset’s entire lifecycle. When and where money is spent can make a real difference as to how much value is realised – and when (particularly in net present value terms).

Best practice example – Pennsylvania Rapid Bridge Replacement project

The Pennsylvania Rapid Bridge Replacement project was a first-of-its-kind multi-asset project in the US. The private-public project, commenced in May 2014, was delivered by a consortium using a design-build-finance-operate-maintain contract. Not only did the contract winner need to manage the financing, design and construction of all 558 bridges in the project, but it was also contracted to maintain each bridge for 25 years. 47 This included 50ft upstream and downstream of each bridge and annual cleaning. Each bridge is due to be inspected a year before the contracted maintenance phase ends and 98% of all bridges must meet the set condition standard and 100% of the superstructure standard. 48 The Pennsylvania Department of Transport estimated a project of this scale would normally take eight to twelve years to complete using traditional contracting approaches. This project was completed in just four years and will ensure adequate maintenance of all assets for over two decades. 49 47. U.S. Department of Transportation, Project Profile: Pennsylvania Rapid Bridge Replacement Project 48. Pennsylvania Department of Transportation, PennDOT P3 Rapid Bridge Replacement Project 49. Pennsylvania Department of Transport, Rapid Bridge Replacement Project Lessons Learned Report

3.7 Lack of portfolio view and strategic objectives

A cross-cutting issue which also often causes time and cost increases for UK projects is the lack of a considered approach and perspective across the portfolio of infrastructure projects. This contributes to a lack of information sharing across projects, preventing lessons learnt from being taken forward and improvements to cascade from one project to the next. Projects are approached in isolation leading to an inability to draw out and apply learnings and skills from one to the next. Often infrastructure projects will cut across each other without a clear understanding of what each project is doing or trying to achieve, or any picture of how they fit together into a broader whole. This can often cause delays and increase uncertainty and can also mean skills and resources are not deployed effectively across and between projects. A strategic view needs to identify objectives, avenues for delivery and opportunities for impact; and everyone needs to be clear on it.

There have been attempts to achieve this in the UK. For example, the National Infrastructure Plan of 2010 was well received. 50 50 Infrastructure UK, National Infrastructure Plan: October 2010 Notes: 50 Infrastructure UK, National Infrastructure Plan: October 2010 However, the approach quickly fell by the wayside – with no new fleet of nuclear power stations, a quick end to the home insulation and energy efficiency programmes and carbon capture and storage only recently starting to see serious investment.

Best practice example – Canadian infrastructure plan

In 2016, the Canadian government published their 12-year infrastructure plan ‘Investing in Canada’. 51 The plan identified five long-term infrastructure priorities and $187 billion in investments across these areas. 52 Integrated Bilateral Agreements (IBAs) between federal and provincial governments were established. These agreements between the two layers of government have been used to establish the terms and conditions of infrastructure funding, setting out clear expectations and rewards over the next 12 years. Under IBAs, provinces and localities have to submit portfolio-level multi-year plans and the projects are not designed and delivered in isolation, but rather considered in the wider context. Local areas have the opportunity to set out what their long-term priorities are and the national government can allocate funding based on need and impact. Provinces can structure their plans to unlock funding over phases, ensuring they have certainty in the long run. Infrastructure Canada – the country’s federal infrastructure department – is responsible for overseeing the plan and collecting data. 53 They coordinate across 20 other federal agencies and departments that are responsible for individual infrastructure programmes. By structuring this way, clear lines of accountability and a body who ultimately ensure that infrastructure investments reflect top priorities. Setting out a long-term plan that outlines overall economic, social and environmental priorities has provided security to projects that extend beyond Canada’s political cycles. In the first three years, nearly 50,000 infrastructure projects worth $43 billion were approved, providing 100,000 jobs a year and 100,000 additional public transit seat. 54 51. Government of Canada, Investing in Canada Plan - Building a Better Canada 52. Government of Canada, Investing in Canada Plan 53. Infrastructure Canada, Funding delivered under the Investing in Canada Plan 54. Infrastructure Canada, Building a better Canada: a progress report on the Investing in Canada plan 2016-19

Looking at the wider problem set, and examples of how these issues have been avoided elsewhere, highlights a common theme. The industry – across both public and private sector – has become dominated by risk aversion. Almost every actor, at every stage, focuses on perceived predictability over efficiency. This has failed to reduce risk but has driven up cost and delays. It has created perverse incentives since no one has the desire or ability to push down costs and time across the project delivery lifecycle. Taking longer and spending more may also, ironically, increase risk. Taken as a whole, these issues can be summarised around six cross-cutting issues: 

• Risk aversion means designs are frequently changed and are often over-elaborate, with too little attention paid to value or how the project will be built and operated – there is a failure to target the minimum viable product, instead focusing on a design that will avoid any objections. There is also little leveraging of what has worked well elsewhere in the UK or globally. Those responsible for operating and maintaining the asset are not involved in design or construction, resulting in multiple iterations before the asset comes into operation.
• The planning process is too long and complex, with multiple veto opportunities, adding process with little view on cost and time implications – permissions and approvals take far too long. Required feasibility assessments are over complicated. Consultations often take place multiple times with designs changing every time, partly as they seek to cover every stakeholder possible with no reference to which ones are more important. Early engagement can be beneficial, but mainly if it focuses on the ‘mission’ of the project and how it can unlock benefits for the public.
• The current sourcing and contracting approach creates the illusion of risk reduction, but actually often just shifts risk rather than effectively managing it, which creates perverse incentives – too much emphasis is placed on passing risks along the supply chain, masking the location of the risk instead of taking shared ownership of it across the whole ecosystem. Contracts can never fully account for risks. They often miss the actual source of the risk and ultimately the client (usually the government) will always retain a share of that risk – all meaning incentives to keep time and cost down are limited. The emphasis is on perceived predictability over efficiency.
• External pressure to move to construction despite repeated changes means designs are often immature and engineering risks not fully understood – repeated changes to designs (often from the consultation process) and lack of upfront investment in detailing designs, or exploring engineering risks, can drive up costs and cause delays as problems are found later in the process, with earlier stages then needing to be repeated.
• The UK construction industry is fragmented with little incentive or opportunity to invest in capital, skills or technology – many small firms are required to deliver projects; this increases costs and complexity on individual projects and means none of the firms have the incentive or ability to invest. There is no clear strategic objective across UK infrastructure and no real process to ensure lessons are learnt across the piece and that economies of scale are leveraged. This all results in wide variations in productivity across the sector.

Many of these issues occur at the pre-construction stages, setting up infrastructure projects for failure before the first hole has even been dug or stone has been laid.

Section 4: Steps to Improve UK Infrastructure Delivery

These problems are not insurmountable; there are plenty of examples in which the UK or other countries have overcome them. No single country manages to avoid them all, but learning from these experiences can allow us to determine a series of steps which will help improve things in the UK. 

No single actor will be able to fix the challenges we face. Given the scale of the issue, this must be a combined effort across the public and private sectors and across different forms of infrastructure. To that end, we have identified nine recommendations, split into three categories, which require urgent action. 

Many of these recommendations are interrelated and work together. No single recommendation alone would solve the challenges the UK faces in infrastructure delivery, but together we believe they could revolutionise our approach.

Take risk out of the system with a bold long-term agenda

Adopt a more strategic approach to infrastructure focused on economic needs. Strengthen government leadership to maintain a clearer project pipeline to de-risk industry investment and innovation, as well as allowing economies of scale to develop to bring down costs. 

1. Creating an empowered Centre of Infrastructure Excellence : Establish a centralised hub of expertise to ensure best practices, knowledge sharing and continuous innovation in infrastructure delivery. This central hub should focus on enabling government to be an effective client and provide an incentive for the supply chain to invest and innovate, partly by giving a clear strategic approach to the entire portfolio of UK infrastructure projects and defining a clear pipeline (set out in detail below). Within project delivery, this centre must use appropriate mechanisms to challenge project assumptions and decisions. It should use past sector learnings to inform decision-making for future projects. This new Centre should work across the supply chain to help drive down costs. It will require new capability, deep industry knowledge and much better collection and use of granular cost and productivity data. The Infrastructure Projects Authority (IPA), as well as others, are valiantly trying to play this role at present, but there is a growing sense that this hasn’t quite succeeded in cascading the necessary change or learnings across large infrastructure projects. This is partly down to the fact that, to date, no organisation has been fully empowered vis-à-vis government departments nor given the decisive remit to properly fulfil this role. The revamped 2021 IPA mandate was a good step forward but did not go far enough in our view. This central function must have some executive power to direct departmental decisions where relevant and to challenge assumptions. Ideally, it would report directly to the Prime Minister and avoid dual reporting lines. There should also be an evaluation of how spending reviews and the UK Green Book impact infrastructure decision-making. Fundamentally, decisions on whether to invest in infrastructure should be taken with a view to the multi-year economic and infrastructure strategy, not just narrow spending review choices or Green Book criteria. The strategy should override these constraints where necessary. 

2. Securing certainty in the supply chain: Create a multi-year infrastructure strategy. Set out clear infrastructure priorities and commit to them in the long run. This should go beyond a simple list of projects: ideally, a detailed pipeline which includes timings and spending over a prolonged period, updated regularly (at least once a year). A steady flow of projects in the pipeline will ensure predictability, increasing willingness to invest and drive cost and time savings. The value chain must be confident that priorities will survive beyond parliamentary cycles to ensure a return on investment. Supply chain liquidity should also be prioritised, or projects may collapse. Consideration must be given to how the pipeline of infrastructure projects will impact the supply chain and if any support is needed from the government. Many countries are adopting local content requirements, particularly for green infrastructure. Consideration should be given to this approach as a further incentive to help develop local supply chains. 

3. Taking a consistent portfolio-level approach to infrastructure : A clear, overarching portfolio view allows government to prioritise constrained resources optimally and bring together learnings from across infrastructure. The ability to draw on a wider knowledge and experience base will introduce new technologies and improve resource allocation. This portfolio view should be created and overseen by the new Centre for Infrastructure Excellence.

4. Reforming the planning process: There are significant changes needed here to reduce timelines and streamline processes. These should include:

• Setting mission-led strategies, allowing for public consultation. This will pre-empt issues that arise in individual project consultation processes and allow for re-use of learnings across project portfolios. A good example of this is Transport Infrastructure Ireland’s Roads 2040 strategy. 55 55 Transport Infrastructure Ireland, National Roads 2040 Notes: 55 Transport Infrastructure Ireland, National Roads 2040
• Within an individual project lifecycle, standardise and limit consultation and alteration to pre-delivery phases so designs can be finalised earlier in the delivery cycle.
• Participants should be encouraged to vote for the ‘least bad’ options rather than asked to choose ‘the best’ and conveners should be prepared with up-to-date information and data.
• First, residents who see the most disruption from nationally important projects should receive specific compensation to give them more of a stake in the benefits of the project.
• Second, where there is a need to purchase land or move people from their homes we should be willing to provide some bonus above market value to avoid delays. France often pays above market value but, as our benchmarking demonstrates, has much lower unit costs for both road and rail infrastructure than the UK.
• Sharing data that has been collected and used for a given circumstance for previous EIAs to establish a baseline and avoid reinventing the wheel every time.
• Sharing mitigations which have previously been used to address these same or similar issues in previous projects.

For example, between 2018 and 2021, five offshore wind farms were developing mitigations for similar environmental impacts. These were subject to cumulative delays of two and a half years. Duplicated effort and time delays could be avoided by data sharing and a platform with clear standards and data for developers, something which the NIC has also called for. 56 56 National Infrastructure Commission, Ensure better sharing of environmental data Notes: 56 National Infrastructure Commission, Ensure better sharing of environmental data Pushing through the government’s current plans to refocus EIAs on outcomes would also be a welcome improvement. 

Be a better client, don’t be a source of risk

The public sector must give clearer and more constrained direction to contractors. Provide greater clarity in the early stages of a project. Make choices early and stick to them to provide for smoother project delivery. Be disciplined and, where needed, be ruthless with enforcement. 

