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Developing Strategic
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Developing Strategic
Approaches toInfrastructure PlanningResearch Report2021

The International Transport ForumThe International Transport Forum is an intergovernmental organisation with 62 member countries. It acts
as a think tank for transport policy and organises the Annual Summit of transport ministers. ITF is the only
global body that covers all transport modes. The ITF is politically autonomous and administratively
integrated with the OECD.
The ITF works for transport policies that improve peoples’ lives. Our mission is to foster a deeper
understanding of the role of transport in economic growth, environmental sustainability and social
inclusion and to raise the public profile of transport policy.
The ITF organises global dialogue for better transport. We act as a platform for discussion and prenegotiation of policy issues across all transport modes. We analyse trends, share knowledge and promoteexchange among transport decision-makers and civil society. The ITF’s Annual Summit is the world’s largest
gathering of transport ministers and the leading global platform for dialogue on transport policy.
The Members of the Forum are: Albania, Armenia, Argentina, Australia, Austria, Azerbaijan, Belarus,
Belgium, Bosnia and Herzegovina, Bulgaria, Canada, Chile, China (People’s Republic of), Croatia,
Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India,
Ireland, Israel, Italy, Japan, Kazakhstan, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta,
Mexico, Republic of Moldova, Mongolia, Montenegro, Morocco, the Netherlands, New Zealand,
North Macedonia, Norway, Poland, Portugal, Romania, Russian Federation, Serbia, Slovak Republic,
Slovenia, Spain, Sweden, Switzerland, Tunisia, Turkey, Ukraine, the United Arab Emirates, theUnited Kingdom, the United States and Uzbekistan.

International Transport Forum
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ITF Research Reports
ITF Research Reports are in-depth studies of transport policy issues of concern to ITF member countries.
They present the findings of dedicated ITF working groups, which bring together international experts overa period of usually one to two years, and are vetted by the ITF Transport Research Committee. Any findings,
interpretations and conclusions expressed herein are those of the authors and do not necessarily reflect
the views of the International Transport Forum or the OECD. Neither the OECD, ITF nor the authors
guarantee the accuracy of any data or other information contained in this publication and accept no
responsibility whatsoever for any consequence of their use. This document and any map included herein
are without prejudice to the status of or sovereignty over any territory, to the delimitation of international
frontiers and boundaries and to the name of any territory, city or area.

Cite this work as: ITF (2021), Developing Strategic Approaches to Infrastructure Planning, ITF Research
Reports, OECD Publishing, Paris

Acknowledgements
This paper sets out the findings of a Working Group facilitated by the International Transport Forum (ITF)
at the OECD, comprising 36 members from 13 ITF member countries and chaired by Mr Philip Graham(Executive Director, Greater London Authority and former CEO, UK National Infrastructure Commission).
The Working Group met four times between February 2019 and June 2020.
The initial drafting of the paper was primarily undertaken by Working Group members Stephen Alchin (SDAlchin Advisory, formerly Infrastructure Australia), Tom Worsley (University of Leeds) andTom Wickersham (UK National Infrastructure Commission), together with Rex Deighton-Smith (ITF
Secretariat). Additional research and drafting were provided by Max Bauernfeind (Austrian Ministry forTransport, Innovation and Technology), Steven Finch and Charles Levy (UK Department for Transport),
Björn Hasselgren (Swedish Transport Administration, Trafikverket), Pierre-Alain Roche (Conseil Général del’Environnement et du Développement Durable, France), Alan Scarlett (Department of Transport, Tourism
and Sport, Ireland), Alex Galetovic (Universidad de los Andes/Stanford University) and Philip Graham.
The full list of Working Group members appears as Annex B.

Foreword
Infrastructure underpins both national economies and the wider quality of life people enjoy. It provides
the physical and digital connectivity needed to transport goods, exchange ideas, and stay in touch withfamily and friends, as well as powering homes and businesses and supplying the water that keeps people
alive. Infrastructure networks account for a substantial proportion of both government and private sector
investment, and, given its scale, it is critical that such investment is deployed effectively. Poor
infrastructure investment decisions can lead to congestion, wasted resources and environmental harm;
improving decision making can deliver increased benefits over many decades.
That is, however, easier said than done. The very long timescales for developing and delivering
infrastructure, which mean that the benefits are not felt until many years after the costs begin to be
incurred, do not sit easily with shorter term political and electoral cycles. A lack of commonly accepted
metrics to measure infrastructure need and performance prevent meaningful comparisons being madebetween countries and sectors. Technological and demographic change, together with the potential forground-shifting events such as the current pandemic, mean that any infrastructure plan must deal
effectively with uncertainty.
The increasing interactions within and between different sectors, particularly as the electrification of roadtransport gathers pace and digital systems are embedded across all infrastructure networks, also create
additional complexity. These interactions make it increasingly important that infrastructure
decision making is guided by strategic plans that are long-term and cross-sectoral in scope.
For all these reasons, the question of how infrastructure investment strategies are developed is both vitally
important and hugely challenging. Recent years have seen a number of new approaches that aim to deliver
more sophisticated strategic plans, better targeted at meeting future needs. These include thedevelopment of new and innovative methodologies to capture the wider economic benefits ofinvestments, the creation of independent advisory bodies to support and challenge government
decision makers, and an increasing focus on measuring the actual performance of major infrastructure
projects. This report reviews those developments, seeks to understand their impact and makes
recommendations to improve the quality, consistency and coherence of infrastructure planning anddecision making.
As countries across the world develop strategies to recover from the devastating economic impacts of
COVID-19, infrastructure investment will play a central role – providing fiscal stimulus to support job
creation and growth, creating and strengthening the networks on which renewal will depend, and enabling
the transition to a lower carbon, more sustainable economic model. It is more important than ever,therefore, that such investment is well-planned and targeted and its benefits are felt where they areneeded the most.

TABLE OF CONTENTS

Table of contents
Executive summary ............................................................................................................................. 7
CHAPTER 1 Introduction .................................................................................................................... 10
CHAPTER 2 Project identification, appraisal and selection ................................................................. 13
Project identification and selection ............................................................................................... 13
Project appraisal............................................................................................................................ 15
Use of public-private partnerships ................................................................................................ 17
CHAPTER 3 Institutional and process issues ....................................................................................... 19
Strategic infrastructure plans ........................................................................................................ 19
Independent infrastructure bodies ............................................................................................... 26
Stewardship of existing assets ....................................................................................................... 44
The context for reform .................................................................................................................. 50
CHAPTER 4 Broadening the scope of infrastructure appraisal............................................................ 51
The role of cost-benefit analysis ................................................................................................... 51
Wider economic benefits .............................................................................................................. 52
Integrating WEB assessments with traditional CBA ...................................................................... 58
Issues in cross-border strategic infrastructure planning ............................................................... 62
CHAPTER 5 Ex post measurement of infrastructure performance .................................................... 73
Differences between ex ante and ex post assessments ................................................................ 73
The value of ex post evaluation ..................................................................................................... 74
Challenges for ex post evaluation of infrastructure ...................................................................... 75
Examples of ex post measurement practices ................................................................................ 79
Using evidence from ex post measurement in the strategic assessmentof infrastructure needs in the United Kingdom ............................................................................ 80
Criticisms and responses ............................................................................................................... 81
CHAPTER 6 Conclusions and recommendations................................................................................ 82
Adopting strategic infrastructure plans ......................................................................................... 82
Independent infrastructure advisory bodies ................................................................................. 83
Methodological issues ................................................................................................................... 84
Stewardship of major infrastructure assets .................................................................................. 85
Ex post assessment ....................................................................................................................... 85
Cross-border issues ....................................................................................................................... 86
Notes................................................................................................................................................. 87

References ........................................................................................................................................ 90
Annex A. Comparison of the form and roles of Australian subnational infrastructure bodies ........... 95
Annex B. Working Group participants................................................................................................ 98
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FiguresFigure 1: Strategic planning and project selection in ten countries .................................................. 14

Figure 2: The Danube region – territorial coverage .......................................................................... 63
Figure 3: The Öresund region ........................................................................................................... 67
Figure 4: The proposed Helsingborg-Elsinore connection ................................................................ 69
Figure 5: Proposed Copenhagen-Malmö metro extension ............................................................... 71

TablesTable 1: Comparison of governments’ focus in establishing an infrastructure body ........................ 31
Table 2: Sectoral scope of independent infrastructure bodies ......................................................... 34
Table 3: Comparison of infrastructure bodies’ strategy-related functions ....................................... 36
Table 4: Comparison of infrastructure bodies’ project or investment-related functions ................. 37
Table 5: Regulatory functions that might be adapted and applied to non-regulated infrastructure 46

Boxes
Box 1. Defining strategic infrastructure planning ............................................................................. 11
Box 2. Policy insights from the ITF report on strategic infrastructure planning:
Systemic risks can be reduced where projects form part of a broad and long-term strategic plan.. 20
Box 3. Leadership recommendations from the Infrastructure Commission for Scotland ................. 40

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EXECUTIVE SUMMARY

Executive summary
What we did
This report explores the actual and potential use of strategic planning by governments in ITF member
countries as a means of improving the quality of major infrastructure policy making and investment
decisions. This includes the scope and content of strategic plans, and the extent to which decision making
on individual infrastructure projects takes account of the priorities and directions established in the plans.
Secondly, the report investigates the emerging role of independent infrastructure advisory bodies as a tool
to help governments adopt a long-term, cross-sectoral approach to infrastructure planning anddecision making. Thirdly, it explores current practices and trends in relation to project identification,
appraisal and selection, and the role of ex post evaluation.
What we found
Strategic planning is a relatively commonly used policy tool and is becoming more widespread. However,the nature and scope of strategic plans vary widely: some are sectorally based, some regionally focused
and a few are cross-sectoral, or even have a whole-of-government perspective. Some are limited to theidentification of broad strategic orientations and/or objectives, while others identify individual projects –typically those large in scale and/or transformational in impact. Strategic plans enable more co-ordinateddecision making, which takes account of synergies between projects, considers the demand for, as well as
the supply of, infrastructure services, weighs the competing claims of different sectors and enables
investment decisions to be oriented towards national priorities.
There is an apparent correlation between the adoption of strategic plans and the establishment of
independent infrastructure advisory bodies. The relatively recent establishment of these bodies in mostcountries means firm conclusions as to their effectiveness in improving decision making cannot yet bedrawn. The widely differing range of responsibilities given to these bodies also complicates suchjudgements. However, the independent expert advice on infrastructure needs and priorities these bodies
provide appears to improve the information base for decision making, as well as enhancing transparency
and accountability.
Project appraisal is subject to explicit process and methodological requirements in most countries, andcost-benefit analysis (CBA) is central in virtually all cases. Many countries report proposed projects mustmeet certain benchmarks (e.g. have a positive net present value [NPV]) to be eligible for approval. Others
report CBA is only one among several analyses conducted, and a positive NPV may therefore be neither
necessary nor sufficient for a project to be selected. Differences in the scope of CBA may explain some ofthese apparent differences, with some countries adopting broader CBA by requiring the use of indirect
valuation techniques that enable the quantification of many non-market benefits and costs.
Appraisals of large-scale infrastructure projects increasingly include wider economic benefits (WEBs). This
adds an element of macroeconomic analysis to the microeconomic approach of CBA. WEB assessment isboth data- and resource-intensive. As WEBs are likely to add only 10-30% to traditional benefit estimates
for all but the most transformative projects, WEB assessment is generally reserved for projects that are

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expected to have a large impact on labour markets. Significant uncertainty surrounds most WEB estimates,
but WEB analysis can help provide a clearer picture of the beneficiaries of the project.
Many infrastructure assets serve numerous, often quite different economies and societies. Developing
shared infrastructure can yield efficiencies of scale and scope and deliver higher quality infrastructure
more quickly. By deepening economic inter-dependence, such arrangements can also promote further
efficiency gains and function as a force for positive engagement between countries or regions. However,
the effective operation of shared infrastructure requires sound institutional architecture, clear policy
objectives and agreed allocations of responsibilities.
Strategic infrastructure planning includes the allocation of expenditure between new infrastructure
projects and the maintenance and upgrading of existing infrastructure. This means strategic infrastructure
planners should address the stewardship of existing assets, as well as the means by which new projects
are chosen and developed. Efficient asset management will significantly reduce the life-cycle cost of
infrastructure.
What we recommend
Governments should adopt a strategic approach to infrastructure planning. This should be communicatedclearly via an explicit, detailed and periodically updated strategic infrastructure plan.
These plans should address all major physical infrastructure sectors and take plausible scenarios bearing
on infrastructure demand and supply into account. They should propose clear objectives for infrastructuredevelopment and operation to inform government investment decisions and set the policy framework
underpinning regulatory decisions and private sector investments.
Strategic infrastructure plans should be linked to explicit infrastructure funding envelopes, with projectpipelines identified, at least in broad terms.
There should be clear linkages between strategic infrastructure plans and individual project selection
processes.
Governments should consider the merits of establishing independent infrastructure advisory bodies toprovide transparent, expert advice on long-term, cross-sectoral infrastructure strategy, planning and policy
development, as well as priorities for medium-to-longer-term infrastructure investment.
Evidence to date shows these bodies constitute a low-cost and effective means of improving andcomplementing existing processes. Establishing independent advisory bodies by statute enhances theirability to provide frank and fearless advice and their credibility with a range of stakeholders.
Arrangements for the establishment of independent bodies should address key governance principles, suchas those identified in the OECD’s Principles for the Governance of Regulators.
Advisory bodies should be required to publish their advice to governments, and governments should be
required to respond to that advice in a timely manner.
Infrastructure project appraisal should, as far as possible, be based on a consistent and transparent
methodology.
It should capture all substantial effects of the proposed project, including sustainability, health, safety anddistributional impacts. Addressing these through an expanded CBA will contribute to a more integrated
analysis that aids comparisons between investment options. A selective approach should be taken to the8

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use of WEB analysis, focusing on the largest projects, and those that have wider objectives than are
traditionally pursued via transport infrastructure projects. WEB estimates should highlight key
uncertainties and, where appropriate, incorporate scenario analysis. Project appraisal should clearly
separate WEB from other analyses to clarify the impact of WEBs on the overall outcome.
The OECD/ITF should publish a review of government and private sector infrastructure-related responses to
the Covid-19 pandemic.
This review should consider how demand for infrastructure (especially transport and telecommunications)is likely to change due to the pandemic. It should also assess whether, and how governments and private
infrastructure providers are changing their strategic plans, project appraisal processes and prioritisationof projects.
A formal policy framework should guide decisions on the stewardship of major infrastructure assets.
The objective should be to ensure efficient asset utilisation, maximising availability and performance andminimising life-cycle cost. This should be achieved by setting out relevant performance standards andestablishing incentives for optimal maintenance and upgrade scheduling. This implies separating asset
ownership and management and creating clear financial accountability and incentives. It also requires anadequate (preferably cross-sectoral) regulatory regime to be established where workable competition isabsent.
Governments should review their infrastructure regulatory frameworks.
The review should seek opportunities to support integrated approaches to cross-sectoral planning in order
to avoid unintended consequences.
Ex post performance assessment should be undertaken for all major projects.
This should be conducted using standard CBA frameworks and methodologies. Meta-analysis should beundertaken to better inform future infrastructure policy.
National infrastructure institutions and statistical agencies should co-ordinate internationally to develop
consistent infrastructure performance measures.
Performance measures and indicators can help identify strengths and weaknesses in infrastructure
systems and evaluate the impact of past interventions. Successes in international harmonisation of otherareas of economic statistics suggest the potential to develop comparable measures of infrastructure
performance, which can underpin broader, international comparisons by national infrastructure
institutions and statistical agencies.
Where cross-border infrastructure projects are adopted, they should be managed by a specific-purpose bodywith all parties represented. Policy objectives and performance standards should be clearly specified andgovernance, funding and accountability mechanisms established.
The effective operation of shared infrastructure imposes important challenges, particularly where larger
numbers of countries or regions must co-operate and where they differ widely in economic or cultural
terms. Addressing these challenges effectively requires an appropriate institutional architecture, clear
policy objectives and agreed allocations of responsibilities.

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1. INTRODUCTION

CHAPTER 1
Introduction
Infrastructure investment is a major expenditure item for all governments. The OECD estimates thattransport infrastructure spending alone in OECD countries totalled USD 440 billion in 2016, or 0.79% ofgross domestic product (GDP) (OECD, 2019). Moreover, the current level of expenditure is relatively low
by historical standards: the International Transport Forum (ITF) notes (ITF, 2015; 2018) that transport
infrastructure spending in Western Europe progressively declined as a proportion of GDP, from a high ofaround 1.5% in 1975 to 0.7% in 2015, before rising slightly in the most recent period. Reflecting this trend,
there have been numerous warnings of a developing “infrastructure gap” in recent years. This suggeststhat the relative importance of transport and other infrastructure in terms of overall government spendingis likely to increase in the medium term.
The scale and scope of infrastructure spending, together with the long lifespan of most infrastructure
assets, make it essential that decisions about what infrastructure to build and when are well-based. Thatis, the opportunity cost of poor decision making in relation to infrastructure investment is very high.
Moreover, infrastructure quality is a key determinant of the productivity performance of the economy asa whole. Even where infrastructure sectors are privatised, government policies and objectives set thecontext in which regulatory and private sector investment decisions are taken. Robust and consistentprocesses and methodologies are needed to ensure systematically that the right infrastructure is built at
the right time, and that it is constructed and maintained at efficient cost. The temptation to makeinfrastructure choices on political grounds provides a further rationale for using explicit, standardised
processes and methods to identify and assess project options and inform decision making.
Good processes and methods are needed to underpin the key tasks of project identification, appraisal andselection. However, even where such mechanisms are in place, decision making undertaken wholly at a
project-specific level, without consideration of the trade-offs between expenditure options within andbetween sectors, will not consistently serve the wider range of policy objectives to which infrastructure
investment contributes. In addition to being a key contributor to productivity, infrastructure investments
serve objectives including improved connectivity and accessibility, regional economic development, andbroader strategic economic objectives. The fact that there are frequently synergies between projects (bothpositive and negative), further complicates the decision-making process and also points to the need for a
strategic approach to be taken to maximise the benefits of infrastructure spending.
Recognition of these factors has seen governments in an increasing number of countries move toward
adopting strategic approaches to infrastructure planning. These entail identifying high-level priorities andweighing infrastructure investment options both within and between sectors – looking at options relating
to both the supply of and demand for infrastructure. They can also involve addressing the issue of theoverall level of expenditure needed to achieve infrastructure-related goals and the means by which these
spending levels will be funded. At the same time, governments are making significant reforms to theprocesses and methods used to undertake project identification, assessment and selection. This includes
expanding the scope of the appraisals undertaken, improving the methodologies employed andstrengthening feedback loops through enhanced ex post assessments.

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1. INTRODUCTION

Box 1. Defining strategic infrastructure planningThe objective of the strategic infrastructure planning agencies and processes examined in this report is toenhance the quality, affordability and sustainability of infrastructure services. This entails: establishingoutcome-focused objectives for infrastructure services; reviewing and updating relevant policy processes;
and identifying, assessing and prioritising projects and programmes on a cross-sectoral basis. Strategic
infrastructure planning should consider options that address both the supply of and demand forinfrastructure services. It necessarily has a long-term focus, typically reflecting a minimum 10-15 year time
horizon and, in some cases, extending as far as 30 or 40 years. It covers both the policy framework
governing infrastructure development and operation and the identification and prioritisation of
investments. Developing a more strategic approach to planning usually involves significant reform ofprocesses for project identification, assessment and appraisal and ensuring that they are appliedconsistently.
Strategic infrastructure planning is typically primarily concerned with broad investment directions andpriorities, rather than individual projects, although many plans will identify some specific projects,
particularly where these are major, long-term investments likely to be transformative in nature. An
important aim of strategic infrastructure plans (SIPs) is to build consensus around the goals that
infrastructure investment and operation are intended to achieve and to identify evidence-based strategies
to achieve them. Such strategies should recognise the uncertainties necessarily inherent in long-term
investment planning and take account of the challenges of sustainability and climate change. To do this,
SIPs should be able to demonstrate that the relative merits of different investments are considered on aconsistent and cross-sectoral basis and that possible positive and negative interactions between
investment decisions are taken into account. Where infrastructure sectors are fully or partially privatised,
SIPs will focus particularly on ensuring that sound policy frameworks, and associated regulatory strategies,
are adopted to underpin the efficient private provision of infrastructure services.
A fundamental change currently underway is that strategic infrastructure plans are increasingly being
integrated with land-use plans. This integration of policy and planning across sectors offers major
opportunities to achieve synergies in development and enhance the quality of urban environments.

This report examines a number of dimensions of strategic infrastructure planning. Good practices in eacharea can and should be mutually supportive. Hence, the discussion in each chapter highlights the links
between different elements of strategic infrastructure planning, including potential synergies andtensions. The report focuses in particular on transport infrastructure; however, many of the issues
discussed and the strategies for improving infrastructure investment practices identified are broadly
applicable across all areas of physical infrastructure.
Chapter 2 provides a brief overview of current practices and recent trends in respect of project
identification, appraisal and selection. It is based on material provided by working group members in
response to a questionnaire and covers 11 ITF member countries. It discusses the processes adopted, theinstitutions responsible for major tasks, and the appraisal methods and decision criteria adopted.
Chapter 3 addresses institutional and process issues in detail, focusing on three key issues. First, it
discusses key issues in the use of SIPs, focusing on their scope and content, addressing cross-sectoralissues, the use of public and stakeholder consultation in developing SIPs, the use of scenario planning, andthe merits of linking SIPs to indicative infrastructure budget allocations. Second, it discusses the role ofindependent infrastructure advisory bodies in providing advice and other inputs to governments to

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1. INTRODUCTION

contribute to the development of SIPs. This section describes the spread of these bodies across several ITF
member countries in recent years, including at the subnational level; identifies and analyses the range offunctions that they perform; and reviews the relationships between the independent advisory bodies,other government entities and non-governmental stakeholders. Third, the chapter addresses thestewardship of existing infrastructure assets. It explores the importance of ensuring timely, programmed
maintenance in minimising the life cycle costs of infrastructure and discusses the relationship between
ownership structures, regulatory architectures and incentives, and the achievement of these outcomes. It
also briefly considers the trade-off between new project funding and the maintenance and upgrading ofexisting assets when allocating infrastructure spending.
Chapter 4 deals with project appraisal methodologies. A central issue is that of how to ensure that all of
the significant impacts of major infrastructure investments can be captured within the appraisal process
and assessed in an integrated and consistent way. Only if this is done can fully informed decisions be made,taking account of all relevant trade-offs. Key questions include:

how and when to expand the analysis to include wider economic benefits

how to ensure equity impacts are accounted for, including regional impacts



how infrastructure spending should be financed, and what implications different options have forinter-generational equity



how sustainability impacts can be included within the analysis



how cross-border issues, such as the determination of appropriate infrastructure investment andthe allocation of costs, can be addressed by sometimes disparate neighbouring countries andsubnational administrations investing in infrastructure to serve the region.

Chapter 5 discusses the role of ex post assessment of the performance of infrastructure projects. Ex post
assessments have been relatively rarely undertaken in the past, but are increasingly recognised as a core
part of a best practice strategic infrastructure planning process. This reflects the broader movement
toward recognition of the need to evaluate major policy choices if the policy cycle is to be completed andsound policy processes are to be established in the dynamic sense. Chapter 5 describes emerging practices
in relation to ex post assessment, particularly in relation to methods and processes, and the role of theseassessments in the policy process.