5. Setting clear objectives and ensuring they don’t conflict : Define explicit objectives at the project’s outset, ensuring clarity of purpose and direction for all stakeholders. Be clear about what a project is trying to achieve and ruthlessly assess whether specifications and designs unnecessarily exceed need. Keep objectives simple; make sure they do not conflict with one another. Find consensus on the objective early on and then deliver in a straight line, in one go. Before any project proceeds, check to make sure the above criteria are met. This limits the potential for the scope to creep and be stretched during the planning and design processes. 

6. Targeting the minimum viable product and reducing risk averse gold plating: Do not do more than necessary. Set standards and specifications which will ensure the minimum viable product is delivered. Standards should be designed to ensure product simplicity and should avoid over-speccing in pursuit of social, environmental or safety standards that exceed what is necessary. This means retaining a ruthless focus on achieving the core specified objectives in the most efficient way and resisting the oft-seen scope creep in multi-stakeholder megaprojects. Where specifications and approaches have been used effectively or have been given regulatory approval elsewhere, they should be eligible for fast-track or automatic approvals. Clear justification should be given when standards need to be updated or expanded in any way. Ideally, over time, we should develop standardised national approaches for key specifications for each form of infrastructure with a high bar to deviate from these.

7. Linking construction, delivery and operation so all responsible parties are joined up: Foster strong collaboration and integration between construction, delivery and operational phases to ensure seamless transitions and holistic project oversight. Consider greater use of operation concessions to help spread incentive (and return) over longer timelines. The way in which the new asset will be brought into service and operated over the long term must be established clearly at the start of the project. This should not change during the project delivery. Those that will operate and maintain the asset should be integrated with design and engineering choices. Where possible contracts should be structured to provide a long-term stake in the project to help improve short-term incentives on construction. Part of this also means accepting a whole life view for investment in the project, not cutting back cost in construction if it creates additional whole-life maintenance cost. 

Work together to improve risk management across the sector

Government and industry must contract in a way that more effectively shares risk across the entire project ecosystem rather than using a process which creates the illusion of risk reduction. Value efficiency over predictability. 

8. Rethinking risk management in a quantitative way to better address the larger tail risks and avoid spurious certainty: The current approach of trying to qualitatively assess the potential sources of risks has not worked. It tends to become too elaborate and often doesn’t receive the oversight it needs. Instead, a quantitative approach should be taken that allows risks to be more comprehensively managed and mitigated. It should also take proper account of the lower probability but huge impact of tail risks that can derail a project if not addressed. An acceptance that, while it might have greater unpredictability, it is preferable to consider a wide range of potential outcomes instead of more narrowly focused estimates which prove to be incorrect. This quantitative approach should also be included in the schedule, in the form of acknowledging variability and shifting a focus to workflow rather than simplistic point productivity for resource allocation. 

9. Standardising contracts with a focus on more effective management of risk across entire projects rather than just passing risks along supply chain: Contracts should not be obsessed with passing risk to various parties and then assuming it has all been taken care of. For projects with fat-tailed risk distributions, contractors are unable to fully price in risks and thus gamble that they can deliver at or near target. While allocation of risk to the contractor gives the illusion it has been managed, the tail end is in fact left exposed. If the project fails, the poor outcome falls at the feet of the client (usually the government). It is their responsibility to provide continuity of service to citizens even if the delivery partner is late or over budget and if a supplier fails they will be left to pick up the pieces. Current approaches like ‘Design and Build’ contracts provide a single point of responsibility and full risk allocation to the contractor as well as apparent cost certainty for the project owner. This approach prioritises predictability over effective risk management. We have seen good progress with UK standard contracts (e.g. NEC) and we should continue to minimise bespoke contracting to better clarify risk ownership and decrease procurement timelines. We can also proactively reduce risk and increase efficiencies early in the project lifecycle with standardised designs, ensuring teams know how to deliver. Where risk cannot be mitigated, the project owner should not try to create certainty artificially with rigid contracting, e.g. Public Private Partnership contracting. Instead, we should consider ownership models which account for project context and risk profile. While unit costs may be higher in the short term, this alliance approach will result in shorter timelines with fewer disputes, which can ultimately be very costly. Shifting to an enterprise model brings together all parties through more integrated and collaborative arrangements, underpinned by long-term incentives. It is also important to consider how the contracting approach fits with the delivery model. While we should reduce bespoke contracting, the framework should still allow for flexible delivery models depending on the context of the project. Greater active ownership can drive increased adherence to cost and time schedules due to greater ownership of risk and reward. This blended, holistic model creates a more flexible structure which enables a better response to risks and an agile, collaborative approach to deliver better outcomes. Finally, focus should shift to targeting the source of uncertainty rather than rigid adherence to process or box-ticking exercises. At each stage, the hurdle shouldn’t be completion of every piece of work, but instead, progress depends on whether there is a clear approach for the major deliverables and risks to be managed going forward.

This report would not have been possible without the contributions of the following BCG colleagues: Emily Arbuthnott, Luke Cavanaugh and Katie Rhodes. The authors would like to thank them for their support and are incredibly grateful for their invaluable work, particularly in analysing the data on which this report is centred.

BCG's Centre for Growth brings together ideas, people and action to drive the UK forward. We work with our global expert network to identify transformational opportunities, connect key decision-makers and build coalitions for change. We offer long term strategic insight, extensive cross-sector expertise, platforms for dialogue and bias to action.

Scope and methodology

• Rail projects – cost per track km : calculated by dividing final cost of delivery by the product of project length and average number of rail tracks  
• Road projects – cost per lane km : calculated by dividing final cost of delivery by product of project length and average number of lanes 
• Social projects (Hospitals, Prisons and Schools) – cost per square metre : calculated by dividing cost of delivery by product of project length and average usable square metre size
• Recognising project dates are often announced in broad terms and minor variations in completion date may not be widely regarded as an overrun, ‘late’ projects are defined as more than six months over the announced completion date and ‘early’ projects as more than six months earlier than the announced completion date.  
• Where a project had estimated completion in a particular year, for example 2020, we took projects delivered at any point in that year as ‘on time’.  
• Minor variations in project cost may not be widely regarded as overbudget or underbudget. We define overbudget as more than 5% above the estimated cost at the date of public commitment to delivering the project, and under budget as more than 5% below that same estimated cost.  
• Cost overruns were calculated based on the difference between final construction costs and estimated construction costs as at the time of announcement, divided by the estimated construction costs at time of announcement.  

Subscribe to our Public Sector E-Alert.

Director, Centre for Growth

Managing Director & Senior Partner, Global Leader, Infrastructure, Transport, and Cities in Public Sector

Managing Director & Partner

Partner and Director

Partner & Associate Director

Centre for Growth Lead Analyst

ABOUT BOSTON CONSULTING GROUP

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.

Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place.

© Boston Consulting Group 2024. All rights reserved.

For information or permission to reprint, please contact BCG at [email protected] . To find the latest BCG content and register to receive e-alerts on this topic or others, please visit bcg.com . Follow Boston Consulting Group on Facebook and X (formerly Twitter) .

What Is Next

Read more insights from BCG’s teams of experts.

Explore the dynamics of UK trade in our latest article. Gain insights and strategies for navigating the evolving global economic landscape. Click to learn more.

In a world of rapidly changing competition within the green economy, the UK can continue to attract businesses by implementing pro-innovation regulation. Here’s how.

Clean hydrogen could deliver significant economic, industrial and climate benefits for the UK. It must act now by leveraging its competitive advantages to capture these benefits and avoid falling behind competitors.

After a tumultuous few years, the UK economy now finds itself facing a challenging path ahead. BCG's Centre for Growth explores how the UK might rewrite this outlook to ensure sustainable and inclusive growth.

Understanding Infrastructure Disputes: Disputes and Case Studies

In the conclusion of the series on understanding infrastructure disputes , peter bird and calvin qiu give an overview of the factors leading to infrastructure disputes, how these disputes arise and how project finance can affect the dynamics of disputes. they provide three case studies to show how these factors play out in real-world contexts., infrastructure projects can be complex and involve multiple parties in multiyear contracts, which can give rise to disputes. .

In part three of our series, we give a brief overview of factors that are more likely to lead to disputes, common causes of disputes and how project finance can affect the dynamics of disputes. We conclude with three case studies.

Factors affecting prevalence of disputes

In general terms, projects with the following features are more likely to give rise to disputes: 

(i) Incomplete or unclear allocation of risks: infrastructure-related agreements typically contain terms specifying how risk is allocated between different parties. If risk allocation is poorly defined or incomplete, disputes can arise over the party that is responsible for taking on risks. 

(ii) Contract terms that are open to interpretation : contracts may contain poorly defined terms that are open to interpretation. Parties involved may have different expectations on their obligations and/or rights based on their interpretation, e.g. over the valuation method that should be used to determine the level of compensation. 

(iii) Projects with poor underlying economics can give rise to disputes. Where project companies find their involvement unsustainable, the project company may ask the host government to provide compensation or additional support or may engage in behaviour that adversely impacts operational quality. Equally, projects that are excessively burdensome on the offtaker may lead to disputes where the offtaker seeks to evade its obligations.

Causes of disputes

Global Infrastructure Hub, a nonprofit organisation created by the G20 to support infrastructure investment, conducted a study of 165 public–private partnership (PPP) projects where disputes arose. [1] For projects with identifiable causes, the study found that:

(i) Where the dispute notice was issued by the private entity, the most common reason was an increase in costs for which the private party was seeking compensation. The cost increases had a variety of reasons, such as unexpected ground conditions or changes in project scope.

(ii) Where the dispute notice was issued by the governmental entity, the most common reason was a private partner’s ongoing failure to meet certain operational requirements.

(iii) Disputes also were caused by the actions of a third party, e.g. decisions by an environmental regulator or ongoing protests by local populations.

Project finance and disputes

The use of project financing can affect the dynamics between the parties in a dispute. Two examples are discussed below: (i) emphasis on the maintenance of cash flows and (ii) dominance of lenders’ interests in disputes. 

Emphasis on maintaining regular cash flows 

The sponsors and lenders to a project-financed company are concerned about maintaining its regular payment schedule, the project could be at risk of default without a regular stream of cash flows. 

The project company’s conduct is heavily influenced by the above consideration. In a dispute, it may lead to greater emphasis on maintaining cash flow, at the possible expense of longer-term value considerations.

Interests of lenders in disputes

Project financing agreements customarily require sponsors and the project company to notify lenders about pending or actual disputes. The interests of the sponsors and lenders may be broadly aligned in the early stages of a dispute. However, if the dispute worsens and/or begins to impact covenants, the interests of lenders will become dominant over those of the sponsors. 

There also may be direct agreements between lenders and offtakers that contain step-in rights, which give lenders the ability to step in and take over the project. While lenders in practice are reluctant to do so (due to the liability associated with taking on a project), this places pressure on how offtakers react to disputes, and outcomes in a dispute tend to be geared more towards the lenders. 

Case studies

Each case study below illustrates different types of risks in infrastructure and how these can lead to disputes between project participants. [2]  

Case study 1: geopolitical dispute in relation to a power plant project 

The owner entered into a contract for a power project, but with the contract conditional on the owner’s ability to raise finance. The owner subsequently terminated the project, claiming its inability to raise finance.

The owner and contractor entered into a dispute. The owner maintained that the project could not be financed. The contractor claimed  that financing was available and sought damages for termination.

The experts involved had to testify whether financing was genuinely available. It was alleged that political factors had influenced the parties’ decisions.

This case study illustrates how important political considerations can be in infrastructure projects.

Case study 2: solar power tax credit dispute

A government allowed the owners of solar power systems to claim a percentage of the fair market value of the systems as investment tax credit. A large solar power system installer applied to receive a substantial investment tax credit, while the government estimated the tax credit to be significantly less. 

The parties differed in their assessment due to different valuation methods used. The government valued the project using a cost-based approach by estimating the cost of the system plus a small markup as profit margin to the installer. The installer used a discounted cash flow (DCF) approach, as it had an installation contract for the solar power system, under which it would receive predictable cash flows over a long period of time. The experts in this matter debated whether a cost- or DCF-based valuation approach was more appropriate. 

Subsidy regimes are common in infrastructure projects; however, these place pressure on treasuries, which want to find ways to minimise costs. Such regimes can lead to disputes, where governments would end up disputing the amounts of subsidies.

Case study 3: project termination payment dispute

An offtaker terminated a 25-year power purchase agreement (PPA) for a gas-fired power project after 16 years because the power was no longer economically competitive. Under the PPA, a termination payment was due based on the project’s expected future cash flow in present value terms. 