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2. PROJECT IDENTIFICATION, APPRAISAL AND SELECTION

CHAPTER 2
Project identification, appraisal and selection
The Working Group gathered data on infrastructure project identification, appraisal and selection practices
via a survey of its members, with responses being received in respect of 11 ITF countries.1 These data,
which cover all infrastructure sectors, were compiled to provide insights into both current practices andemerging trends, and are summarised below.
In this chapter, project identification refers to the institutions and processes by which possible
infrastructure projects are identified, including questions of what linkages exist between the identificationof individual projects and strategic plans. Project appraisal refers to the processes and methodologies used
to assess the societal benefits and costs of possible infrastructure investments. Project selection refers to
the institutional and procedural means of choosing between different infrastructure investment options,and the decision criteria employed.

Project identification and selection
This section summarises country responses in relation to project identification and selection, focusing on
the two key dimensions of the use and extent of strategic planning and the allocation of institutional
responsibilities.
Use of strategic planning

Infrastructure investment decisions are taken in the context of strategic plans in most of the respondent
countries; however, the nature of these plans varies widely. While seven of the ten countries thatprovided information on this issue stated that strategic plans were in place, only three (Austria, Hungary
and Slovenia) stated that a National Transport Plan had been adopted. Four more countries stated thateither mode-specific or regional plans are used.2 In only one respondent country (Ireland) does transport
infrastructure planning occur within the larger framework of a national strategy that covers all key
sectors of the economy. In the remaining two respondent countries, project selection is essentially
undertaken on an organic basis. Chapter 3 discusses the nature and uses of strategic infrastructure plans.

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Figure 1: Strategic planning and project selection in ten countries

National strategy (multisectoral) (IRE)
National transport plan
(AUT, SLO, HUN)
Sectoral/regional plans(AUS, CAN, NZL, GBR)
Mostly organic (CHL, SWE)

Source: working group analysis.

Institutional responsibilities

A wide range of entities are involved in project generation. However, national transport agencies, which
are commonly quasi-independent bodies operating at arm’s length from the relevant ministries, weremost commonly identified as performing these functions. There appears to be a trend toward the mergerof previously mode-specific agencies. For example: Transport Infrastructure Ireland was formed in 2015
via a merger of the former National Roads Authority and the Railway Procurement Agency; the Slovenian
Infrastructure Agency is responsible for both the road and rail sectors;3 and the Swedish Transport
Administration (Trafikverket), formed in 2010, is responsible for infrastructure planning across the road,rail, aviation and shipping sectors. The growth of multi-modal transport agencies provides opportunities
for more strategic decision making that compares the relative merits of project proposals across different
transport modes.
Many responses also highlighted the partly decentralised nature of project generation activity. In
federations, such as Australia and Canada, constitutional factors mean that primary responsibility for
infrastructure accrues to subnational levels of government. However, a high level of vertical fiscal
imbalance means that co-funding from the national government is a feature of many of the largest projects
and, in turn, implies that national governments exercise significant influence on project selection. Unitarycountries such as Sweden also highlighted the fact that much project generation activity occurs at theregional level. In this context, regional planning and public transport agencies, as well as regional officesof transport agencies such as the Swedish Transport Administration, can have significant roles in projectgeneration.
Project selection is largely separate from project generation in most of the surveyed countries. Several
stated that this reflects the fact that project selection decisions are ultimately political, with ministers
taking decisions based on the advice of transport agencies or ministries and decisions on the largest
projects typically taken at a Cabinet level. However, conscious separation of these activities is also found
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2. PROJECT IDENTIFICATION, APPRAISAL AND SELECTION

within the administration. For example, while Transport Canada both assists infrastructure agencies withproject generation and undertakes assessments, these functions are kept separate, with officials who workon one task not undertaking the other. In New Zealand, project generation and option selection are carriedout by “approved organisations”, while selection of projects that require access to the National Land
Transport Fund is undertaken by the NZ Transport Agency. Sweden reports that there is an overlap
between project generation and selection, with the multi-modal Swedish Transport Administration bothbeing a significant player in project generation and being responsible, within the scope set by thegovernment, for the development of the national and regional transport strategies, which are the vehicles
for the project selection process.
Several countries indicated that projects’ degree of consistency with strategic plans was central to thedecision criteria adopted for project selection purposes, although projects are generally also required tomeet relevant economic and financial benchmarks, as demonstrated via a business case process. Sweden
stated there was no standardised set of criteria with pre-defined weights, but that consistency with thetransport objectives set by parliament was the key driver of project selection decisions. Transport Canada
identified the following criteria: an adequate business case; support for improved supply chain
performance; contribution to increasing the resilience of the transport system, including climate
resilience; addressing the economic and social development needs of the north; and ability to leverage
investments from other partners.
New Zealand has an Investment Decision-Making Framework and an Investment Prioritisation Method,which form the basis for project selection decisions. These are based on the business case approach andconsider the project’s degree of alignment with overall government strategic priorities as well as theresults of CBA. Similarly, Ireland pointed to its Public Spending Code and Common Assessment Frameworkas the key framework documents for project selection. Australia noted the existence of some variations inapproach between jurisdictions (i.e. between national, state and territory governments), but stated that,in general, projects’ alignment with strategic plans, economic and financial appraisals, and the delivery
strategy are all weighed during project selection. However, among these factors, the financial appraisal(including the call on government budgets) is generally accorded the greatest weight. The delivery strategy
for the project also receives significant attention, due to the political risks of failure to deliver projects ontime and on budget.

Project appraisal
Formal project appraisal processes are required to be followed for most or all publicly funded
infrastructure projects in all of the respondent countries. The formal appraisal requirements typically
apply above a specified project cost threshold, which varies quite widely between countries. For
example, a threshold of EUR 2.5 million is applied in Slovenia, a EUR 5 million threshold is used in both
Austria and Sweden, and a EUR 20 million threshold is used in France and Ireland. Australia’s federal
government requires projects to have their business cases assessed by the independent infrastructureadvisory body, Infrastructure Australia, and to be drawn from the Infrastructure Priority List, if the
expected federal government contribution exceeds AUD 100 million (EUR 60 million),4 while several state
and territory governments apply similar rules. The United Kingdom does not have a formal monetarythreshold for project appraisal, instead adopting a general requirement that a “proportionate” level ofanalysis be undertaken. This requirement is applied within the context of a five-part business case,including strategic, economic, commercial, financial and management analyses.

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Appraisal methodologies

All the respondent countries publish methodological guidance on project appraisal, thus helping toestablish clear expectations and promote consistency in analytical standards. Two countries (Hungary andSlovenia) noted that their guidance is based on European Union standards. Published guidance documents
generally set out a wide range of potential impact types, which the appraisal is required to include where
relevant. Most also identify what analyses are required to be completed. For example, Transport Canada’s
guidance states that the net present value, benefit-cost ratio (BCR) and internal rate of return must be
calculated, with sensitivity analysis also undertaken.
Guidance on indirect valuation methods is provided in most cases, in order to ensure monetary values arecalculated for as many impacts as feasible, while parameter values for key variables are specified in somecases to promote consistency between appraisals. Guidance on indirect valuation is typically provided in
respect of most or all of: the value of travel time, safety benefits, noise impacts, pollution impacts andgreenhouse gas emissions.
Eight of the 11 guidance documents explicitly state that impacts that cannot be monetised even indirectly(e.g. network resilience or travel time reliability benefits) should, nonetheless, be included in the analysis,
However, only around half of these provide specific guidance on how this should be done, beyond generalstatements that such impacts should be assessed qualitatively. Slovenia requires multi-criteria analysis(MCA) to be used, but does not specify particular MCA methods or weightings. Ireland requires
unquantified impacts to be assessed using a seven-point scale, rating the impacts from “very negative” to“very positive”. Austria also uses an MCA-like scoring system, with weightings sometimes applied.
In addition, some guidance documents identify a range of specific equity-related impacts that are required
to be included in the analysis. For example, in Ireland, this includes impacts on physical activity,
accessibility, and social inclusion and integration. In New Zealand it includes impacts on social inclusion,
cultural and heritage values, and indigenous people.
Quality control

The conduct of project appraisal is, in all cases, the responsibility of the project proponent, althoughseveral responses highlighted the fact that this function is contracted to external experts in many or mostcases. Independent quality control mechanisms exist in most, but not all, countries. This quality control
function is most commonly undertaken by the transport agency or ministry (including in Austria, Canada,
New Zealand and the United Kingdom), with other quality control bodies including:other ministries (e.g. the Department of Public Expenditure and Reform in Ireland and the Ministryof Social Development in Chile)

independent infrastructure advisory bodies (Australia, at both state and national level)groups of independent experts appointed by the proponent agency for this purpose (Slovenia andSweden)

external audits (France).

Where used, quality control by an independent body is generally seen as a key element of an effective
project appraisal process. This is consistent with the practices of OECD countries in relation to regulatory
impact assessment, which applies CBA and related methods to appraise the merits of regulatory proposals.
The OECD recommends that independent oversight be applied to ensure the quality of all regulatory
impact assessments (OECD, 2012).

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2. PROJECT IDENTIFICATION, APPRAISAL AND SELECTION

Decision rules

No respondent country stated that a single, unambiguous decision rule is adopted in project appraisal.
Four countries (Chile, France, New Zealand and Slovenia) stated that a positive net present value was
generally seen as a prerequisite for a project to be approved, while Australia noted that its independent
infrastructure advisory body had placed increasingly heavy weight on the BCR in recent times, albeit thattwo other criteria – “strategic fit” and delivery strategy – are also included in the decision process.
Conversely, several responses described the outcome of the CBA as being only one element of theappraisal, which must be weighed alongside other factors, such as the project’s contribution to thegovernment’s strategic objectives for the transport system, its linkages to other projects and its
distributional implications. The Swedish response stated that the three elements of its project appraisal(CBA, distributional impacts and contribution to transport objectives) are unweighted and cannot besummed.
Ex post assessments

Ex post assessment of projects is widely practised, although the nature and extent of the assessments
differs significantly between countries. Seven of the 11 respondents stated that ex post assessments are
required for all projects, but in two cases (France and Ireland), the mandatory assessment requirement
applies only to projects with a cost higher than the identified threshold value (EUR 20 million and
EUR 83 million, respectively). The United Kingdom requires plans for ex post evaluations to be included inbusiness cases, but notes that these are not completed systematically in practice. In Austria and
New Zealand, ex post assessments are conducted in respect of “selected” projects only,5 while in Australia
ex post assessments are recommended, and guidance on how to conduct them is published, but they are
not generally mandatory.6
Stakeholder engagement

Ireland, New Zealand and the United Kingdom report that stakeholder engagement is an expected part ofthe project development and/or business case development process, while Infrastructure Australia
encourages project proponents to engage with stakeholders during project development, notably via its
published Infrastructure Decision-Making Principles (2018). France notes that stakeholders are formallyable to engage in the assessment via the project consultation process, but that the highly technical natureof CBA means that there is little engagement in practice. Canada has legislated requirements forstakeholder engagement to be undertaken during the development of environmental impact assessments,
though not in respect of the development of business cases more generally. Stakeholder engagement
appears to be limited in the other respondent countries.

Use of public-private partnerships
Countries differ widely in terms of their propensity to use public-private partnerships (PPPs) to deliver
infrastructure projects. While the use of PPPs is widespread in Australia, Canada, Ireland and theUnited Kingdom, they are rarely employed in several other countries. Notably, there have been apparently
significant moves away from the use of PPPs in several countries in recent years. The Swedish government
adopted a strong recommendation against the use of PPPs in transport infrastructure in 2012, whichlargely remains in place, albeit that there has been some reconsideration of the issue in recent years. The
French Cour des Comptes also recommended against their use in a 2017 report (Cour des Comptes, 2017).

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In the United Kingdom, which has been a pioneer of PPPs and adopted them widely, the government
announced in 2018 that it was discontinuing the use of its second-generation PPP policy, the Private
Finance 2 (PF2) initiative, following the publication of a critical report by a parliamentary committee(UK Parliament, 2018). These moves away from the use of PPPs seem to have been driven largely by valuefor-money concerns, although increasing understanding that PPPs cannot expand the public funding
envelope may also be a factor.