The PPA tariff incorporated a fixed element to cover capital costs and fixed operations and maintenance (O&M) costs. It also included a variable element to cover fuel costs and variable O&M costs, linked to indicators of fuel and labour costs. 

The project company put forward a claim for the termination payment, based on forecasts of labour cost indicators, exchange rates, fuel prices and despatch of the plant. The forecasts were derived from different sources. The offtakers disputed the calculations on the basis that the fuel price forecasts were inconsistent with the despatch assumptions. 

Projects may have to be terminated when they are no longer economically feasible. Disputes may arise between parties over how to allocate the costs/residual economic benefits of a project. When formulating scenarios based on inputs from different sources, it is important to ensure overall internal consistency. 

[1] Global Infrastructure Hub, Managing PPP Contracts After Financial Close (2018), pp. 109–110.

[2] The case studies are provided for illustrative purposes only.

In this series, Peter Bird and Calvin Qiu set out the elements of infrastructure projects which are key to understanding the disputes they frequently become involved in; and the context and insights which economists and forensic accountants will apply in their analysis and assessment of these cases. Read part one, “ Stakeholders ” and part two, “ Financing Strategies and Rate of Return .”

Infrastructure development in India: a systematic review

• Original Paper
• Published: 14 October 2023
• Volume 16 , article number  35 , ( 2023 )

Cite this article

• A. Indira   ORCID: orcid.org/0000-0003-1189-5922 1 &
• N. Chandrasekaran   ORCID: orcid.org/0000-0002-0076-2019 2  

323 Accesses

Explore all metrics

It is now well-accepted that infrastructure development is essential for the growth of any economy. Successive governments in India, both at the Union and State level have given a thrust towards increased budgetary spending on infrastructure to help economic growth. On the eve of the 75th year of independence, there is a reiteration for long-term initiatives, including focused programs for roads, railways, airports, waterways, mass transport, ports, and logistics to further boost infrastructure spending. Keeping this in mind, the authors sought to systematically review the literature on how infrastructure development has unfolded in India between the years 2000–2022. The study shows that with diverse economic growth in India, there is interest in infrastructure development aligned with public interests. Infrastructure development is contextual and location-specific. Access to infrastructure positively impacts social and economic outcomes. There is however growing concern for sustainable development with rapid urbanization.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA) Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Rent this article via DeepDyve

Institutional subscriptions

Source  Handbook of Statistics on Indian Economy, 2021–22, Table 93

Source Author

Similar content being viewed by others

Road Development Risks and Challenges in the Philippines

Influencing factors of urban innovation and development: a grounded theory analysis

Jing-Xiao Zhang, Jia-Wei Cheng, … Ge Wang

Gentrification, Neighborhood Change, and Population Health: a Systematic Review

Alina S. Schnake-Mahl, Jaquelyn L. Jahn, … Mariana Arcaya

Agarchand, N., Laishram, B.: Sustainable infrastructure development challenges through PPP procurement process: Indian perspective. Int. J. Manag. Proj. Bus. 10 (3), 642–662 (2017)

Google Scholar  

Aschauer, D.A.: Is public expenditure productive? J. Monet. Econ. 23 (2), 177–200 (1989)

Asher, S., Garg, T., Novosad, P.: The ecological impact of transportation infrastructure. Econ. J. 130 (629), 1173–1199 (2020)

Azam, M.: The role of migrant workers remittances in fostering economic growth: the four Asian developing countries’ experiences. Int. J. Soc. Econ. 42 (8), 690–775 (2015)

Barman, H., Nath, H.K.: What determines international tourist arrivals in India? Asia Pac. J. Tourism Res. 24 (2), 180–190 (2019)

Bhattacharyay, B.N., De, P.: Promotion of the trade and investment between people’s Republic of China and India: toward a regional perspective. Asian Dev. Rev. 22 (1), 45–70 (2005)

Chakravorty, U., Pelli, M., Ural Marchand, B.: Does the quality of electricity matter? Evidence from rural India. J. Econ. Behav. Organ. 107 , 228–247 (2014)

Chatterjee, E.: The politics of electricity reform: evidence from West Bengal, India. World Dev. 104 , 128–139 (2018)

Chaudhuri, S., Roy, M.: Rural-urban spatial inequality in water and sanitation facilities in India: a cross-sectional study from household to national level. Appl. Geogr. 85 , 27–38 (2017)

Dasha, R.K., Sahoo, P.: Economic growth in India: the role of physical and social infrastructure. J. Econ. Policy Reform 13 (4), 373–385 (2010)

Datta, S.: The impact of improved highways on indian firms. J. Dev. Econ. 99 (1), 46–57 (2012)

Deichmann, U., Lall, S.V., et al.: Industrial location in developing countries. World Bank. Res. Obs. 23 (2), 219–246 (2008)

Desai, S., Joshi, O.: The Paradox of declining female work participation in an era of economic growth. Indian J. Lab. Econ. 62 (1), 55–71 (2019)

Dutta, A., Bouri, E., et al.: Commodity market risks and green investments: evidence from India. J. Clean. Prod. 318 , 128523 (2021)

Economic, Survey: 2000-01, Ministry of finance, Government of India, Chap. 9, (2023). https://www.indiabudget.gov.in/budget_archive/es2000-01/chap91.pdf ,. Accessed on June 15,

Economic, S.: 2022-23, Ministry of finance, Government of India, (2023). https://www.indiabudget.gov.in/economicsurvey/doc/eschapter/echap12.pdf ,. Accessed on June 15

Fan, S., Hazell, P., Haque, T.: Targeting public investments by agro-ecological zone to achieve growth and poverty alleviation goals in rural India. Food Policy 25 (4), 411–428 (2000)

Gardas, B.B., Raut, R.D., Narkhede, B.: Evaluating critical causal factors for post-harvest losses (PHL) in the fruit and vegetables supply chain in India using the DEMATEL approach. J. Clean Prod. 199 , 47–61 (2018)

Ghosh, B., De, P.: Investigating the linkage between infrastructure and regional development in India: era of planning to globalization. J. Asian Econ. 15 (6), 1023–1050 (2005)

Hirschman, A.O.: The Strategy of Economic Development. Yale University Press, New Haven (1958)

Hulten, C.R., Bennathan, E., Srinivasan, S.: Infrastructure, externalities, and economic development: a study of the Indian manufacturing industry. World Bank. Econ. Rev. 20 (2), 291–308 (2006)

Hutchison, N., Squires, G.: Financing infrastructure development: time to unshackle the bonds? J. Prop. Invest. Financ. 34 (3), 208–224 (2016)

Jain, M.: Contemporary urbanization as unregulated growth in India: the story of census towns. J. Econ. Behav. Organ. 107 , 228–247 (2018)

Kaul, H., Gupta, S.: Sustainable tourism in India. Worldw. Hosp. Tour. Themes 1 (1), 12–18 (2009)

Kennedy, L.: Regional industrial policies driving peri-urban dynamics in Hyderabad, India. Cities 24 (2), 95–109 (2007)

Krishnamurthy, R., Desouza, K.C.: Chennai, India. Cities 42 , 118–129 (2015)

Kumar, H., Singh, M.K., et al.: Moving towards smart cities: solutions that lead to the smart city transformation framework. Technol. Forecast. Soc. Chang. 153 , 119281 (2020)

Lei, L., Desai, S., Vanneman, R.: The impact of transportation infrastructure on women’s employment in India. Fem. Econ. 25 (4), 94–125 (2019)

Mahalingam, A.: PPP experiences in Indian cities: barriers, enablers, and the way forward. J. Constr. Eng. Manag. 136 (4), 419–429 (2010)

Maparu, T.S., Mazumder, T.N.: Transport infrastructure, economic development and urbanization in India (1990–2011): is there any causal relationship? Transp. Res. Part A: Policy Pract. 100 , 319–336 (2017)

Mitra, A., Nagar, J.P.: City size, deprivation and other indicators of development: evidence from India. World Dev. 106 , 273–283 (2018)

Moench, M.: Responding to climate and other change processes in complex contexts: challenges facing development of adaptive policy frameworks in the Ganga Basin. Technol. Forecast. Soc. Chang. 77 (6), 975–986 (2010)

Nakamura, H., Nagasawa, K., et al.: Principles of infrastructure-case studies and best practices. Asian Development Bank Institute and Mitsubishi Research Institute Inc, Tokyo, pp 52–96 (2019)

Orgill-Meyer, J., Pattanayak, S.K.: Improved sanitation increases long-term cognitive test scores. World Dev. 132 , 104975 (2020)

Pal, S.: Public infrastructure, location of private schools and primary school attainment in an emerging economy. Econ. Educ. Rev. 29 (5), 783–794 (2010)

Parikh, P., Fu, K., et al.: Infrastructure provision, gender, and poverty in Indian slums. World Dev. 66 , 468–486 (2015)

Parwez, S.: A conceptual model for integration of indian food supply chains. Global Bus. Rev. 17 (4), 834–850 (2016)

Patel, U.R., Bhattacharya, S.: Infrastructure in India: The economics of transition from public to private provision. J. Comp. Econ. 38 (1), 52–70 (2010)

Pesaran, M., Hashem; Shin, Y., Smith, R.J.: Bounds testing approaches to the analysis of level relationships. J. Appl. Econ. 16 , 289–326 (2001)

Pradhan, R.P., Arvin, M.B., et al.: Sustainable economic development in India: The dynamics between financial inclusion, ICT development, and economic growth. Technol. Forecast. Soc. Chang. 69 , 120758 (2021)

Rasul, G., Sharma, E.: Understanding the poor economic performance of Bihar and Uttar Pradesh, India: A macro-perspective. Reg. Stud. Reg. Sci. 1 (1), 221–239 (2014)

Rud, J.P.: Electricity provision and industrial development: Evidence from India. J. Dev. Econ. 97 (2), 352–367 (2012)

Sahoo, P., Dash, R.K.: India’s surge in modern services exports: Empirics for policy. J. Policy Model 36 (6), 1082–1100 (2014)

Sati, V.P.: Carrying capacity analysis and destination development: A case study of Gangotri tourists/pilgrims’ circuit in the Himalaya. Asia Pac. J. Tour. Res. 23 (3), 312–322 (2018)

Sharma, M., Joshi, S., et al.: Internet of things (IoT) adoption barriers of smart cities’ waste management: An indian context. J. Clean Prod. 270 , 122047 (2020)

Shenoy, A.: Regional development through place-based policies: Evidence from a spatial discontinuity. J. Dev. Econ. 130 , 173–189 (2018)

Sohail, M., Miles, D.W.J., Cotton, A.P.: Developing monitoring indicators for urban micro contracts in South Asia. Int. J. Project Manag. 20 (8), 583–591 (2002)

Sudhira, H.S., Ramachandra, T.V., Subrahmanya, M.H.B.: Bangalore. Cities 24 (5), 379–390 (2007)

Sun, Y., Ajaz, T., Razzaq, A.: How infrastructure development and technical efficiency change caused resources consumption in BRICS countries: Analysis based on energy, transport, ICT, and financial infrastructure indices. Resour. Policy 79 , 102942 (2022)

Thomas, A.V., Kalidindi, S.N., Ananthanarayanan, K.: Risk perception analysis of BOT road project participants in India. Constr. Manag. Econ. 21 (4), 393–407 (2003)

Thomson, E., Horii, N.: China’s energy security: Challenges and priorities. Eurasian Geogr. Econ. 50 (6), 643–664 (2009)

Vidyarthi, H.: Energy consumption and growth in South Asia: Evidence from a panel error correction model. Int. J. Energy Sect. Manag. 9 (3), 295–310 (2015)

Yadav, V., Karmakar, S., et al.: A feasibility study for the locations of waste transfer stations in urban centers: A case study on the city of Nashik, India. J. Clean Prod. 126 , 191–205 (2016)

Zhang, X., Fan, S.: How productive is infrastructure? A new approach and evidence from rural India. Am. J. Agric. Econ. 86 (2), 492–501 (2004)

Download references

Author information

Authors and affiliations.

Centre for Budget and Policy Studies, M.N.Krishna Rao Road, Basavanagudi, Bengaluru, India

Operations Management, IFMR GSB - Krea University, Sri City, A.P., India

N. Chandrasekaran

You can also search for this author in PubMed   Google Scholar

Corresponding author

Correspondence to A. Indira .

Additional information

Publisher’s note.

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Indira, A., Chandrasekaran, N. Infrastructure development in India: a systematic review. Lett Spat Resour Sci 16 , 35 (2023). https://doi.org/10.1007/s12076-023-00357-5

Download citation

Received : 19 June 2023

Revised : 19 June 2023

Accepted : 20 September 2023

Published : 14 October 2023

DOI : https://doi.org/10.1007/s12076-023-00357-5

Share this article

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Infrastructure spending
• Infrastructure development
• Economic growth

JEL classification

Advertisement

• Find a journal
• Publish with us
• Track your research

• Principles of Infrastructure: Case Studies and Best Practices

Title: Principles of Infrastructure: Case Studies and Best Practices

Language: English

Type: Document

Nature: Case Study

Published: January 1, 2019

Region: Global

Country: Global / Non-Specific

Keywords: Knowledge Lab , Preparation

Document(s):

• Principles of Infrastructure: Case Studies and Best Practices 9.3 MB

In this book, since the authors would like not only to show knowledge that those involved in infrastructure should study, but also to pass on a sense of responsibility and mission, the authors tried to describe the predecessors’ various outstanding achievements as much as possible. 

Infrastructure is a priority around the world for all stakeholders. Infrastructure projects can continue for several years, from planning and construction to the provision of services. As development in Asia and the Pacific accelerates, governments must invest more in infrastructure to ensure continued economic growth. This book draws on lessons and case studies from Japan and worldwide, covering broad and long-term infrastructure projects. It describes the principles of developing quality infrastructure and focuses on the various steps of a project—from design, planning, and construction to operation and management. It also discusses overseas development assistance, taking examples from Asian Development Bank and World Bank projects. This book is an important reference tool for policy makers in Asia who are planning and implementing large-scale public infrastructure.

Updated: April 12, 2022

Positively Sustainable

Green metropolis: successful case studies of urban green infrastructure projects.

Green infrastructure, characterized by elements such as green roofs, walls, and multifunctional green spaces, is playing a pivotal role in urban planning and management. It’s reshaping urban areas by providing a plethora of benefits from reducing the urban heat island effect to promoting sustainable urban drainage. This article delves into enlightening case studies of successful green infrastructure projects in various urban environments, showcasing the potential for green transformation.

Case Studies of Green Infrastructure Success

1. chicago’s green roof initiative, green infrastructure elements:.

• Urban Heat Island Mitigation
• Sustainable Urban Planning

The city of Chicago’s green roof project stands as an inspiring case study in the field of green infrastructure. It led to the implementation of green roof designs on city buildings, resulting in improved urban sustainability, reduced heat effects, and increased accessible green space.

2. New York’s High Line Park

• Urban Green Space
• Green Infrastructure Network
• Urban Development

New York’s High Line Park demonstrates the integration of existing green spaces into a new green infrastructure network. The park provides accessible green space and enhances the urban landscape by promoting green and blue spaces, serving as an example of inclusive urban planning.

3. Singapore’s Green City Approach

• Urban Green Infrastructure
• Green Walls
• Urban Environment

Singapore’s push for green city status has led to the successful implementation of green walls and green infrastructure projects. The extensive planning of green infrastructure, urban green, and blue infrastructure is now a model for multifunctional green infrastructure globally.

4. Copenhagen’s Sustainable Urban Drainage

• Urban Drainage
• Green and Blue Infrastructure
• Urban Land Use

Copenhagen’s urban drainage system is an innovative green infrastructure project that emphasizes sustainable urban drainage. It combines green and gray infrastructure to manage urban stormwater efficiently.

5. London’s Green Grid Strategy

• Green Infrastructure Plan
• Green Building

London’s comprehensive green infrastructure plan and Green Grid Strategy have resulted in new green infrastructure development, including green buildings, urban green spaces, and the functionality of green infrastructure systems. Funding for green projects and the consideration of the role of green in urban planning have made this a landmark case study.

The successful case studies of green infrastructure projects in cities showcase the versatility, benefits, and immense potential for green transformation in urban areas. They highlight the importance of considering principles for green design, integrating green infrastructure into new developments, and increasing the use of green elements in urban planning.

These examples demonstrate how urban areas can harness the value of green, promoting green infrastructure to achieve urban sustainability, enhance public green space, and improve urban living conditions. They provide inspiration and guidance for other cities looking to implement green, emphasizing the need for a holistic green infrastructure approach, including funding, planning, and managing urban landscapes with an emphasis on both gray and green infrastructure.

Green infrastructure benefits both urban and rural areas, and these case studies signify the ever-growing field of urban planning. They set a precedent for integrating, planning, and delivering by green infrastructure, forging the path for a sustainable future.

More to explorer

Eco-Friendly Practices: Your Guide to Greener Living

You’ve heard it time and again: the planet needs our help. But shifting to a greener lifestyle doesn’t have to be a

Sustainable Living: A Path to a Greener Future

You’re on a path that’s increasingly crucial in today’s world—a path toward sustainable living. It’s about making choices that ensure the health

Embracing Eco-Friendly Practices: A Guide to Sustainable Living

In an era where the health of our planet is more precarious than ever, the shift towards eco-friendly practices is not just

Privacy Overview

To revisit this article, visit My Profile, then View saved stories .

• Backchannel
• Newsletters
• WIRED Insider
• WIRED Consulting

US Infrastructure Is Broken. Here’s an $830 Million Plan to Fix It

There’s one word that will get any American fuming, regardless of their political inclination: infrastructure. Pothole-pocked roads, creaky bridges, and half-baked public transportation bind us nationally like little else can. And that was before climate change’s coastal flooding , extreme heat , and supercharged wildfires came around to make things even worse.

US infrastructure was designed for the climate we enjoyed 50, 75, even 100 years ago. Much of it simply isn’t holding up, endangering lives and snapping supply chains . To bring all those roads, railways, bridges, and whole cities into the modern era, the Biden-Harris administration last week announced almost $830 million in grants through 2021’s Bipartisan Infrastructure Law. The long list of projects includes improved evacuation routes in Alaska, a new bridge in Montana, restored wetlands in Pennsylvania, and a whole bunch of retrofits in between.

“We know that if we want to build infrastructure that lasts for the next 50 or 100 years, it's got to look different than the last 50 or 100 years,” says US transportation secretary Pete Buttigieg.

WIRED sat down with Buttigieg to talk about the bipartisan appeal of infrastructure, utilizing nature instead of fighting it, and the irresistible triple payoff of getting people out of cars and into buses and trains. The conversation has been edited and condensed for clarity.

Matt Simon: The United States is a very diverse place, climate-wise. We've got all these deserts and extreme heat, coastlines and sea level rise, and increasingly extreme rainfall. How does this new funding go toward managing all that?

Secretary Buttigieg: While every part of the country is different, every part of the country sees transportation systems impacted by the climate and other threats. It can be wildfires, it can be floods, sea level rise, mudslides, droughts, or even earthquakes. All of these things can impact the durability of our transportation systems. And many of these things are getting more extreme.

One of the more counterintuitive consequences of climate change is heavier rainfall . A lot of this funding is going toward retrofitting infrastructure to adapt to those sorts of deluges. What are the options?

In Cincinnati, for example, we're shoring up retaining walls and actually installing sensors in hills to get ahead of an issue where a hillslide, caused by intense rainfall, would impact a road. In West Memphis, we're investing in natural infrastructure. What's interesting about that case is it's not actually the road itself—we're investing in the wetlands around the road to make flooding less likely. That’s part of how we protect supply chains that run along I-55 and I-40.

And then sometimes you're facing a one-two punch. In Colorado, for example, I-70 was impacted by a combination of fires and floods. A wildfire will come through, it'll undermine the trees and root structures that hold soil together, it'll be followed by a flood. And then you'll be more likely to have a mudslide, which took out I-70 for an extended amount of time a few years ago. So we are seeing that a lot of times—something that as a former mayor I think about a lot—which is just the struggle against water in the wrong places. It's certainly a big part of what we have to deal with in our transportation systems.

Mark Andrews

Andy Greenberg

Morgan Meaker

Matt Burgess

What makes nature a powerful partner here? Both outside of cities—as you mentioned, wetlands being able to absorb floodwaters and rising seas—but even within cities, like more green spaces being good for reducing urban temperatures .

A lot of times we can incorporate natural infrastructure into the life of the city, or the way our land-use works. And there's a real win-win. Some of our grants are helping with heat islands : For example, the [California] city of Davis, where we're helping them effectively reimagine the substance and the technologies around their pavements. There are ways to have cooler pavement that helps mitigate against that . From the days of canals, we've always kind of mixed nature and artificial construction to get results in terms of transportation. The smarter and more flexible we are, the better the results and the more durable the results are going to be.

In what ways does preparing for climate change in cities actually provide opportunities to improve infrastructure and public health? So for instance, getting people out of cars and into buses and trains instead.

Anytime we can support active transportation or public transit, there is a triple payoff. There's an economic win, a safety win, and health and environmental win. Because these are modes of transportation that are associated with better public health, whether we're talking about the health benefits that come directly from active transportation, or just the fact of cleaner air . And we have more and more data now about the impacts of air quality and how that affects things like childhood asthma , which is why we're funding everything from greener shipping in ports to things like bike lanes.

A lot of this funding is going toward improving evacuation routes. What does that say about how bad the effects of climate change already are? How bad is the federal government expecting things to get if we're investing heavily in these options?

What I've seen in places ranging from Maui to Appalachian Kentucky is that we need to make sure that those kinds of routes are there when people need them. And it's also a reminder that climate change is not an academic exercise, nor is the reality of it debatable anymore. There's all kinds of debates on what to do to stop it from getting worse, which is another very active area of investment here, but we also simply have to deal with what's upon us right now and recognize that a road designed 50 years ago might not be the right design for today's climate.

It doesn't matter if you're on the coast or inland in the US, we've all got infrastructure that's vulnerable. Does that give this sort of funding bipartisan appeal?

There can be. I've noticed that even those who are not with us in Congress to get this funding set up, are still advocating for it to come to their states. And yeah, it has a very unifying effect in terms of the threat we all face and the resilience needs we all share. I think about the heat waves in the Pacific Northwest a couple of years ago, that should have been statistically impossible, and they wound up leading to shutdowns of transit because cables were literally at risk of melting. I think about the project we're doing to elevate the causeway in Miami Beach that's getting swamped by rising sea levels. You're talking about literally the opposite corners of the continental US united by the reality that their transportation infrastructure needs to adapt.

You Might Also Like …

In your inbox: The best and weirdest stories from WIRED’s archive

Jeffrey Epstein’s island visitors exposed by data broker

8 Google employees invented modern AI. Here’s the inside story

The crypto fraud kingpin who almost got away

Listen up! These are the best podcasts , no matter what you’re into

Reece Rogers

Eric Berger, Ars Technica

Matt Reynolds

David Kushner

Elise Cutts

• Project Partners
• Hire Our Students
• Mentors, Speakers, and Guest Judges
• Support Segal
• Co-labs Program
• Course Listings
• Prospective Students
• Current Students
• Faculty & Staff Resources

DESIGN INNOVATION SEGAL DESIGN INSTITUTE at the McCORMICK SCHOOL OF ENGINEERING

• News & Events

How Infrastructure Shapes Our World

Author and engineering professor deb chachra challenges students to rethink infrastructure design.

Growing up near Toronto, close to a power plant and Niagara Falls, Deb Chachra was acutely aware of her access to essential resources such as water and energy.

This was especially poignant when she visited her parents' family home in India in the 1980s during summer vacation. During a time when electricity demand far exceeded the available supply, her family had running water for one hour in the morning and evening, and energy blackouts were a common occurrence in the afternoons. 

Chachra’s awareness of the utilities that underpin our lives extends beyond personal appreciation. Author of How Infrastructure Works: Inside the Systems that Shape Our World (Riverhead/Torva, 2023) and professor of engineering at Olin College of Engineering, Chachra studies and teaches on infrastructural systems, including water, electricity, transportation, and communications.