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3. INSTITUTIONAL AND PROCESS ISSUESCHAPTER 3
Institutional and process issues
The environment in which infrastructure investment decisions must be made has become increasingly
complex and challenging for most countries in the OECD and beyond. Infrastructure must be delivered andmaintained in an environment of falling productivity growth, increasing pressure on public budgets, risinginequality, and increasingly urgent concern over climate change and sustainability. These challenges have
sharpened awareness of the necessary trade-offs involved in making infrastructure investment choices
and the importance of ensuring that investment choices reflect broad social priorities. This, in turn, hasbeen a significant factor in driving the increasing adoption of strategic infrastructure plans internationally,
highlighted in Chapter 2.
This chapter reviews institutional issues associated with strategic infrastructure planning processes anddecision making. Well-governed institutions and sound processes are fundamental to effective strategicplanning as they are more likely to deliver effective infrastructure plans and decisions. In particular, thechapter addresses:strategic infrastructure plans, notably: the use of scenario planning, the importance of broad
consultation, challenges in integrating planning across infrastructure sectors, linkages togovernment budgets, and links to individual projection selection

the increasing role of independent bodies in providing advice to governments on strategic
infrastructure issues

the long-term stewardship of existing assets, including what regulatory arrangements can be
adopted where the operating environment is not workably competitive.

Strategic infrastructure plans
The International Transport Forum published guidance in 2017 on best practice in strategic infrastructure
planning (ITF, 2017b). The report included 11 “policy insights” (Box 2) to assist governments in improving
their strategic infrastructure planning and associated decision-making processes. This paper does notcanvass those insights further, as they are only recently articulated and there is no evidence of material
developments to suggest they are no longer relevant.7 Indeed, the COVID-19 pandemic has probably
highlighted the importance of some insights. The following section discusses four areas in whichapplication of the insights can be problematic. These are:

the use of scenario planning

the importance of consultation

challenges in adopting a cross-sectoral approach to planningthe need for strategic plans to be linked to budget processes.

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Box 2. Policy insights from the ITF report on strategic infrastructure planning: Systemic risks can be
reduced where projects form part of a broad and long-term strategic plan
When it works well, strategic planning can set out a stable set of priorities and future investment withdurable cross-party support.
Strategic infrastructure planning nevertheless carries its own risks.
A successful infrastructure planning process balances a stable framework with maintaining flexibility.
The planning process requires clear objectives, a degree of independence and an open, collaborative
approach.
The planning methodology needs to address risks and uncertainties, take into account binding policy
constraints, and include consideration of pricing the use of infrastructure.
A top-down approach to infrastructure planning to complement traditional project by project assessment
is essential to a strategic assessment of long-term economic infrastructure needs across sectors.
Infrastructure planning across sectors can help identify the most important systemic risks early.
Using analytical methods such as a scenario-based approach to analysis can be helpful in future-proofing
infrastructure plans.
It is important to consider how demand for scarce infrastructure can be managed.
A top-down approach could foster the development of an analytical framework for investment decisions
reflecting both demand- and supply-side considerations.
Source: ITF (2017b).

Scenario planning

The ITF report found that policy makers have made only limited use of scenario planning, although someexamples were identified. These included the use of scenarios to estimate long-term infrastructure needs
by RTE, France’s electricity transmission network operator, and similar work undertaken at a Europe-widelevel by ENSTO-E. France’s 1Mobilite 21 Commission also used two economic growth scenarios indeveloping its Long-term National Sustainable Mobility Plan (ITF, 2017b).
The development of Australia’s National Freight and Supply Chain Strategy was informed by an analysis ofvarious scenarios. This analysis was used to:20



anticipate future developments, i.e. what challenges may be faced by the Australian freight sector
and what opportunities may arise within the time horizon explored (20 years)

brainstorm what government and industry may do in the future, i.e. generate ideas about what
directions, policies and measures stakeholders may decide to pursue



identify blind spots in the decision process, i.e. explore, given the directions, policies and measures
under consideration, whether anything important has been left outtest decisions, i.e. to explore whether the policies and measures under consideration would beappropriate in the different scenarios identified (Centre for Supply Chain and Logistics, 2017).

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3. INSTITUTIONAL AND PROCESS ISSUESNew Zealand also uses scenario planning in a number of transport contexts. In particular, these include
assessing future demand in areas including freight and passenger movements. In recent times, the Ministryof Transport has developed a range of COVID-19 recovery scenarios to inform priorities for future policy
development to ensure the transport system is sustainable and resilient. Scenario studies are used to help
inform discussions with stakeholders and the public on the strategic direction of investment, feeding into
long-term planning documents such as the Government Policy Statement on Land Transport Investment.
Governments’ reluctance to use scenario planning may be due, at least in part, to the difficulty ofaddressing multiple objectives. However, they may also be concerned about how such exercises will beperceived in the community and in the media, and see scenario planning as an unnecessary risk. In one
jurisdiction, a scenario planning exercise became the subject of media criticism and ridicule when a “leftfield” scenario involving the arrival of aliens was canvassed early in the process. This example illustrates
two important points. First, scenarios should be reasonably plausible, and able to be influenced bygovernment decisions. Second, infrastructure planning is necessarily a public exercise, and the media has
considerable interest in this field; governments therefore must manage media and public discussion about
the scenarios. In particular, governments need to manage public messages about pessimistic scenarios,
lest they be accused of “planning to achieve a disaster”.
The effort required to implement scenario planning may also be a reason why the technique is not often
applied. Scenario planning typically requires significant commitments of time and resources, whereas
Cabinet processes tend not to provide time for the analytical and strategic thinking associated withscenario planning.
Governments should consider how they can adapt their policy- and decision-making processes to support
the use of scenario planning and its influence on decision making. That said, scenario planning must
demonstrate an ability to add value to decision-making processes. The following factors will be critical if
scenario planning is to become a standard element of planning practice within governments:

support for its use at senior levels of the civil service: senior officials must promote the value of
scenario planning, e.g. by providing clear advice as to how scenarios can be used to shape strategy,planning, investment and policy decisions



ministerial support for scenario planning as a tool in planning and decision making

Cabinet willingness to commit time to developing and updating scenario plans.

Some governments have taken steps toward establishing a scenario planning capability as a part of theirdecision-making processes. For example, in Australia, the New South Wales government adopted a rangeof “common planning assumptions” in November 2017 (and updated in early 2020) that have to beaddressed in plans and project business cases. The assumptions are developed by a working groupconvened by the Ministry of Finance. Project proponents can vary the assumptions if there is a compellingcase to do so; however, any departures from the common assumptions are assessed as part of the businesscase review processes.
Governments, or their advisory agencies, could consider formally establishing and publishing a range of
scenarios for use in strategic planning, policy making and the evaluation of project proposals. The use of
scenarios would encourage deeper reflection on the uncertainties associated with a project than simply
adding X% +/- on to the parameters in a CBA, which often appears to be the extent of risk assessment
contained in project business cases. The scenarios could be used to assess whether projects remain robust
under a plausible range of circumstances, or whether staging a project (where that is practicable) would
be an appropriate way of managing uncertainty and risk. The scenarios themselves would need to be thesubject of periodic review and challenged.
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3. INSTITUTIONAL AND PROCESS ISSUESThe COVID-19 pandemic has highlighted the fact that the future is uncertain, and that events candramatically upend forecasts and projections. Infrastructure decision making is typically concerned withlong-term matters, with major investments having lifespans of many decades and lengthy payback periods.
The COVID-19 pandemic has underlined the need for governments to acknowledge uncertainty in a deeper
way, and to consider making greater use of scenario planning in their decision making.
At least two of the independent bodies – Infracom and Infrastructure Western Australia – are using
scenario planning as a tool in the development of their forthcoming infrastructure strategies. Work on
both strategies commenced before the pandemic, and the organisations’ use of scenarios reflects theirbelief in the value of scenario planning, including its ability to clarify the interconnections between
seemingly disparate events that might bear on different infrastructure sectors (Infracom, 2020b).
Consultation

The ITF (2017a) also highlighted the importance of stakeholder engagement in the strategic planning
process, both as a means of ensuring the credibility and legitimacy of the resulting plans and as a data
source. However, consultation on strategic plans presents numerous challenges. Consultation processes
can miss key voices and raise concern in some quarters about the direction of government plans,particularly in a context of declining trust in governments and their institutions in many countries.8 Thissuggests that significant effort is needed to engage the public in strategic planning and to involve a broadcross-section of society in discussing the difficult policy and investment trade-offs that strategic plans seek
to address.
Government agencies continue to experiment with ways to engage more effectively with the public,
including those who may not normally be involved in strategic planning processes. For example, in thedevelopment of its 30-year infrastructure strategy, Infrastructure Victoria used a “citizens’ jury” process
to complement more established consultation processes. Juries were assembled in both metropolitan andregional areas, with each comprising approximately 40 randomly selected community members. They
each met on six occasions, enabling a broad cross-section of individuals to become more deeply engaged
with the issues being considered in the planning process. Infrastructure Victoria provided detailed
responses to every recommendation made by the juries (Infrastructure Victoria, 2016) and subsequently
conducted a detailed survey asking for respondents’ views on the objectives underpinning the strategy.
This work was undertaken to seek feedback on the objectives and their relative priority and, in turn, toinform the next cycle of strategy development.
In Scotland, the Infrastructure Commission for Scotland (ICS) developed a stakeholder engagement
strategy and action plan to capture the views of infrastructure stakeholders. This included the use of“deliberative research” methods with citizens and consumers of infrastructure. Similar to Infrastructure
Victoria’s use of citizen juries, this is a form of interactive engagement, and provides detailed information
to participants in order to facilitate more informed input. In the ICS case, this included detail on theconcept and practicalities of trade-offs, in both urban and rural settings.
Robust processes such as these, and the insights they provide, can provide governments with confidence
that the strategic direction they are pursuing is founded on solid policy analysis and a well-researchedunderstanding of public aspirations and concerns. They provide a powerful defence against claims thatgovernments are “out of touch”. Extending these sorts of processes to scenario planning is a “next step”
worthy of further consideration.

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Challenges in adopting a cross-sectoral approach to infrastructure planning

The adoption of a cross-sectoral approach to infrastructure planning has been advocated for some time.
For example, in introducing legislation to establish Infrastructure Australia, the then Minister for
Infrastructure stated, “… it is clear that, when it comes to planning on infrastructure, we … need aco-ordinated approach to infrastructure that is whole of government and that recognises that there are
relationships between our transport infrastructure – that is, roads, rail, shipping and aviation – and ourwater infrastructure, energy infrastructure, communications infrastructure and social infrastructure. We
need to do much better on these issues in the future than we have done in the recent past” (Albanese,2008).
Similarly, the ICS has strongly emphasised the need to address interdependencies between different forms
of infrastructure, especially if Scotland’s economy is to be decarbonised.
However, while changes have occurred in the process of planning for individual infrastructure sectors,
cross-sectoral planning arguably remains beyond the frontier of infrastructure planning practice. The casefor cross-sectoral infrastructure planning is founded on an expectation that it will make infrastructure
networks (individually and collectively) more resilient and generate greater economic benefits than aseries of uncoordinated sector-specific plans.
Resilience