Chachra’s work focuses on the historical and socioeconomic context in which these systems were developed, the harms — both environmental and societal — that have occurred, and the ways systems can become circular, minimizing waste, and maximizing resource efficiency. 

During her April 11 talk “How Infrastructure Works” at the Ford Engineering Design Center, Chachra sounded a call to action to engineering students: We need to rethink how we design and build infrastructure to minimize harm and maximize benefits for all. 

Chachra’s talk took place as part of a visit to Northwestern Engineering through the school’s Art + Engineering Initiatives , which provide Northwestern students, faculty, and staff with opportunities to explore the intersections of creative thinking and making. Chachra has been part of similar initiatives as part of the faculty team for Sketch Model, Olin College’s innovative, Mellon Foundation-funded initiative that builds relationships between artists and engineering faculty and students. In addition to her talk, Chachra led an interactive infrastructure walk through the Ford building, where she discussed the interconnections between physical infrastructure and the social, creative, and care networks that sustain and transform the world we live in. 

During her presentation, Chachra highlighted historical infrastructure examples, including the New York City water system. Initially, the 19th-century system faced setbacks, notably private provision Manhattan Company, led by Aaron Burr—the former vice president of the United States best known for shooting Alexander Hamilton in a duel—that was highly profitable despite poor water distribution through substandard pipes. This led to the publicly funded construction of a dam and aqueduct and the beginning of New York’s municipal water supply that continues to serve the city’s population to this day, in a pattern repeated all over the world.  

“People have repeatedly figured out that if you have societal cooperation to build these systems, you will have healthier communities,” she said.

As these systems expanded, they disproportionately distributed harms and benefits. For instance, Chachra noted that highways, particularly in urban areas, were often routed through Black communities. Similarly, to construct the reservoir for a hydroelectric generating station at Niagara Falls, the New York Power Authority went to the Supreme Court to break a federal treaty obligation and take land from the adjacent Tuscarora Indian Reservation.

“These networks were largely built out with this mindset that ‘we’re going to bring these resources to us,’ but these same systems can just as easily displace the associated harms onto others, and often did,” Chachra said. “In every infrastructural system that I looked at, there was a story of inequity.” 

Chachra concluded by urging a mindset shift toward more equitable and sustainable approaches to infrastructure development. There is a world of possibility, Chachra said, that becomes possible if people recognize our planet has a constantly renewed supply of energy from the sun, but it’s a closed system for materials. However, we need to understand the context in which our systems were built — and redesign them such that we minimize harms and increase benefits for all.

“Resources come from somewhere, and they have to go somewhere. We can’t just use materials and dump them,” Chachra said. “We need to figure out how to close these loops. We need to make systems locally appropriate, locally situated, and beneficial for everyone.”

• Vegetation Mapping NEW
• Heat Susceptibility SOON
• Wildfire Severity SOON
• Updates & Insights
• Brand Style Guide

Case Study: Infrastructure Vulnerability to Climatic Disasters in Bhutan

The client s are the Asian Disaster Prepar edness Center and the government of Bhutan, represented by the Department of Disaster Management and the Department of Roads.  

WHAT WE DID

• Utilised very-high resolution and multi-band satellite data to assess the vulnerability of critical infrastructure to natural disasters such as landslides and floods.  
• an infrastructure model based on replacement value metrics and detailed susceptibility maps for rockfalls, debris flows, large torrents, and floods.  
• Analysed the potential impact on buildings, roads, and power lines using a vulnerability model at a 30-meter grid resolution, identifying hotspots most at risk.  
• Provided actionable mitigation measures to local stakeholders to enhance resilience and reduce potential damages from future climatic events.  

PROJECT INFORMATION

Geoneon, in partnership with Terranum, took part in the Climate Innovation Challenge (CIC), a contest designed by the Asian Disaster Preparedness Center (ADPC) and supported by the Program for Asia Resilience to Climate Change funded by the UK Government and the World Bank. This initiative aimed to find innovative solutions for building resilience against climate change in South Asia, where Geoneon’s project was one of sixteen global innovations recognised for its potential impact out of 270 applicants.  

In the challenging terrains of the Phuentsholing - Pasakha and Gelephu watersheds in Bhutan, the project spanned approximately 400 square kilometres, employing state-of-the-art geo-analytical methodologies to strengthen regional resilience against natural disasters.  

Leveraging cutting-edge very-high resolution and multi-band satellite imagery, our team developed a sophisticated infrastructure vulnerability model. This approach allowed us to systematically assess and predict the impacts of hydro-geological hazards on critical infrastructures.  

Our innovative use of replacement value metrics in infrastructure modelling provided a quantifiable basis for economic risk assessment and mitigation planning. Complemented by our development of susceptibility maps for rockfalls, debris flows, large torrents, and floods, this dual approach facilitated a comprehensive hazard evaluation.  

We achieved detailed vulnerability modelling of buildings, roads, and power lines, utilising a 30-meter grid resolution. This granularity in data modelling supports targeted mitigation strategies and enhances the accuracy of intervention planning.  

These initiatives exemplify the integration of advanced geospatial technologies and data-driven strategies in disaster risk management. By transforming complex data sets into actionable intelligence, we empower policymakers and stakeholders to implement more effective resilience and adaptation measures.  

• Accessing high-quality, high-resolution data in remote and rugged terrains was complex and required innovative satellite data solutions.  
• Combining various data types, from satellite imagery to local infrastructure databases, posed significant integration challenges.  
• Communicating technical findings to local stakeholders and ensuring their engagement in long-term mitigation strategies.  

The successful completion of this project not only supports Bhutan in its efforts to mitigate disaster risks but also sets a benchmark for similar initiatives worldwide, proving the efficacy of technology-driven solutions in enhancing infrastructure resilience against climate change.  

• It provided valuable resources for the Department of Disaster Management, enhancing their ability to communicate risks and engage with local governments on mitigation strategies.  
• Mitigation measures have been recommended to reduce potential damage and enhance resilience against future climatic events.  
• The methodology developed can be applied globally, demonstrating a scalable and fast approach to identifying vulnerable infrastructure using advanced algorithms, including machine learning.  

BROWSE THE PROJECT MAPS

Phuentsholing - Pasakha

RELATED ARTICLES

Join 307,012+ Monthly Readers

Get Free and Instant Access To The Banker Blueprint : 57 Pages Of Career Boosting Advice Already Downloaded By 115,341+ Industry Peers.

• Break Into Investment Banking
• Write A Resume or Cover Letter
• Win Investment Banking Interviews
• Ace Your Investment Banking Interviews
• Win Investment Banking Internships
• Master Financial Modeling
• Get Into Private Equity
• Get A Job At A Hedge Fund
• Recent Posts
• Articles By Category

Infrastructure Private Equity: The Definitive Guide

If you're new here, please click here to get my FREE 57-page investment banking recruiting guide - plus, get weekly updates so that you can break into investment banking . Thanks for visiting!

If I put together a list of the longest-running “unfulfilled requests” on this site and BIWS , infrastructure private equity would be near the top of that list.

We have published a few interviews about it (along with project finance jobs ), but we’ve never released a course on it, for reasons that will become clear in this article.

UPDATE: We now have a Project Finance Modeling course . Check it out!

And while I’m skeptical about the long-term prospects of private equity , especially at the mega-funds, there are some bright spots – and I think infrastructure is one of them.

But before delving into deals, top firms, salaries/bonuses, interview questions, and exit opportunities, let’s start with the fundamentals:

What is Infrastructure Private Equity?

At a high level, infrastructure private equity resembles any other type of private equity : firms raise capital from outside investors (Limited Partners) and then use that capital to invest in assets, operate them, and eventually sell them to earn a high return.

Profits are then distributed between the Limited Partners (LPs) and the General Partners (GPs) – with the GPs representing the private equity firm.

Just as in traditional PE, professionals spend their time on origination (finding new assets), execution (doing deals), managing existing assets, and fundraising.

The difference is that infrastructure PE firms invest in assets that provide essential utilities or services.

Real estate private equity is similar because both firm types invest in assets rather than companies.

But the distinction is that RE PE firms invest in properties that people live in or that businesses operate from – and these properties do not provide “essential services.”

Sectors within infrastructure include utilities (gas, electric, and water distribution), transportation (airports, roads, bridges, rail, etc.), social infrastructure (hospitals, schools, etc.), and energy (power plants, pipelines, and renewable assets like solar/wind farms).

Many of these assets are extremely stable and last for decades.

Some, like airports, also have natural monopolies that make them incredibly valuable (well, except for when there’s a pandemic…).

Infrastructure assets have the following shared characteristics:

• Relatively Low Volatility and Stable Cash Flows – Power plants can’t just “shut down” unless human civilization collapses.
• Strong Cash Yields – Unlike traditional leveraged buyouts, where all the returns might depend on the exit, infrastructure assets usually yield high cash flows during the holding period.
• Links to the Macro Environment and Inflation – Investors often view infrastructure assets as “inflation hedges” because they’re linked to population growth, GDP, and other macro factors that change the demand for infrastructure.
• Low Correlation with Other Asset Classes – For example, returns in infrastructure investing don’t correlate that closely with those in traditional PE, equities, fixed income, or even real estate.

On the last point, here’s what JP Morgan found when comparing infrastructure, real estate, and the S&P 500 from 1986 to 2013:

Holding periods are also longer, partially because customer contracts tend to be lengthy, such as power purchase agreements that last for 15 years.

Overall, infrastructure private equity sits above fixed income but below equities in terms of risk and potential returns; it might be comparable to mezzanine funds .

The History and Scale of Infrastructure Investing

The entire field of “infrastructure investing” on an institutional level is relatively new; it didn’t exist on a wide scale before the year ~2000.

It started in Australia in the 1990s, spread to Canada and Europe in the early 2000s, and eventually made its way to the U.S. as well.

Partially because it is a newer field, infrastructure private equity has raised less in funding than real estate private equity or traditional private equity:

• Infrastructure PE: $50 – $100 billion USD per year globally
• Real Estate PE: $100 – $150 billion
• Traditional PE: $200 – $500 billion

Despite the lower fundraising, “small deals” are quite rare in infrastructure because of the nature of the assets.

The average deal size is over $500 million, and the top 10 deals each year are in the multi-billions, up to $10+ billion.

Public Finance vs. Project Finance vs. Infrastructure Private Equity  vs. “Infrastructure Investing”

Several terms are closely related to infrastructure, so let’s go down the list and clarify the differences before moving on:

• “Infrastructure Investing” – This one is the broadest term and could refer to investing in the debt or equity of infrastructure assets. Investors could fund the construction of new assets or acquire existing, stabilized ones. And the investors could be PE firms, pensions, sovereign wealth funds , and many others.
• Infrastructure Private Equity – This term refers to investing in the equity of infrastructure assets to gain ownership and control. There are dedicated infra PE firms, but plenty of pensions, large banks, SWFs, and other entities also make “equity investments in infrastructure.”
• Project Finance – This one refers to investing in the debt of infrastructure assets (both new and existing ones), which is mostly about assessing the downside risk, how much money could be lost in the worst-case scenario, and then offering terms commensurate with the risk.
• Public Finance – This one also relates to investing in the debt of infrastructure assets, but in this case, it’s to support governments and tax-exempt entities that need to raise funds to build assets.

Infrastructure Private Equity Strategies

The main investment strategies are similar to the ones in real estate private equity: core , core-plus, value-add , and opportunistic .

The main difference is slightly different names: “greenfield” refers to brand-new assets that a sponsor is building, while “brownfield” refers to existing assets that it is acquiring.

Here’s a quick summary by category:

• Core: There’s limited-to-no growth here; examples might be regulated electricity distribution assets, such as power lines. Governments set rates, so there’s little revenue risk. Most of the returns come from the asset’s cash flows, and the expected IRRs are usually below 10%.
• Core-Plus: These assets have modest growth potential (via additional CapEx or other improvements), or they’re stabilized assets operating in regions outside developed markets. The expected IRRs might be in the low teens.
• Value-Add: These assets require serious operational improvements or re-positioning. The risk and potential returns are higher, and more of the potential returns come from capital appreciation rather than cash flows during the holding period. An example might be acquiring a small airport and then performing additional construction to turn it into more of a regional hub.
• Opportunistic: These deals are the riskiest ones because they often produce limited-to-no cash flow for a long time, and they depend on building new and unproven assets (e.g., a new power plant or toll road). The potential IRRs might be 15%+, but there’s also a huge downside risk.

A single infrastructure PE firm could have different types of funds, each one specializing in one of these categories, but in practice, the first three strategies are the most popular ones.

One final note: in addition to everything above, public-private partnerships (PPP) represent another strategy within this sector.

For example, a private firm might build a toll road, and the local government might guarantee a certain amount in revenue per year as an incentive to complete the project.

Sometimes PPP deals are labeled “core” even when the asset changes significantly or is built from scratch because the revenue risks are much lower if there’s government backing.

Yes, construction overruns and delays could still be issues, but the overall risk is lower.

The Top Infrastructure Private Equity Funds

You can divide infrastructure investors into a few main categories: actual private equity firms (“fund managers”), large banks, pension funds, sovereign wealth funds, and the investment arms of insurance companies.

Technically, only the private equity firms count as “infrastructure private equity” – but each firm type here still invests in the equity of infrastructure assets.

For many years, fund managers dominated the market, but institutional investors such as pension funds have been building their internal investment teams to do deals directly.

Private Equity Firms and Fund Managers

Some PE firms focus on infrastructure; examples include Global Infrastructure Partners, IFM Investors, Stonepeak Infrastructure Partners, I Squared Capital, ArcLight Capital, Dalmore Capital, and Energy Capital Partners.

Then, some firms invest in a broader set of “real assets,” with Brookfield in Canada being the best example (it has also raised the third-highest amount of capital for infrastructure worldwide).

In the U.S., Colony Capital and AMP Capital are examples (they do both real estate and infrastructure).

Finally, there are large, diversified private equity firms that also have a presence in infrastructure, such as KKR, EQT, Blackstone, Ardian, and Carlyle.

Large Banks

The biggest “infrastructure investing firm” worldwide is Macquarie Infrastructure and Real Assets (MIRA) , which is a branch of the Australian bank Macquarie.

Many of the other large banks also do infrastructure investing, but they often use different names for their infra businesses (e.g., Goldman Sachs and “West Street Infrastructure Partners” or Morgan Stanley and “North Haven Infrastructure Partners”).

JP Morgan and Deutsche Bank are also active in the space.

There are also infrastructure investment banking groups , which advise sponsors and asset owners on deals rather than investing in debt or equity directly.

Pension Funds

Canadian pension funds , such as CPPIB and OTPP, are some of the biggest investors in the infrastructure space, and they all have internal teams to do it.

These funds have advantages over traditional PE firms because their returns expectations are lower, and they’re non-taxable in Canada , so they can afford to out-bid other parties and pay high prices for Canadian assets.

In Europe, various pension managers, such as APG and PGGM in the Netherlands and USS in the U.K., also invest in infrastructure, and in Australia, plenty of “superannuation funds” (AustralianSuper, QSuper, etc.) also do domestic infrastructure deals.

Sovereign Wealth Funds

These are very similar to pension funds: historically, they acted as Limited Partners, but they’ve been building their internal teams to invest in infrastructure directly.

Just like pensions, they also target lower returns, but they also have far more capital since they’re backed by governments in places like the Middle East and Asia.

Names include the Abu Dhabi Investment Authority, the Abu Dhabi Investment Council, the China Investment Corporation, and GIC in Singapore.

For more about these points, please see our coverage of investment banking in Dubai and sovereign wealth funds .

Insurance Companies

Most insurance companies do not invest directly in infrastructure, but many are Limited partners of existing funds.

Well-known names include Swiss Life, Allianz Capital Partners in Germany, and Samsung Life Insurance in South Korea.

Other Investment Firms

There are plenty of “miscellaneous” firms that do infrastructure investing as well.

For example, some construction companies invest their cash into infrastructure, and some larger, energy-focused PE funds such as Encap and Riverstone have also gotten into it.

There’s a blurry line between “energy private equity” and “infrastructure private equity” in the U.S., which is why firms like ArcLight and Energy Capital could be in either category.

Infrastructure Private Equity Jobs: The Full Description

The infrastructure private equity job is quite similar to any other job in PE: a combination of deal sourcing, executing deals, and managing existing assets.

Deal sourcing consists of inbound flow from bankers, competitive auctions, secondary deals from other financial sponsors, and sometimes buying entire infrastructure companies or individual assets.

Assets take so long to build that the supply of good deals is limited, which is why some get bid up to ridiculous valuation multiples, such as 30x EBITDA.

When evaluating deals, assessing the downside risk is critical because the upside is quite limited.

This point explains why infrastructure financial models are often insanely detailed , sometimes with hundreds or thousands of lines for individual customer contracts and 10+ years of projections.

You can’t just say, “Assume revenue growth of 5%” – it has to be backed by contract-level data and extensive industry research.

As in real estate, infrastructure deals often use high leverage (think: 80%+), and the debt may be “sculpted” to meet a minimum Debt Service Coverage Ratio (DSCR) requirement:

When you evaluate deals, you focus on:

• Contracts – How does the asset earn revenue, how much water/electricity/energy has it promised to deliver, and are there any onerous terms? Are there step-ups for inflation? Are any counterparties promising to pay for fuel or other expenses?
• Expenses and CapEx – Will the asset need major CapEx for maintenance or expansion? What do its ongoing operating expenses look like, and are they expected to grow in-line with inflation or above/below it?
• Growth Opportunities – The asset’s overall growth rate should be aligned to its key macro drivers, especially for “core” deals. For example, if air traffic in the region is growing at 2% per year, but an airport’s revenue is growing by 5%, something is off – unless the airport is planning to expand in some way.
• Downside Protection – What happens if inflation exceeds expectations? How easily can customers cancel their contracts? If something goes wrong, does the government back the asset or promise anything? What if there’s a construction delay or cost overrun?
• Debt – How much leverage is being used, what are the rates, and how much refinancing risk is there? Could the asset potentially support a dividend recap ? Is there any chance that it might not be able to comply with covenants, such as a minimum Debt Service Coverage Ratio (DSCR)?

Project Finance & Infrastructure Modeling

Learn cash flow modeling for energy and transportation assets (toll roads, solar, wind, and gas), debt sculpting, and debt and equity analysis.

Infrastructure Private Equity Salary and Bonus Levels

Now to the bad news: salary and bonus levels in infrastructure range from “a bit lower” to “quite a bit lower” than traditional private equity compensation because:

• Management fees tend to be lower (1.0% to 1.5% rather than 2.0%).
• Carry is still based on 20% of the profits and an ~8% hurdle rate, but since holding periods are much longer, it takes more time to earn the carry. Also, it’s more difficult to exceed the hurdle rate.

Infrastructure Investor has a good set of recent compensation figures , excluding carry.

To summarize and round the numbers a bit, compensation ranges at dedicated infrastructure and energy PE firms are:

• Associates: $150K – $300K total compensation (50/50 base/bonus)
• Vice Presidents: $250K – $500K
• Directors: $400K – $900K
• Managing Directors: $750K – $1.8 million

If you also factored in carried interest, these numbers would increase modestly for Directors and MDs.

Expect lower compensation at pension funds, sovereign wealth funds , and insurance firms because they do not have carried interest at all.

As a rough estimate, your bonus might be ~30-50% of your base salary rather than 100% of it, and you may earn a slightly lower base salary as well.

The upside is that the lifestyle is also much better: you might work only ~40-50 hours per week at some of these funds.

You get busier when deals are heating up, but it’s still a vast improvement over the typical IB/PE hours .

The Recruiting Process: How to Get into Infrastructure Private Equity

Similar to real estate private equity, infrastructure private equity firms are also more forgiving about candidates’ backgrounds.

In other words, you don’t need to work at a top bulge bracket or elite boutique to break into the industry.

You could potentially get into the industry from many different backgrounds:

• Investment banking , ideally in groups like infrastructure , energy , renewables , or power & utilities that are directly related.
• Project finance since PF represents the debt side of infrastructure deals, and you need to understand both equity and debt to evaluate any deal.
• Real estate since some segments of infrastructure, such as schools and hospitals, overlap quite a bit; also, many companies structured as REITs own infrastructure assets.
• Other areas of private equity , such as firms that focus on renewables, energy, or power and utilities, since they’re all related to infrastructure.
• Infrastructure corporations/developers for obvious reasons (especially if you target greenfield-focused firms).

Some people also get in from areas like infrastructure/project finance law or infrastructure groups at Big 4 firms.

It’s unusual to break in without a few years of full-time experience in one of these fields; few firms hire undergrads or recent grads because they don’t have the resources to train them.

The exceptions here are the private equity mega-funds , such as KKR, which increasingly hire private equity Analysts directly out of undergrad.

Most infrastructure PE firms use off-cycle processes to recruit (i.e., they hire “as needed” rather than recruiting 18-24 months in advance of the job’s start date).

Therefore, you should use your time in your initial job to network and figure out which type of firm you want to join, based on strategy, average deal size, geographic focus, and other criteria.

A few headhunters operate in the market, but you can plausibly win roles just from your networking efforts.

One Search is the one recruiting firm dedicated to “real assets” (infrastructure, energy, and real estate), and they’re the best source for positions at infra PE firms – if you decide to go through recruiters.

The Infrastructure Private Equity Interview Process

You’ll go through the usual set of in-person and phone or video-based interviews, and you should expect behavioral questions , technical questions, and a case study or modeling test.

The behavioral/fit questions are all standard: walk me through your resume , describe your past deals, tell me your strengths and weaknesses, and so on.

The technical questions tend to focus on the merits of different infrastructure assets, the KPIs and drivers, and how you evaluate deals and use the right amount of leverage.

And the case studies and modeling tests are much simpler than on-the-job models because you usually have only 1-3 hours to complete them.

If you’re already familiar with Excel, LBO modeling, and/or real estate financial modeling , these tests should not be that difficult.

You do need to learn some new terminology, but projecting the cash flows and debt service and calculating the IRR are the same as always.

Infrastructure Private Equity Interview Questions And Answers

Here are a few examples of sector-specific interview questions:

Q: Why infrastructure investing?

A: You like working on deals involving long-term assets that provide an essential service and also do some social good.

Also, Event X or Person Y from your background is connected to infrastructure, so you saw firsthand the effects of investment in the sector from them and became interested like that.

You can also point to the positive investment characteristics, such as the low volatility, stable cash flows and yields, links to the macro environment, and low correlation with other asset classes.

Q: What are the key drivers and key performance indicators (KPIs) for different types of infrastructure assets?

A: This is a broad question because each asset is different, but to give a few examples:

• Power Plants: Capacity (maximum output), production (electricity produced, which is a fraction of the total capacity), contracted rates for both of those, fixed and variable operating expenses, annual escalations for the revenue rates and expenses, and required maintenance or growth CapEx.
• Airports: Total passenger volume and average fees per passenger, fees from rent and fuel, operating expenses such as payroll, insurance, maintenance, and utilities, required CapEx, and assumed inflation rates for all of these.
• Toll Roads: Traffic levels and growth rates, the toll rate per vehicle per day, fixed expenses for operations and maintenance and variable expenses linked to per-car figures, required CapEx, and inflation rates for all of these.

Q: Walk me through a typical greenfield deal/model.

A: You assume a certain amount of construction costs and a timeline for the initial development, and you draw on equity and debt over time to fund it, putting in the equity first to satisfy lenders. Interest on the debt is capitalized during the construction period.

When construction is finished, the construction loan may be refinanced and replaced with a permanent loan as the asset starts operating and eventually stabilizes.

Then, you forecast the revenue, expenses, and cash flow in different scenarios and size the debt such that it complies with requirements, such as a minimum Debt Service Coverage Ratio (DSCR).

At the end of the holding period, you assume an exit based on a percentage of the asset’s initial value or a multiple of EBITDA or cash flow.

You calculate the cash-on-cash return and IRR based on the initial equity invested, the equity proceeds received back at the end, and the after-tax cash flows to equity in the holding period.

Q: Walk me through a typical brownfield deal/model.

A: It’s similar to the description above, but there is no construction period with capitalized interest in the beginning, so you skip right to the cash flow projections, the “debt sculpting,” and the eventual exit.

Q: How would you compare the risk and potential returns of different infrastructure assets? For example, how does a regulated water utility differ from an airport, and how do they differ from telecom infrastructure like a cell tower?