Over the last two or three decades, attention has increasingly focused on the resilience of national andregional infrastructure systems. This reflects growing recognition of the threats to the economies andcommunities dependent on those systems posed by long-term shifts such as climate change, as well as
short-term incidents such as terrorist attacks. COVID-19 has also served to emphasise the importance of
resilience to systems across all sectors of the economy and society.
The focus above on the term “systems” rather than “infrastructure” is deliberate. Although the physicalinfrastructure itself needs to be as resilient as reasonably possible in the face of these shifts and events, itis the resilience of the transport system overall, including possibilities for substituting the mode oftransport, that counts. At the same time, it is increasingly clear that ensuring the continuity of the supply
of infrastructure services requires that all of the numerous elements that comprise infrastructure systems
should demonstrate resilience. The focus must therefore be on these broader systems, rather than
individual assets. This includes strategic and asset management planning, operational procedures,
management and integration across infrastructure sectors (not just within transport) and with emergency
and security services.
The promotion of a cross-sectoral approach to infrastructure planning and decision making has been a key
part of the rationale for establishing independent infrastructure advisory bodies, as discussed below, andthe resilience of infrastructure systems appears to be a particular focus of their work. Given their broad
remit, the independent bodies are well-placed to explore cross-sectoral interconnections, whereas
individual line agencies necessarily face difficulties in addressing the interaction of their own work withother sectors. The independent bodies therefore complement the work of the line agencies in this regard.
Digital and energy infrastructure have been identified as having particularly important linkages to othersectors, as all forms of infrastructure need to be supplied with energy and, increasingly, all forms ofinfrastructure are dependent on digital control systems.
In the United Kingdom, the scoping report to the recent study of resilient infrastructure by the National
Infrastructure Commission (NIC), the UK government’s independent infrastructure advisory body,

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observed that “… there is a significant focus on resilience issues in individual sectors, but there is currently
limited understanding of the resilience and vulnerabilities of the UK’s economic infrastructure. Some
organisations have begun to look at cross-cutting resilience challenges, but the current approach is
insufficient to address them … But the fact that the current landscape is focused on individual sectors isitself limiting; it is difficult to find examples of holistic and cross-cutting approaches and there is not yet anadequate understanding of the resilience and vulnerabilities of the UK’s economic infrastructure as awhole.”
The final study report, published in mid-2020, concluded that:

while there are resilience standards, there are gaps, the standards are not regularly reviewed, and,in some cases, the standards are out of date.



infrastructure operators do not always have the right incentives to invest in resilience.

cross-sectoral interdependencies are not as well understood as they might be, and “Increasing
interdependencies can also lead to ‘emergent’ outcomes, which are not related to any specificaspect of the system but emerge from all the elements combined, and can be very difficult toforesee. These vulnerabilities are not well understood.”

Importantly, in conducting the study, the NIC piloted a modelling methodology to test interdependencies
between sectors, helping to understand: “cascade failures”; how different ways to enhance resilience canbe compared; and how opportunities for improving resilience could arise from planned changes toinfrastructure networks (NIC, 2020). The situation identified by the NIC may well be replicated in othercountries. Infrastructure Australia’s 2019 Infrastructure Audit also pointed to complex and interconnectedrisks affecting Australia’s infrastructure networks.
Economic and social benefits

The economic benefits of cross-sectoral planning are perhaps more readily demonstrated at a regional
level than at a national level. Regional development strategies often comprise a mixture of infrastructure
projects as well as non-infrastructure investment in areas such as training, business subsidies, fostering
intra-regional collaboration and other economic development programmes. Cross-sectoral planning canalso offer other economic and social benefits. Co-ordinated planning and delivery of infrastructure should,
in theory, lead to better asset utilisation, with:

lower needs for new capex, e.g. through the use of shared infrastructurelower risks of stranded infrastructure

avoidance of situations in which investment occurs too early and is then dependent on the deliveryof other infrastructure before it can be used (and paid for through user charges).

Cross-sectoral planning also minimises the risk of social costs being incurred due to the development of
new settlements without timely delivery of supporting infrastructure. This is relevant at levels below thatof truly long-term, strategic planning. For example, in Australia, the Greater Sydney Commission, a body
responsible for the city’s strategic planning, is co-ordinating infrastructure-related inputs from a wide
range of state government agencies and local councils to develop a series of “growth infrastructurecompacts” for various parts of Sydney. These typically have a 10+ year outlook and are aimed at ensuring
new development is supported by high-quality infrastructure. Critically, the compacts will influence thesequencing of new urban development. As the name implies, the compacts are intended to secureinter-governmental and inter-agency agreement on, and commitment to, a co-ordinated programme of

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investment. There is concern in some quarters as to whether the compacts can be delivered. For example,
some local councils are concerned that the New South Wales government will have insufficient funding tofollow through on timely delivery of certain infrastructure. Nevertheless, the compacts represent asignificant step forward in planning and, importantly, prioritisation of investment.
Linkages to government budgets

Strategic plans can sometimes be little more than “wish lists” of projects, lacking clear funding
arrangements. At one level, this is understandable; strategic plans necessarily take a long view of
infrastructure needs, extending beyond the budget cycle. However, plans that do not have a reasonablechance of being implemented artificially raise expectations. Where funding constraints lead to planned
projects being scaled back or abandoned, public trust risks being damaged. Plans that do not plausibly
address funding needs also present other problems. In particular, they:

fail to address necessary choices about prioritisation of scarce resources

put off debates about policy reforms that might be a more effective means of dealing with various
infrastructure challenges – e.g. transport charging and pricing.

As noted earlier, the UK and Welsh governments provide the NIC and National Infrastructure Commission
for Wales (NICW) with a fiscal remit for their work and recommendations to the government. The
UK government is the only government to have set a specific fiscal target for its independent body. The
NIC is required to “demonstrate that its recommendations for economic infrastructure are consistent with,and set out how they can be accommodated within, gross public investment in economic infrastructure of
between 1.0% and 1.2% of GDP in each year between 2020 and 2050.” This is quite an importantstatement, both because of its strategic significance (i.e. it provides a clear indication of the government’s
views on the long-term share of the general government budget available for infrastructure spending) andbecause it necessarily requires the commission to demonstrate the reasons for prioritising some initiatives
over others.
In response to these requirements, the NIC included a funding profile of recommended infrastructure
outlays in its 2018 National Infrastructure Assessment, showing total outlays at 1.2% of projected GDP) up
to 2035 and then falling to 0.8% of GDP by 2045-50. Because the assessment also made recommendations
regarding the policy frameworks governing the private provision of infrastructure assets and services, due
to the high level of infrastructure privatisation in the United Kingdom, the assessment was also required
to include the commission’s assessment of the impact of its recommendations on bills paid by households,
businesses and the public sector.
The fiscal remit for the NICW is more open-ended. It states, “In making its recommendations, the NICW
should take account of, but not be unduly constrained by, recent trends in spending. It may make the casefor exceptional investment if it believes it to be justified. If doing so, it may consider the availability ofalternative funding streams.”
In recognition that various infrastructure is funded though user charges, the remit letter for both the NIC
and the NICW also set an “economic remit”. This states that “when making recommendations, the NIC[NICW] should include a transparent assessment of the impact on costs to businesses, consumers, publicbodies and other end users of infrastructure that would arise from implementing a proposal.”
Linking infrastructure plans to plausible long-term fiscal estimates provides some degree of confidence
that the plans are financially “deliverable” and economically defensible. In turn, this can assist

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governments and the community to consider the investment (and policy) trade-offs that are implicit in any
infrastructure plan.

Independent infrastructure bodies
Several countries have established independent infrastructure advisory bodies over the past decade.
Typically, these bodies work with, but stand apart from, conventional government agencies responsiblefor infrastructure policy, planning and delivery. They also engage with business groups and otherstakeholders.
At a national level, the following bodies have been established: Infrastructure Australia (establishedin 2008); the UK National Infrastructure Commission (established in an interim form in 2015 andpermanently in 2017); the National Infrastructure Commission for Wales (2018);9 and the New Zealand
Infrastructure Commission (Te Waihanga, also known as Infracom, late 2019). The Infrastructure
Commission for Scotland was established in early 2019 to provide advice to the Scottish government on
reforms to infrastructure planning and development but, unlike the bodies mentioned above, is notintended to be a permanent body and is expected to finish its work by the end of 2020. Almost all ofAustralia’s state and territory governments established similar bodies in the decade after theestablishment of Infrastructure Australia. Annex A provides a high-level comparison of these bodies.
The independent advisory bodies all have remits that cover a wide range of infrastructure sectors. Thisdistinguishes them from other independent infrastructure bodies, such as IMobilite 21 in France, thatprovides advice to governments in relation to a single sector. They are permanent agencies with an
ongoing responsibility to perform identified functions. In this, they differ from independent inquiries thatmight be established by governments (or, potentially, by parliaments) for a fixed term to investigate aparticular issue.
In a few jurisdictions, independent infrastructure bodies also undertake independent assessments ofproject business cases. However, this appears to be the result of country-specific institutional and fiscal
characteristics, rather than necessarily constituting a core role for such bodies. While independent (of the
proponent) assessment of business cases is a valuable process element that can substantially improve therigour of assessments and subsequent project selection choices by governments, it is not clear that an
independent infrastructure advisory body is likely to be better-placed to perform this function than other,potentially better established and resourced, bodies within government, such as the Ministry of Finance.
In those jurisdictions where other entities assess project business cases, the independent bodies’ projectrelated focus lies in identifying infrastructure service needs that are likely to then require some form ofinvestment response.
Rationale

All of the independent infrastructure bodies were established in response to concerns that existingprocesses within government and, in some cases, existing institutions, were not meeting the need for
effective long-term infrastructure planning and/or for rigorous, sensibly prioritised capital investment
decisions.
Infrastructure Australia was established because of concerns that investment decisions had become overly
politicised and, in particular, that there was a need to correct a situation whereby the Australian
government invested little in Australia’s cities, even though this is where the majority of Australians live
and where most economic activity occurs.

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3. INSTITUTIONAL AND PROCESS ISSUESIn the United Kingdom, the Armitt Review (2013) highlighted the challenges of developing and maintaining
a well-conceived long-term strategy in a parliamentary democracy. The NIC was established to addressthese and other concerns and provides government with impartial, expert advice on major long-term
infrastructure challenges.10 In establishing the NIC, the UK government noted that “the commission’s
independence will … enable it to make recommendations on potentially controversial issues, and bringstability to long-term infrastructure plans, which will increase the likelihood of its recommendations
attracting a political consensus. This consensus will come from a clear, transparent analysis of what
infrastructure is needed; what the key trade-offs and dependencies are; and how these needs can best bemet” (HM Treasury, 2016). The high level of privatisation of infrastructure in the United Kingdom makes
the establishment of stable, long-term policy frameworks all the more important, if investors are to benefit
from consistent and predictable decision making by government and regulators.
In New Zealand, Infracom was established in response to the national government’s concerns that:decisions within and across central and local government were not well integrated; there was a lack oftransparency regarding planned infrastructure; and there was an undue focus on building new assets,
rather than the outcomes that governments are trying to achieve and the nation’s ability to deliver thoseoutcomes. As in the United Kingdom, New Zealand has recognised the importance of working to build aconsensus on infrastructure planning. The act establishing Infracom explicitly states that the commission
has the function of developing “broad public agreement”, while its core function is to develop “anapproach to infrastructure and the services provided by infrastructure that improves the well-being of
New Zealanders” (New Zealand Parliamentary Counsel Office, 2019).
The National Infrastructure Commission for Wales (NICW) was established in response to concerns that
infrastructure decision making in Wales needed to be more clearly focused on pursuing a long-term
strategy, rather than being driven by short-term considerations. The commission is also seen as a meansof adopting a cross-sectoral approach to infrastructure, similar to that being applied elsewhere by the
Welsh government, and of providing “integrated responses to some of the most pressing challenges facing
Wales today” (Skates, 2018).
In 2018, Consult Australia, an industry advocacy organisation, published a report on the governance ofAustralia’s independent infrastructure advisory bodies (Consult Australia, 2018). In making the case forsuch bodies, the report emphasised similar themes or aspirations to those mentioned above:

taking politics out of infrastructure development by establishing long-term strategic plansproviding independent and expert advice about current and future infrastructure needscreating a pipeline for the roll-out of infrastructure projects that will deliver jobs and growthmaking infrastructure decision making transparent and evidence-based.