A: Regulated utilities for water and electricity have lower risk, lower potential returns, and a higher percentage of total returns coming from the cash yields.

That’s because local governments set the allowed rates, and demand doesn’t fluctuate much unless the local population grows or shrinks significantly.

On the other hand, there’s also little downside risk because people can’t stop drinking water or using electricity even if there’s an economic crisis.

Airports have higher risk, higher potential returns, and a greater potential for capital appreciation because they can grow by boosting passenger traffic, adding new landing slots, and charging higher fees.

But there’s also more risk because passenger traffic could plummet in an economic recession, a war, or a pandemic.

With telecom assets like cell phone towers, the risk and potential returns are even higher, with much of the returns expected to come from capital appreciation.

There are different lease types (ground leases and rooftop leases), and location is even more critical than with other infrastructure, so these assets are closer to real estate in some ways.

Q: How would you value a toll road or an airport?

A: You almost always use a DCF model for these assets because cash flows are fairly predictable.

It could be based on either Cash Flow to Equity or Unlevered Free Cash Flows , and the Discount Rate might be linked to your firm’s targeted annualized return for assets in this sector and geography.

If the Discount Rate is the Cost of Equity, then it’s linked to the targeted equity returns; for WACC , the Cost of Debt is linked to the weighted average interest rate on the debt used in the deal.

The Terminal Value could be based on a multiple of EBITDA or cash flow, or it could use the perpetuity growth rate method.

Q: Why can you use high leverage in many infrastructure deals? And what are some of the important credit stats and ratios?

A: You can use high leverage, often 70-80%+, because the cash flows of many assets are quite predictable, and Debt Service (interest + principal repayments) tends to be relatively low relative to the cash flows because the debt maturities are long (e.g., 10-15+ years).

Some of the most important ratios include the Debt Service Coverage Ratio (DSCR) and the Loan Life Coverage Ratio (LLCR) , along with standard ones like the Leverage and Coverage Ratios used in debt vs. equity analysis .

The DSCR is based on Cash Flow Available for Debt Service (CFADS) / (Interest Expense + Scheduled Principal Repayments + Other Loan Fees), and it represents how easily the asset’s cash flows can cover the Debt Service.

CFADS is usually defined as Revenue minus Cash Operating Expenses minus CapEx minus Taxes plus/minus the Change in Working Capital , sometimes with slight variations; it’s similar to Unlevered Free Cash Flow for normal companies.

Importantly, depreciation must be excluded, except for its tax impact, because it’s non-cash.

The LLCR is defined as the Present Value of the total Cash Flow Available for Debt Service over the loan’s life divided by the current Debt balance.

The Discount Rate should be based on the weighted average interest rate on the Debt.

Higher numbers are better because it means the asset’s cumulative cash flows can more easily pay for the debt.

Q: What is “debt sculpting” in infrastructure deals, and why is it so common?

A: In infrastructure, the amount of Debt is often based on a minimum DSCR or LLCR rather than a percentage of the purchase price or a multiple of EBITDA.

Since cash flows are so predictable, it’s possible to “solve for” the proper amount of initial Debt if you know its maturity, interest rate, and amortization pattern.

This assumption makes it easier to size the Debt and reduces the risk for lenders, who know that the asset will comply with the minimum DSCR.

Infrastructure Case Study Example

UPDATE: Please see our Project Finance & Infrastructure Modeling course for many additional and better case study examples.

Real-life infrastructure models can be complex, but time-pressured case studies are a different story.

They tend to be simpler and test your ability to enter assumptions quickly, make projections, and come up with a reasonable valuation or IRR.

Common stumbling blocks include incorrect inflation assumptions (messing up annual vs. quarterly vs. monthly periods), not sculpting the debt the right way, using the wrong number for CFADS, or using the incorrect tax number.

Here’s a simple example of a valuation case study (no solutions, sorry):

“Your firm is considering acquiring a brand-new natural gas power plant with the following characteristics:

• Capacity: 500MW
• Heat rate: 7,500Btu/kWh
• Annual dispatch: Expected capacity factor of 50%

The plant’s revenue sources include:

• Capacity payment: $135/kW-year
• Energy payment: $10/MWh, escalating at 2% per year

Operating expenses include the following:

• Fixed O&M expense: $30/kW-year, escalating at 2% per year
• Labor and operations: $5/MWh, escalating at 3% per year
• Water and consumables: $1/MWh, escalating at 2% per year

Annual fuel is not an expense because the contract counterparty provides it.

Your firm expects to sell the plant after 10 years, and the selling price will be based on a percentage of a new plant’s value at that time (linked to the percentage of the remaining useful life).

Comparable projects cost $1,000/kW currently and are expected to increase in price at 2% per year, with a useful life of 40 years.

The Debt will be based on the following terms:

• Tenor: 10 years, fully amortizing
• Interest Rate: 5%, fixed rate
• Amortization: Sculpted amortization to achieve a 1.40x Debt Service Coverage Ratio (DSCR) in each year based on Cash Flow Available for Debt Service (CFADS)

Please value the power plant on an after-tax basis using a 12% Cost of Equity and assuming a 25% tax rate and 20-year depreciation based on MACRS.”

Infrastructure Private Equity Exit Opportunities

The most common entry points into infrastructure PE are also the most common exit opportunities: investment banking, project finance, real estate, other areas of PE, infrastructure corporates/developers, and Big 4 infrastructure groups.

It tends to be difficult to move into generalist roles coming from infrastructure because the perception is that it’s very specialized.

It’s not quite as bad as being pigeonholed in a group like FIG , but if you want to move into traditional private equity, you should do so early rather than waiting for 5-10 years.

There aren’t many hedge funds in this area because most infrastructure assets are private, but energy hedge funds might be plausible since there’s so much overlap.

Venture capital is not a likely exit opportunity because infrastructure assets are the opposite of early-stage startups: stable, with highly predictable cash flows and growth profiles.

Resources for Learning More About Infrastructure Private Equity

Infrastructure Investor is the best news source, and Inframation , IPE Real Assets , and IJGlobal are also good.

Preqin issues good infrastructure reports once per year, which you can Google, and this guide from JP Morgan also has a concise sector overview .

And, of course, there’s our Project Finance & Infrastructure Modeling course if you want both short/simple and longer case study examples and video-based training:

Infrastructure Private Equity: Pros and Cons

Summing up everything above, here’s how you can think about the industry:

Benefits/Advantages:

• High salaries and bonuses , at least if you work at a dedicated PE firm rather than a pension, SWF, or insurance company.
• You get to work on deals that do some social good , at least in certain sectors, and that provide benefits to individuals, such as diversification, inflation hedging, and strong cash yields.
• Each asset requires different assumptions and drivers, so you’re always learning new skills (compared with vanilla IB/PE, where deals start to look the same after a while).
• The hours and lifestyle are better if you’re at a pension, SWF, or insurance company – but total compensation is also below standard PE pay.
• It’s more feasible to get into the industry without working at a top BB or EB bank for two years; they care more about your skills and sector experience than your pedigree.

Drawbacks/Disadvantages:

• It is a small industry if you go by the number of dedicated, independent PE firms, so it can be tricky to find openings and advance.
• It is also specialized , though arguably less so than something like FIG; that said, you can still get pigeonholed if you stay too long and then decide you don’t like it.
• Compensation is lower at the non-PE firms, and even at the dedicated PE firms, the MD/Partner-level compensation has a lower ceiling.
• You’re further removed from real life than you might expect because finance professionals cannot “evaluate” a power plant or water treatment facility in the same way they could inspect an apartment building; you rely on outside specialists for much of this process.
• Although each deal is different, some of the modeling work can become repetitive because you have to look at so many individual contracts and build very granular assumptions.

Overall, infrastructure private equity is a great career option, but it’s a bit less of a “side door” or “back door” than real estate private equity because you do need some relevant deal experience first.

The best part is probably the optionality – if you want higher pay and longer hours, you have options, and if you want a better lifestyle with lower pay, you can also do that.

And with the dismal state of infrastructure in most countries, it’s safe to say that there will always be demand for investment – even if it takes a few broken bridges and toll roads to get there.

Further Reading

You might be interested in:

• The Full Guide to Direct Lending: Industry, Companies & Careers
• Private Equity Salary, Bonus, and Carried Interest Levels: The Full Guide
• The Complete Guide To Commercial Real Estate Market Analysis

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street . In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

Read below or Add a comment

41 thoughts on “ Infrastructure Private Equity: The Definitive Guide ”

Hi Brian. Thanks for writing such articles, I find them really helpful as a beginner. I do have a quite different background than most aiming to head into infrastructure investment banking/PE and thought it would be great if I could have your perspective.

I did my undergrad in Civil Engineering, from one of the top 5 unis in Asia (HKU) and graduated with a 2:1. I have since worked for about three years now, at a leading engineering and consulting firm within the infrastructure sector, in the capacity of both an engineer and a management consultant concurrently. I have worked on some really high profile infrastructure projects worth 3.5 Bill USD and have been involved in management consulting projects that have influenced the infrastructure sector at a national level within Asia. I am really passionate about working within the infrastructure finance space and thus I also ended up taking CFA on the sides. I have passed both Level 1 & 2 of the program with good scores. I am headed to UCL coming fall for their MSc program in Infrastructure Investment & Finance, it’s a specialized program focused specifically on infrastructure and is offered by their faculty of Built Environment which is currently ranked the world’s best department as per QS Subject Rankings.

I do really wanna switch over to the finance side of infrastructure, but I do lack direct work experience in the finance aspect of it. Do you think that my profile is decent to target the big investment banks/funds in London/Asia focused in the infra space? I am specifically interested in advisory or buyside roles. I will be applying for analyst roles in the coming intake and wanted someone’s independent perspective.

Thanks. Yes, I think your profile is good enough since PF/infrastructure is quite specialized and they want people who know the sector really well. Finance is easy to learn if you’re already an engineer – it’s much harder to find people who know the sector and everything that can happen on the ground with infrastructure projects.

Thank you very much for your answer Brian! Really appreciate your perspective.

Hi, thank you for the article, very helpful. Could you please share any insights on how easy it would be to move from renewable energy infra PE to another sector in infra PE? Thanks in advance!

I think it should be doable because you use the same modeling techniques and analysis in all areas of infra PE. It’s just that the numbers and assumptions differ between different asset types. But it’s not like you’re moving from FIG to oil & gas, for example, where everything is different.

This may be the single best resource on the internet for an infrastructure finance overview. I used this to initially break into project finance and now work at an infra-PE fund. The quality on this website always blows me away. Thank you for taking the time and effort to write such high quality guides, this infra one and the many others!

Thanks! Glad to hear it.

I’ve found your article really insightful and was hoping to ask for a bit of advice on breaking into the industry.

I’ve been looking into a PPP investment arm of a construction conglomerate. Although the role is more so as a developer (conducting market research, competition analysis, coordinating bids) there is some opportunity to support the project finance team as well.

Do you feel this is a good opportunity in general to gain industry experience, rather than perhaps in an infra advisory big 4 capacity?

Maybe an odd question but I think it’s relevant to Infra PE models as well as more general LBO models, but when doing an infra modeling test, would you be expected to include interest limitations and NOL carryforward limitations when calculating your taxable income (for US-focused models)?

So, we don’t officially teach infrastructure modeling currently, which means I can’t answer your question definitively, but in the models I’ve gathered, I’ve seen both approaches (factor in these tax elements or ignore them). I think it mostly depends on the model complexity and if you’re doing it at the corporate or asset-level.

Hardly any LBO models, in practice, include the bits around interest deduction limitations because they’re not common constraints with normal leverage levels.

is it possible for the section where you mentioned TV is determined by the perpetuity growth rate or an exit multiple, that for infrastructure assets, i generally see them modelled to the end of concession in which case there isn’t really a terminal value.

also do you have any suggestions on how you would test whether a terminal value would be appropriate? i.e. not too big or smal?

We don’t officially cover infrastructure modeling on this site and do not usually answer technical questions in these articles, so I can’t tell you for sure. The approach you suggested sounds reasonable, but many infra assets do assume a Terminal Value if the asset is expected to last for decades. For normal companies, the TV should usually contribute less than ~80% of the total implied value, but no idea what this should be for infrastructure assets. I assume much less because of the longer holding periods/projections.

Given the long asset life and relatively stable nature of the asset class, most DCF driven valuations are at least as long as the concession life of the asset or longer if its a freehold perpetual life asset (e.g. landlort ports in the UK). For this reason TV usually tends to be a smaller proportion of the PV compared to other asset classes. In terms of methodology, people tend to use both perpertuity and multiple based methodologies. Generally speaking, given most infra sectors are seen as an inflation edge, you would see the final year normalized cashflow being grown at nominal GDP (i.e. real GDP growth + inflation). Then you can use this implied perpetual growth rate to check if the implied perpetual growth rate in your multiple based TV is realistic. If you are running a levered DCF, i.e. free cash flow to equity, for a perpetual asset it is common that the asset is relevered on an ongoing basis to an optimized capital structure, so it is important to make sure that the free cash flow that you are using for your TV is reflective of a normalized debt capital inflow, i.e. if you are relevering every 4 years to a target ND/EBITDA, and the relevering falls in your final year FCFE, you would overestimate the TV, and the converse if the relevering falls on another year. You could avoid that if you relever every year. Regarding assets with concession life, I have seen concession life extension assumptions being included in models, but in that case you would need additional assumptions, as you would effectively be capturing the PV of the spread between the concession rights payment (outflow) and the inflows from the later years. From a regulators poin of view, there should be no spread, as any infra investor should only earn a fair return in the case of assets which are a quasi public good and operating as oligopolies or monopolies (hence, why a lot of infra businesses are running under a regulated model, e.g. RAB based returns). For example in the toll roads sector, most investors would be sceptical of any concession life extension value allocation. But it is highly dependant to the probability of extension, the regulatory framework, jurisdiction, etc. Hope this helps.

Hi Brian – I wanted to enquire what financial modelling foundation would set me up for a Infra PE role. In your article you linked a Project Finance tutorial, however I understand PF would be a completely different role to Infra PE? Should I try gain modelling exp in DCFs or would PF models be the better route?

Project Finance and Infrastructure PE are similar. Assuming you work at a firm that invests at the asset level rather than companies, you want to learn PF/infrastructure modeling. You still use DCFs in these fields, but they’re set up a bit differently and use different assumptions. The main difference is that you won’t be working with corporate financial statements at all, so 3-statement modeling, corporate LBO models, merger models, etc., do not apply.

Brian, this was incredibly thorough and very appreciated, thank you! Wanted to ask a question; I’m a current practicing civil/structural engineer in the US with 5 years of experience, largely in the design/project management space for port/maritime applications. Is there a path to Infra PE with this background? Would an MBA/MSF be a necessary stepping stone? Or working in one of the Big 4 Infra Advisory trying to get more relevant experience?

I think you would need another degree or an actual finance/advisory role to get in. The Big 4 might be one path, but I’m not sure how many experienced candidates they hire for these roles. The MBA/MSF route is safer but also costs more time and money.

Any chance we can get the solution to the case study? Just want to compare with what I’m putting together.

Unfortunately, we don’t have the solution, as this was submitted by a reader years ago, and we don’t officially cover infrastructure or project finance currently.

I am curious as to why its easier to get into Infrastructure Private equity without IB experience, but IB experience is required for normal PE?

It’s because of the specialization and deal/modeling skill set. Infrastructure is very specialized and doesn’t follow the accounting rules that standard corporations do because everything is cash flow-based, and you need to know the nuances of things like customer contracts for individual assets, escalation rates, etc., none of which you learn in most IB groups.

Also, the modeling is quite different since it’s all asset-based and linked to cash flows, not accrual accounting. Therefore, most IB modeling experience won’t carry over that well.

So, all else being equal, they’d prefer someone who knows infrastructure very well to someone with IB experience but in an unrelated group with no exposure to asset-level modeling.

Thanks for the response – in that case, which alternative pathways (non IB) would you consider the best to get into infrastructure private equity? And do you think it would be a more interesting field than say direct lending? (as i think Direct lending / credit investing roles also don’t require IB?)

I don’t think there is one “best” option because people tend to get in from varied backgrounds. There’s a list of possibilities under “The Recruiting Process” here. Anything infrastructure-related works, whether it’s project finance, a normal company, the same sector at a Big firm, etc. It’s hard to compare to direct lending because it depends on what you’re looking for. Direct lending compensation is lower, and you tend to see and close more deals, but you don’t go as in-depth into each one. It’s probably a bit easier to get into direct lending because it doesn’t have “private equity” in the name.

Hi Brian. Thanks for the great article. I was wondering how difficult you think it would be to break into infra PE as an analyst from a tech IB group. Will the difference in coverage group be too large of a hurdle to overcome? Can a bank’s “prestige” override that? Thanks!

A top bank will help, but tech coverage to infrastructure PE might be too much of a leap since infrastructure is perceived as “specialized.” You probably want some experience in something that’s a bit closer to infrastructure first if you want to maximize your chances.

Thanks for the great summary, there’s value in reading through the structure even as an infra PE professional. Would caveat that because of the higher prevalence of auctions due to pricings getting competitive the work-life balance I see is getting worse even on the pension fund end of the scale and so comp is adjusted accordingly. Smaller funds that can avoid competition and do bilaterals pay less and can offer better hours but not always as that highly depends on deal flow vs team size and the number of people on the deal team and the level of detail required in the DD, at least in Europe.

Thanks for adding that.

Brian – great guide, as always. Really appreciate you taking the time to put this together.

I’m a civil engineer by training, with a few years of Big 4 infra advisory experience (Canada and UK).

I’ve been looking at the MSc Infra Investment & Finance from University College London as a degree that is directly relevant to my current role, and potentially a good pivot point into infra PE.

Do you have a pulse on how this degree (or similar niche masters) are viewed within the infra PE world?

For reference: https://www.ucl.ac.uk/prospective-students/graduate/taught-degrees/infrastructure-investment-finance-msc

Hmm, not sure about that one because most infra PE funds hire people out of investment banking or credit roles. If you’ve already had Big 4 infra advisory experience, I’m not sure the degree adds a whole lot because it’s not like you’re an engineering with no other experience making a huge change. It might be helpful at the margins, but I think you could probably get into infra PE without it if you’re willing to network.

Appreciate the detail and comprehensiveness of this post!

One thing – on the definition of project finance, I am used to hearing a much broader definition that includes the entire capital stack of a separate legal entity (the project), all of which have senior claims over the (multiple) parent owners’ equity holders or debtors. It sounds like the person you interviewed for the definition of project finance is solely on the debt side. In renewable energy, for example, project finance refers to the project’s sponsor equity, tax equity, and debt financing.

Yes, that may be true. We tend to refer to equity investing in the sector as “infrastructure private equity” and debt investing as “project finance” for clarity. Otherwise it gets too confusing if both terms potentially refer to the same thing.

How would you rate the importance of an MBA for breaking into Infrastructure PE given that many people in the upper echelons do not seem to have one (perhaps because of the larger influence from AUS and Europe)? If someone was infra PE-adjacent (Fund of Funds), would it be better to simply hustle to build up a network?

Not important. Networking and work experience are far more important.

Hi, I am starting in Equity Research in a company that overlooks Mining, Construction and Energy sectors. My plan is to move into PE or IB after an MBA and I will like to know which of those three sectors will give me the best background to make the jump.

Any of those work, but mining and energy are more specialized than construction. So construction is probably the safest bet for generalist IB/PE roles.

Love your posts. Thank you so much for the guidance you provide!

I will be starting next summer as a corporate banking analyst for a large US bank, covering Renewable Energy companies. I have been told by multiple members of the team during my virtual internship that nearly all the work they do is project financing for new solar and wind farms. Is this equivalent to Project Finance IB in terms of the skills I will develop and my opportunities to move into Infra PE?

Yes, maybe not “equivalent,” but similar.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Identifying Injustices in Urban Green Infrastructure Connectivity: 4 Case Studies

Urban centers are complex systems, formed and influenced by both external environmental variables like climate and geography, and by the residents who participate in the systems. As the global climate warms, these already complex systems are likely to change in ways that will negatively impact their residents, and certain resources will be required to mitigate and abate these changes. However, these resources are not always fairly distributed amongst participating communities within these systems, particularly populations considered socially vulnerable. One such resource is urban green infrastructure (UGI), the vegetation growing throughout a city that has the potential help mitigate flooding, reduce excessive heat, and improve the quality of life of urban residents. Although studies have examined the amount of UGI in relation to social vulnerability indicators (SVIs), few studies have examined the connectivity of UGI, a variable that can bolster ecosystem services provided by UGI, in relation to SVIs. This dissertation provides a novel method to quantify UGI connectivity inequity in urban centers by examining four US case studies and utilizing a series of Landscape Metrics, SVIs, Principal Component Analysis, and Mann Whitney U Tests to empirically test for inequity. For the first case study, Washington, DC, results indicate that there are disparities in tree areal coverage and connectivity between the upper 50th percentile and the lower 50th percentile regarding Minority %, with plots with a higher percentage of Minority residents having a significantly (p < 0.05) lower mean rank in Tree PLAND, Tree LPI, Tree PLADJ, and Tree Cohesion and a higher mean rank in Tree ENN_MN. The second case study, Phoenix, AZ, indicated disparities in tree and shrub connectivity, with plots in the upper 50th percentile of Poverty %, No High-school Diploma %, and Age 17- % all having a lower mean rank in Tree PLADJ, Tree Cohesion, Shrub PLADJ, and Shrub Cohesion than did the plots in the lower 50th percentile for those variables. In the third case study, Detroit Metropolitan Area, MI, there were no significant disparities facing vulnerable populations over the entire area. However, when comparing the city of Detroit to nearby Oakland County suburbs, results suggested that the city of Detroit, which is known to have a relatively high proportion of vulnerable residents compared to the surrounding suburbs, has a significantly lower mean rank for Tree PLAND, Tree LPI, Tree PLADJ, and Tree Cohesion and a significantly higher mean rank for Tree LSI than the suburbs of Oakland County. This suggests disparities based on city boundaries that were not exposed via this study's initial methodology. In the final case study, New York City, NY, results indicated a significantly higher mean rank for Tree ENN_MN in plots in the upper 50th percentile for the SVI variables Unemployed %, Uninsured %, and Minority % than in plots in the lower 50th percentile. The results of this dissertation empirically demonstrate disparities in UGI coverage in 3 of the 4 cities, and hints at disparities in the 4th, continuing the research into the identification of environmental injustices and providing a new method to quantify this facet of urban ecosystem dynamics through the lens of UGI connectivity.

• https://doi.org/10.18130/V3/FWYKK4
• https://doi.org/10.18130/V3/TSWDAE
• https://doi.org/10.18130/V3/OLNTTE
• https://doi.org/10.18130/V3/6TQ3KH

1_Havens_Zane_2024_PHD.pdf

Uploaded: April 23, 2024

Downloads: 4

Proceedings of the 2023 5th International Conference on Hydraulic, Civil and Construction Engineering (HCCE 2023)

Integrating Geotechnical Engineering and Finite Element Analysis in Urban Tunnel Construction: Case Study of Zhongshan Road Station on Hohhot Metro Line 2

The expansion of Metro Line 2 with the addition of Zhongshan Road Station in Hohhot presents a paradigm of urban engineering that merges infrastructure growth with the conservation of extant utility systems. This study examines the station’s construction, located at a critical junction, which includes a novel straight-wall arch tunnel in close proximity to essential gas pipelines. The core of this paper explores the geotechnical challenges, the application of advanced construction techniques, and particularly the strategic use of grouting for soil stabilization. The employment of Midas GTS NX (2020) for finite element numerical simulation analysis facilitated a thorough investigation of soil dynamics and the interaction with gas pipelines, utilizing the Mohr-Coulomb model. This research also evaluates the impact of different grouting reinforcement approaches on pipeline settlement through a series of controlled simulations. The results demonstrate the significance of grouting methods and their scope in reducing pipeline settlement, where full-section grouting is most effective, but semi-section grouting within a 2.0 m range provides a viable, resource-efficient alternative. The findings of this study offer practical guidance for urban tunnel construction near sensitive infrastructure and emphasize adaptable grouting techniques to ensure the integrity of new and existing structures.

Download article (PDF)

Cite this article