Structure and governance arrangements

Differing models for the organisations’ legal form have been adopted. Infrastructure Australia andInfracom have been established by statute as specific legal entities, arguably giving them greater
permanence. Almost all of the subnational bodies in Australia have also been established by statute.
However, the NIC, the NICW and the ICS have been established as executive agencies; in the case of the
NIC, as an executive arm of the Treasury.
They key consideration is not whether these bodies have been created by statute or by an administrativedecision of government; rather it is the governance principles underpinning the bodies’ establishment andresponsibilities. Guidance on infrastructure governance published by the OECD is relevant in this regard.

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3. INSTITUTIONAL AND PROCESS ISSUES

Key principles highlighted in the guidance are reflected in the bodies’ operations and decision making:taking a long-term perspective, rigorous and evidence-based decision making, effective engagement withstakeholders, co-ordination of policy and investment, transparency in decision making, and avoidance of
conflicts of interest (OECD, 2017a).
All of the organisations report to a nominated minister, usually a senior minister with overall responsibility
for infrastructure matters. For example, the NIC currently reports to the Financial Secretary to theTreasury. In addition to responsibility for tax policy and customs, the Financial Secretary also has
responsibility for various infrastructure-related matters, including the NIC and public-private partnerships(UK Government, 2020).
In some cases, the legislation or charter establishing these bodies establishes reporting and accountability
obligations in respect of both the advisory body and its responsible minister. These typically include a
responsibility to publish and respond to the organisation’s reports and recommendations. For example,
the NIC’s charter and the NICW’s terms of reference commit the respective governments to:

respond publicly to the commission’s reports and recommendations within six months and nevermore than 12 months of the report being received

give reasons where it disagrees with the NIC’s recommendations and, where appropriate, provide
an alternative proposal for meeting the identified needtable the report and the government’s response in parliament as soon as possible after their
publication.

The UK government published an interim response to the NIC’s National Infrastructure Assessment in
October 2018, and has implemented many of the NIC’s recommendations. Nevertheless, the absence of a
final response suggests that while statements such as those in the charter are a useful means of supporting
the independent bodies and their work, they also require ongoing commitment from governments.
Equally, however, without some form of sanction for non-compliance, it is unclear whether a legislated
obligation to respond to reports from the infrastructure body would deliver a different outcome. Other
parties and civil society actors have a role to play in reminding governments of their undertakings.
Importantly, the NIC is also required by its charter to publish an annual monitoring report, taking stock of
the government’s progress in areas where it has committed to taking forward recommendations of the
NIC.
In New Zealand, the government must table any report from Infracom in the parliament as soon aspracticable after receiving it and must provide a response within 180 days. There is no obligation on theAustralian government to publish and respond to reports from Infrastructure Australia. However, in 2016,
the government responded in a detailed manner to the organisation’s Australian Infrastructure Plan
(Australian Government, 2016).
These arrangements do not commit governments to accept the organisation’s recommendations;
ultimately, governments have reserved policy- and decision-making responsibility for themselves.
However, these arrangements foster greater transparency in the way the independent organisations work,
make governments more accountable for their stance on particular issues, and contribute to broader
debate about how best to deal with the major infrastructure issues facing the country.
A balanced board is broadly accepted as critical to the governance of these organisations. The boards are
selected and appointed by the relevant minister overseeing the organisation. Commonly, they include
directors from a number of infrastructure sectors. The directors of the independent bodies are drawn
largely from the private sector although, not infrequently, the boards include individuals with prior
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experience working inside government or who come from academia. This suggests that, in selecting theboards, governments are seeking to establish a balance between:

the independence offered by a predominance of private sector directors, i.e. individuals(usually with some infrastructure experience) but with no direct connection to thegovernment; andthe desirability of having directors with knowledge of how the institutions of government work,and some insight into the key infrastructure policy challenges facing the government.

In some cases (mainly at the subnational level in Australia), the boards include the chief executive or
secretary of one or more government agencies, such as the civil service or the Ministry of Finance; one ormore of the larger infrastructure agencies (often including transport); and, on occasion, the land-use
planning agency. There are advantages and disadvantages to the inclusion of senior civil servants on theboard. On the one hand, their inclusion provides access to decision-making processes and priorities withingovernment. On the other, their presence may be viewed as compromising the body’s independence.
Governance rules might be a means to, at least partially, address such concerns. Examples include:

ensuring that civil servants constitute a minority of board members

making it clear that civil servants are appointed as individuals for their professional knowledge,
rather than as a representative of a particular agency or a government as a whole, and that intheir role as a board member, the civil servant’s first responsibility is to the bodyrigorous board decision-making processes, e.g. how the individual may (or may not) participate
in a discussion or vote on matters relevant to their agency or government.

Prior to 2014, three of Infrastructure Australia’s board members were senior civil servants selected by theminister on the nomination of the subnational governments. It appears this may have been done to ensure
the organisation had access to insights about the particular issues faced by the subnational governments,
especially in a federal country such as Australia, where most infrastructure is their constitutional
responsibility.
Objectives and strategic focus

The NIC and the ICS have been given explicit objectives, while those of Infrastructure Australia andInfracom can be inferred from the legislation establishing each entity. Objectives for the NICW can beinferred from the commission’s terms of reference. While the organisations’ objectives differ in detail,there are similarities in their overall intent. For example, the main function of Infracom is to co-ordinate,develop and promote an approach to infrastructure that encourages infrastructure development that
improves the well-being of New Zealanders (emphasis added). This simple exposition captures the fact that
infrastructure exists to support the broad needs of a nation. Similarly, the NIC has been given an objective
to contribute to improving the quality of life of people living in the United Kingdom. The objectives for the
NICW capture a range of economic, social and environmental considerations.
To varying degrees, the organisations’ objectives assign primacy to economic considerations. However,they also typically refer to social or equity issues. In some cases, such matters are referred to quite
explicitly. For example, the ICS has specific objectives in relation to the development of an inclusive
low-carbon economy. Similarly, the NICW is to support the Welsh government’s efforts to develop an

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3. INSTITUTIONAL AND PROCESS ISSUES

inclusive economy, and “drive up the incidence of fair work”. The ICS’s objectives also refer to “inclusive
economic growth” and “increasing industry competitiveness, whilst tackling inequality”. The NIC’s
objectives refer to “economic growth across all regions”. Statements such as these point to the challengeof ensuring that infrastructure decision making has regard to equity considerations, both social andregional, as well as efficiency benchmarks.
Table 1 summarises the key strategic issues which the various bodies’ respective governments andparliaments have identified and on which they are seeking advice. They are sometimes identified in thelegislation establishing the organisation, but are more commonly set out in a “letter of expectations” or“remit letter” (or some equivalent term) periodically issued by the responsible minister to the chair of theboard. In the cases of Infrastructure Australia and Infracom, both of which are established by statute, thepower (or obligation) to issue a letter of expectations is set out in legislation. On occasion, the responsible
minister will separately issue terms of reference for an inquiry into a specific issue.
Importantly, within the broader policy priorities set out in the letters of expectations or remit letters, theinfrastructure bodies have been given the freedom to identify and pursue work on particular issues as theysee fit. They also have considerable freedom to adopt their own methodologies and makerecommendations without direction from government.
Equally, the organisations are expected to recognise the need to engage with the government of the day,and work with other government agencies. For example, the remit letters to the NIC and the NICW statethat the commission “should ensure that its recommendations do not re-open decision-making processes
where programmes and work have been decided by the government, or will be decided in the immediate
future.” The letter of expectations for Infracom states that the commission will work with ministers andofficials “on a ‘no surprises’ basis with respect to the content, timing, information management and timingof its publication advice.”30

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Table 1: Comparison of governments’ focus in establishing an infrastructure body
Strategic
focus

Infrastructure
Australia

UK National
Infrastructure
Commission

National
Infrastructure
Commission for
Wales

Infrastructure
Commission for
Scotland

New Zealand
Infracom

GeneralEconomicdevelopment

Legislation refers
to improving
national
productivity.
Letter of
expectations
refers tosupporting
economic growththrough better useof existing assets.

Remit letter refers
to contribution “tosustainableeconomic growthacross the UK”, and“to improve theUK’s international
competitiveness.”

Remit letterrefers to building
an inclusive
economy, andrefers to raisingproductivity andsupporting
agglomeration.

Remit letter refers
to international
competitiveness,and the markets
and connections
Scotland requires
for goods, services
and people.

“Long-term
economicwell-being”
referred to in theministerial letterof expectation.

Demographic
changeNot explicitly
referred to inlegislation or letterof expectations,but addressed in
Infrastructure
Australia’s work.

Not explicitly
referred to in theremit letter, but isaddressed in thecommission’s work,
notably its National
Infrastructure
Assessment.

Not expressly
addressed interms ofreference orremit letter, but
implied due to
Well-being of
FutureGenerations Act.

Yes. Identified ingovernment remit.

Yes. Identified inlegislation as afocus.

ClimatechangeLegislation refers
to climate-related
policy issues.

The National
Infrastructure
Commission (NIC)
has interpreted the“sustainable”
element of its
growth objective as
including climatechange.

Not expressly
addressed interms ofreference orremit letter, but
implied due tolinkage with
Well-being of
FutureGenerations Act.

Yes. Identified ingovernment remit.

Yes. Bothmitigation andadaptation
identified inlegislation as afocus.

TechnologicalchangeYes. Mentioned inletter of
expectations.

Yes. Identified in theremit letter, andaddressed in the
National
Infrastructure
Assessment.

Yes. Referred toin remit letter.

Yes. Identified ingovernment remit.

Yes. Identified inlegislation as afocus.

Infrastructuredevelopment
ownership
and financing

Policy advice onfunding andfinancingmentioned inlegislation andletter of
expectations.
Legislativerequirement to
conduct five yearlynational
infrastructure

Not explicitly
referred to in the
NIC Charter or remit
letter, although the2018 National
Infrastructure
Assessment
considered thesematters.

Yes. Financing
referred to inremit letter,particularly ifseen as a barrier
to delivering
infrastructure.

Yes. Identified ingovernment remit,
including a possible
Scottish National
Infrastructure
Company.

Letter of
expectations asks
Infracom toconsiderproviding advice
to the minister on“opportunities for
PPPs [publicprivate
partnerships] in

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3. INSTITUTIONAL AND PROCESS ISSUESStrategic
focus

Infrastructure
Australia

UK National
Infrastructure
Commission

National
Infrastructure
Commission for
Wales

Infrastructure
Commission for
Scotlandaudits and prepare
infrastructure
plan.
Other

Legislation refers
to promoting
public awarenessof infrastructurerelated issues.

New Zealand
Infracomthe short tomedium term.”

Resilience referred
to in the remit
letter.

Remit letterrefers to theimportance of
place-building.

Remit refers toplace-making.

Legislation
provides Infracomwith freedom toidentify othermatters.

Other specific matters
Contributing to an
inquiry into freightand supply chains.
Contributing to an
inquiry (which has
not proceeded todate) into roaduser charging forlight vehicles.

Considerenvironmental
duties ofministers underother legislation.

Letter of
expectations
refers to:more efficient
port sector
Upper North
Island supply
chain
procurement
practices.

Source: ITF analysis of legislation, government charters or remit letters for the bodies.

Although the NIC and the NICW are not established by statute, both governments have committed (in thecharter or terms of reference for their respective commission) to publishing a remit letter (including a fiscal
remit). The fiscal remit is discussed later in this chapter.
Independence

The degree of independence of these bodies is a critical concern. In some cases, civil servants from outside
the organisations have criticised the infrastructure bodies as being too independent and “politically naive”.
Conversely, other officials have criticised such organisations for being too close to the government of theday. This “independence challenge” is well-summarised in a report prepared by the New Zealand Treasury
in the lead up to Infracom’s establishment. The report notes that, during consultation on the commission’s
proposed role and structure, one party had stated, “There is a balance to strike with the entity’s degree of
independence – too far removed and it lacks leverage; too close to the Crown and it could lack credibility.”
These criticisms tend to be made more commonly in relation to decisions on individual projects (reflecting
the immediate political impact of such decisions) than broader debates about strategy and policy. For
example, most of the longer established infrastructure bodies have advocated for some form of roadpricing or charging in their respective jurisdiction. Indeed, several of the bodies have recommended sucha reform, knowing that it was likely to encounter strong resistance from the government of the day, from
opposition parties and from various non-governmental organisations.

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Size of the organisations

The bodies are all relatively small, relative to the breadth of their responsibilities. The NIC had a budget of
GBP 5.7 million (EUR 6.4 million) in 2019-20 and in 2020-21, and about 40 staff. Infrastructure Australia
had a budget of approximately AUD 12 million (EUR 7.6 million) in 2018-19, and employed 24 full-time
equivalent staff at June 2019. Infracom had a budget of NZD 9.1 million (EUR 5.4 million) in 2019-20 and
NZD 13.5 million (EUR 8.0 million) in 2020-21. The ICS has approximately five staff members, including four
professional staff.
Sectoral scope of the organisations’ work

As shown in Table 2, differences exist in the sectoral scope of the independent bodies’ work. Some, suchas the NIC, have an explicit focus on economic infrastructure. Until relatively recently, Infrastructure
Australia also focused exclusively on economic infrastructure, despite there being no statutory limitation
on its scope. This changed in 2017, when it was asked by the responsible minister also to consider social
infrastructure, and social infrastructure was addressed for the first time in the 2019 AustralianInfrastructure Audit. The newer organisations appear to have been given a broad remit covering economic
and social infrastructure. Moreover, the ICS has recently argued that “natural infrastructure” needs to beaddressed as part of a broad approach to infrastructure planning (Infrastructure Commission for Scotland,2020).
Infrastructure and land-use decision making are closely linked, especially in the case of transport
infrastructure. However, the role of the bodies in addressing land-use issues, e.g. housing matters, varies.
For example, while Infrastructure Australia has no express mandate to address housing issues, in the last
two years it has begun to do so, first as part of a report on the sequencing of urban development andinfrastructure and, more recently, in a chapter on social housing in its 2019 Australian Infrastructure
Audit.11 The ICS has an express mandate to address housing matters. The NIC, Infracom and the NICW
consider housing and land-use matters indirectly. For example, interactions between infrastructure andhousing supply are considered (such as the need for housing to be supported with certain infrastructure),
although housing as a distinct class of infrastructure is not directly addressed.

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Table 2: Sectoral scope of independent infrastructure bodies
Infrastructure sector

Infrastructure
Australia

UK National
Infrastructure
Commission

National
Infrastructure
Commission for
Wales

Infrastructure
Commission
for Scotland

New Zealand
Infracom

Transport

Yes

Yes

Yes

Yes

Yes

Energy

Yes

Yes

Yes

Yes

Yes

Water

Yes

Yes

Yes (including
drainage)

Yes

Yes

Telecommunications

Yes

Yes

Yes

Yes

Yes

Waste

No

Yes

Yes

Yes

Yes

Flood defences

No

Yes

Yes (including
coastal erosion)

Yes

Yes

Social housing

Yes

No

No

Yes

No

Health

Yes

No

No

Yes

Yes

Aged care

Yes

No

No

Yes

No

Education

Yes

No

No

Yes

Yes

Open space and recreation

Yes

No

Yes

Yes

Arts and culture

Yes

No

Yes

Yes

Yes

Yes

No

No

Justice and emergency
services

No

Yes

No

Defence

No

No

No

No

Yes

Natural infrastructure

No

No

No

Yes

NA

Source: ITF analysis of websites of the various independent bodies.

Scale of infrastructure

The minimum scale of the infrastructure considered by these bodies varies across countries. Moreover,individual bodies are taking a flexible approach to this question. Infrastructure Australia and the NIC focus
on matters that are nationally significant in some sense, for example larger projects on major networks
and/or policy reforms that are likely to be of national significance. However, the more recently constituted
bodies appear to be considering a broader range of investments. For example, Infracom’s considerationof the infrastructure pipeline includes projects to be undertaken by local councils, with relatively lower
capital values.
The legislation establishing Infrastructure Australia establishes some functions that refer to nationallysignificant infrastructure, and defines that term as “infrastructure in which investment or further
investment will materially improve national productivity” (Australian Parliament, 2014).12 Until 2018, theterm was interpreted to mean investments that were likely to require more than AUD 100 million inAustralian government funding. Since 2018, Infrastructure Australia has argued that “an infrastructure
investment is nationally significant if, based on the evidence presented, the Board expects the investment
to have a material impact on national output by:

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1. addressing a problem that would otherwise impose economic, social and/or environmental
costs
2. providing an opportunity for realising economic, social and/or environmental benefits, or
3. both addressing a problem and providing an opportunity.”
For the purposes of assessing submissions to the Infrastructure Priority List, Infrastructure Australia hasapplied a threshold value of AUD 30 million per annum (nominal, undiscounted) in measuring the material
net benefit of the project, while also taking potential unquantified quality-of-life considerations into
account (Infrastructure Australia, 2018b).
Neither the NICW nor the ICS operate under an explicit statement concerning the scale of theinfrastructure that falls within their responsibilities. However, given the emphasis on “place-making”(which necessarily deals with local considerations) in their remit and work, it can be inferred that bothorganisations will work on both nationally and locally significant infrastructure.
Clearly, the focus of each organisation’s efforts is a matter for the relevant government (through the remit
letter) and the organisation itself. However, the organisations’ modest size necessarily raises questions as
to their capacity to address both national and regional/local level issues. Limited resources are likely to be
best deployed in establishing robust planning, policy and investment settings at the national level.
Additional resources are likely to be needed if the infrastructure bodies are asked also to address issues ofmore local significance.
Roles and functions

Ministers and governments remain the decision makers on infrastructure matters, as the independentbodies have no executive authority. Rather, the outputs of their work – principally strategies and otherreports on particular issues and projects – are advisory in nature. As such, the organisations’ principal
currency is the rigour of their work, their independence and the quality of their relationships.
As noted, the organisations’ small scale necessarily dictates a focus on higher level issues of strategy, policy
reforms and, where relevant, large projects. Limited resources have sometimes meant that some functions
assigned to the organisations have not been performed, e.g. Infrastructure Australia has not reviewed
infrastructure funding programmes; instead, its project-related work has been confined to the assessmentof large, individual projects.
Similarly, the organisations appear not to have been involved in assessing the success or otherwise of
projects. This appears to be the result of both the resourcing reasons mentioned above and a broader
reluctance across governments to undertake and publish post-completion reviews of projects. This could
be a useful area into which to expand their remits, given the numerous examples of major projects thathave both cost more and delivered less than expected. Where post-completion reviews are not alreadybeing undertaken by other government organisations, independent bodies could draw on experience indelivering projects and play an important role in drawing lessons for better infrastructure planning, project
development and delivery.
A broad distinction between the roles of infrastructure advisory bodies is that, while all are tasked with
providing strategic advice, only a proportion also have the role of providing specific, project-related advice.
Tables 3 and 4 highlight the similarities and differences in the roles of the various infrastructure advisory
bodies.

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Table 3: Comparison of infrastructure bodies’ strategy-related functions
Function

Infrastructure
Australia

UK National
Infrastructure
Commission

National
Infrastructure
Commission for
Wales

Infrastructure
Commission for
Scotland

New Zealand
Infracom

Audit of existing
infrastructure

Yes. Explicit
statutory
requirement.

Yes. Implicit in
the conduct of
the National
Infrastructure
Assessment.

Yes. The commission
has to prepare a“state of the nation”
every three years.

No. Although the“Findings report”(January 2020)
includes commenton existing assets
and governance.

Yes. Legislation
requiresexamination ofexisting assets tomeet futureneeds.

Development ofa strategy or aplanYes. Prepared atleast every five
years. Fifteen-year
outlook, unlessboard decides
otherwise.

Yes, prepared atleast once inevery parliament(five years).
Approximately a30-year outlook.

Not expressly,
although the state of
the nation reports
can makerecommendations.
Terms of reference
require a 5-30 year
outlook.

Yes. Recommends
a 30-year outlook.

Strategic advice
on specificissues, both inrelation toplanning
matters andparticularinfrastructure
policyYes. Legislationrefers to various
matters, including:pricing, regulatory
issues, climatechange. Letter of
expectation refers
to additional
matters, including:promoting bestpractice inreforming strategic
infrastructure
planning andwhole-of-life asset
management.

Yes. The
commission
produces regularstudies on more
focused topics
that are agreed
with theTreasury. Recent
examples include
reports on
freight,
regulation andresilience.

Yes. The commission
can produce
occasional reports
on particularinfrastructure
matters as it thinks
fit.

Yes. Implicit in thecommission’s
broad remit.

Yes. Prepared atleast every five
years. Thirtyyear outlook.
First plan, due by
end 2021, will
focus onstrategies andpriorities rather
than specificprojects.
Yes, including
submissions toinquiries
initiated
elsewhere ingovernment.

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Table 4: Comparison of infrastructure bodies’ project or investment-related functions
Function

Infrastructure
Australia

UK National
Infrastructure
Commission

National
Infrastructure
Commission for
Wales

Infrastructure
Commission for
Scotland

New Zealand
Infracom

Project
assessment

Yes. Strongly
focused on CBA,
though theframework is
subject to periodic
review, andcurrent emphasison CBA may bebroadened.

In general, “no”.
However, thecommission has
been asked toreview the options
and sequencing
for rail schemes in
the Midlands andNorth of England.

No. Remit does notinclude reviewing
programmes andwork that has
already been
decided or is near adecision.

No, at least not
explicitly.

No, at least not
explicitly, but yes
as an
independent
support toproject agencies.

Advice on
infrastructure
priorities

Yes. Publishes aninfrastructure
priority list twice
annually, showing
specific projects
and initiatives.

Yes, indirectly via
strategic advice on
broad investment
priorities.

Yes. Includes
providing advice onvalue for money on
public and private
investments.

Yes. Implicit in therole of providing
advice on how to
implement a
strategic vision for
Scottishinfrastructure.

Yes.

Post-completion(ex post)
reviews (PCR)

Yes.
Infrastructure
Australia
providesguidance andframeworks forundertaking PCR.

No.

No, at least not
explicitly.

No, at least not
explicitly.

No, at least not
explicitly.

Procurement
adviceYes.

No. Thecommission has
provided advice
on funding
approaches (suchas public-private
partnerships,
infrastructurebanks).
Procurement ofspecific projects is
the responsibilityof theInfrastructure andProjects Authority.

No, at least not
explicitly in relation
to individual
projects. The
commission can
provide advice (itappears with moreof a policy focus) on“cross-cutting
issues” that bear on
the ability to deliver
on infrastructureneeds.

Yes, implicitly as
part of providing
advice on how to
implement a
strategic vision for
Scottishinfrastructure.

Yes.

Source: ITF analysis of entity and other websites.

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3. INSTITUTIONAL AND PROCESS ISSUESStrategic advice

In broad terms, the organisations’ work in this domain falls into the following areas:development of cross-sectoral, long-term infrastructure plans focused on policy reform and theidentification of medium- to long-term investment needs (as opposed to assessment of specificprojects)

advice on specific policy matters and (occasionally) on specific investment needs, usually preparedon the initiative of the organisation itself, but occasionally prepared at the request of the
responsible minister.

Development of the plans typically involves an “audit” or review of the existing environment (e.g. policy
settings, regulatory arrangements and governance) and current infrastructure networks, and a (necessarily
high-level) assessment of the ability of those networks to meet prospective demand and/or adapt tochanging conditions. These are not audits in a conventional sense, which assumes the existence of clearlyspecified standards and determines whether an entity has operated in conformance with those standards.
Rather the audit or assessment is a broader examination as to whether a country’s infrastructure networks,
policies and infrastructure governance are adequate to meet that country’s future needs. Undertaking theassessments necessarily requires input from line agencies, emphasising the importance of collaborative
relationships between the independent bodies and other agencies. In many cases, the independent body’s
ability to undertake its work is underpinned by statutory or ministerial requirements for line agencies towork with the bodies. This is harder where inter-governmental relations are involved.
Project advice

Infrastructure Australia has a strong focus on evaluating individual project proposals. Most are received
from subnational governments, occasionally from local councils (or from groups of local government
bodies) and very occasionally from private sector parties. A large majority of proposals (probably greaterthan 95%) are for projects in the transport sector. This reflects both the fact that transport is almost
entirely funded by governments in Australia and that there is a high level of vertical fiscal imbalance
between the national and territorial governments. As a result, the state and territory governments typicallyask the Australian government to co-fund major projects.

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In relation to projects, Infracom’s functions appear to be different from those of some of the otherentities. Infracom’s legislated functions relate more to the strategic co-ordination of programmes
and to consolidating and reporting information to present a project “pipeline” aimed at fostering
private sector interest in the development and construction of various projects. Importantly, thecommission also has a function of providing support services to delivery agencies on particular
projects, i.e. to be a “collaborative friend”. However, this support is also underpinned by agovernment direction that, for projects valued over NZD 50 million, or where innovative
approaches to procurement and alternative financing arrangements are being considered, project
agencies must:

consult with the commission early in the development of their business casefollow relevant published Infracom guidance

involve Infracom in the assessment of the project’s business case and advice to ministers

invite Infracom to participate in relevant project steering and working groups, and in the selection
panels.

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3. INSTITUTIONAL AND PROCESS ISSUESInfracom has recently published more detailed advice on how it can assist project agencies and local
councils (Infracom, 2020a).
Project assessment is likely to be the most consistently controversial and difficult role for the independentbodies, as projects attract far more political and media interest than strategic documents. Other than in
the most controversial of areas, e.g. road charging, strategies are often viewed as “something to be dealt
with in the future”. Moreover, it is generally relatively easy to agree on strategic ends, even if the policy
and investment programme means to achieve those ends might be debated. Projects, on the other hand,
are more concrete and immediate.
The “collaborative friend” approach (a phrase found in the letter of expectations issued to Infracom) differs
somewhat from the approach taken by Infrastructure Australia, which because of its mandate and history
has focused on receiving and then evaluating submissions from proponents. This is not to suggest that
Infracom will not argue for rigorous project evaluation. Clearly, that is the parliament’s expectation. Nordoes it suggest that Infrastructure Australia does not work with proponents; indeed, it has actively sought
to work with proponent governments and their agencies early in the life of a project, and not just wait fora project to be submitted for evaluation. In addition to critically appraising project proposals, Infrastructure
Australia assists proponents, e.g. it has highlighted areas where a project’s economic appraisal may haveunderestimated project benefits. Nevertheless, the discussion above highlights an important difference inorganisational approach, with impacts on the way an organisation is perceived and, in turn, operates.
Both approaches carry risks: the organisations risk accusations of “being a soft touch” or “being out of
touch”. A “soft” approach, especially if consistently applied, runs the risk that the organisation will be“captured” by proponent agencies and, in some cases, by central agencies. A “hard” approach risks
fracturing relationships with proponent agencies that are crucial if the overall value of the independent
body is to be realised. In the worst case, the relationships can break down altogether, and the independent
body can be bypassed, at least to some extent.
Ultimately, the boards and the senior executives of the independent bodies, in conjunction with theproponent and other agencies of government, must manage these challenges collectively. Goodwill isrequired, as is the need to set aside institutional “turf wars” between relevant line agencies and the
independent body, and instead work together for a shared outcome.
Robust and widely agreed assessment frameworks are a means of addressing these challenges. Thosebodies that have a role in project assessment, notably Infrastructure Australia, have played an importantrole in working with other agencies to develop and maintain these frameworks. However, whileassessment frameworks can notionally be aligned, differences in key variables can persist; for example,
the parameter values used in economic appraisals (whether generally or in the case of a specific project)
can be debated at length. Thus, the existence of an assessment framework is a necessary, but not
sufficient, step to improving decision making. Governments must endorse these frameworks, andmandate their application.
A particular issue within this field is that of compliance with project assessment frameworks in the case of
the largest, and most politically sensitive, projects. While project assessment frameworks often mandate
more rigorous scrutiny for larger projects, the experience of many countries is that projects promoted at
the political level from an early stage – which tend to be among the costliest of all – often largely escapescrutiny via established project appraisal processes. This lack of scrutiny is associated with poorer project
performance and tends to distort project selection processes and reduce overall infrastructure
productivity. For example, a recent study of cost overruns on Australian transport infrastructure foundthat poor adherence to project appraisal processes is associated with a greater probability of cost
overruns, and that cost overruns were 23% higher on average for projects that received a funding
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commitment during an election campaign. Moreover, while only 32% of the transport infrastructure
projects completed over a 15-year period were announced early (i.e. without proper project appraisal
being conducted), these were responsible for 74% of the total cost overruns identified (Terrill, Coates andDanks, 2016; Terrill and Danks, 2016).
It is not yet possible to conclude whether the independent advisory bodies will prove capable ofsubstantially improving compliance with project appraisal requirements and, if so, what key success factors
might be identified. However, Infrastructure Australia has argued that the adoption in Australia of an
Infrastructure Priority List has “been successful in guiding investments toward projects with demonstrated
economic benefits” and that “… governments are prioritising the delivery of historically significant
infrastructure” by choosing increasingly to fund projects from the list (Infrastructure Australia, 2018a).
This is also an area where the ICS is providing leadership. As well as providing advice on a 30-year
infrastructure vision for Scotland (the “why and what”), it has also been asked to consider options fordelivery (the “how”).13 The commission was also asked to provide shorter term five-year guidance toministers on both of these matters. In its “Findings report”, released in January 2020, the ICS
recommended substantial changes to the Scottish project appraisal system (see Box 3) to support the
government in its aim of developing an inclusive net-zero carbon economy.14 The recommendations
acknowledge that achieving the government’s strategic vision will require a substantial reform process,which will take time to implement. The ICS recognises “the possibility of significant trade-offs between
pro-growth and pro-equality infrastructure measures, at least in the short run.”Box 3. Leadership recommendations from the Infrastructure Commission for Scotland
1. All Scottish government-funded projects included in its 2020 Infrastructure Investment Plan should
be prioritised against available inclusive net-zero carbon economy outcomes.
2. The Scottish government should, by 2021, develop and publish a new infrastructure assessment
framework and methodology that will enable system-wide infrastructure investment decisions to beprioritised on the basis of their contribution to inclusive net-zero carbon economy outcomes.
3. The Scottish government should publish by 2023 a system-wide Scottish infrastructure needs
assessment covering all infrastructure sectors defined by the Scottish government, and the inclusion ofnatural infrastructure is recommended. The assessment should be refreshed and updated at least every
five years thereafter.
4. A fully updated infrastructure investment plan should be developed by the Scottish government for
publication by 2025 using the new assessment framework and methodology and informed by the
infrastructure needs assessment
Source: Infrastructure Commission for Scotland (2020).

Independent infrastructure bodies can also support better infrastructure decision making by taking onother roles. Noting the above-mentioned findings from Terrill and Danks, the independent body might begiven the function of providing published advice on large infrastructure proposals that have been made in
the lead up to, or during, election campaigns and have not been subjected to the standard project appraisal
processes.

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3. INSTITUTIONAL AND PROCESS ISSUESThe obvious risk with this approach is that it puts the independent bodies in the middle of the politicalfray. The bodies may be reluctant to become involved in such sensitive environments and there is a risk ofretribution from aggrieved parties after an election. However, as promises of new projects are central tomost election campaigns, and as elected governments feel some obligation and mandate to pursue
promised projects, there is a case for considering this further step. Given Terrill and Dank’s findings on thecorrelation between projects announced during election campaigns, non-compliance with projectappraisal processes and cost over-runs, there is a clear case for establishing a means of subjecting suchprojects to greater scrutiny.
The independent infrastructure bodies might work in conjunction with bodies such as the Parliamentary
Budget Office (or similar entities) that have been established in some jurisdictions. These entities are
sometimes called upon to provide costing and other commentary on promises in other policy areas madeduring election campaigns, with the aim of fostering more informed debate.
Transparency

A commitment to transparency is common across the independent bodies and is a key strength of thismodel. To varying degrees, all are committed to publishing their reports and the specialist advice they
commission. Publication is important for several reasons. First, it is fundamental to achieving theconsensus on infrastructure strategy that governments and parliaments are seeking by creating thesebodies. Second, publication helps to meet the expectations of increasingly well-informed populations fordetailed information and analysis on which to form their own views. The infrastructure bodies have a roleto play in democratising infrastructure decision making, e.g. clarifying the difficult distributional decisions
and trade-offs that governments need to make. Third, in an era of “fake news” and increasingly divided
polities, credible analysis of infrastructure needs and potential solutions is more important than ever.
Finally, the strategic direction that the independent bodies are expected to deliver must be able to survivechanges in the responsible minister and in the government. If this is to occur, opposition and minority
parties must be provided with the necessary information, data and tools to convince them of the meritsof the case being made by the independent body.
At present, transparency is demonstrated in greater depth in relation to strategy-related reports than inrelation to project advice. This needs to change, notwithstanding the evident political difficulties in doing
so. Maintaining and increasing transparency in the independent bodies’ operations requires:a demonstrated public commitment to transparency from governments and parliamentsa requirement that governments publish substantive responses to the bodies’ advice andrecommendations within a set time frame, including giving specific reasons for not endorsing theindependent body’s advice

sufficient resources to communicate their message effectively.

A legislated commitment to timely publication of the body’s advice is crucial. An example is the legislation
establishing Infrastructure Australia, which requires the organisation to publish a summary of each project
proposal that it has evaluated during a calendar quarter as soon as practicable after the end of thatquarter. The evaluations published by Infrastructure Australia are quite detailed and include content on a
project’s strategic alignment, CBA and delivery matters. Nonetheless, some argue that further detailshould be provided.
The question of the level of detail included in published project evaluations relates to the matters
discussed above regarding the nature and depth of the independent body’s relationships with the

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government and its agencies. Project proponents typically argue for their business cases to be treatedconfidentially, especially if the project proposal is assessed to be of questionable value or to require further
analysis to substantiate the claimed benefits. An appropriate default position might be that, unlesspublication of the detail materially compromises a government’s commercial position in tender anddelivery processes, the details of a project business case should be available on a government website.
There does not appear to be any clear reason why a commitment to publishing a response could not apply
to both an organisation’s strategic advice and project-related advice.
The independent advisory bodies need the capacity to present their analysis in different ways to meet theneeds and expectations of different stakeholders. At one end of the spectrum, a set of key points need to
be available for those who are time poor or only have a passing interest in infrastructure issues. At theother end of the spectrum, the independent bodies need to publish sophisticated, data-rich analysis if they
are to convince key players such as major industry groups. The independent bodies are moving down thispath. They are adopting modern social media communication strategies. Increasingly, they are publishingdetailed technical reports and data sets underpinning their overarching reports.
Evidence on performance to date

The independent bodies have a difficult set of responsibilities. They have been asked to address
weaknesses in planning and decision making that, in some cases, have existed for many years. Moreover,they are being asked to develop a consensus in an area of public policy that is often highly politicised, bothin a broader strategic sense (e.g. agreeing on different objectives and different ways to achieve common
objectives) and, for some bodies, in the short term (e.g. assessment of projects where there are markedly
different views about the merits of a particular project).
The organisations inevitably operate in budget-constrained environments, where trade-offs must be
made; for example, between addressing investment in crowded, rapidly growing cities and improving
access to sometimes basic services in regional areas.
As the independent bodies are mostly relatively new organisations, it is difficult to draw firm conclusions
as to how well they are managing these challenges and improving planning and decision making in theinfrastructure sectors. That said, there are clear signs that the independent bodies have achieved somesuccess. They allow potentially difficult issues, e.g. road user charging and approaches to dealing withclimate change, to be raised in a comparatively safe environment. They can lend credence to the policy
and advocacy work of actors in civil society. Importantly, they also provide a means for those working onchallenging and unpopular issues within line agencies to gain a voice. Finally, they provide genuine thought
leadership on particular issues. Examples include:
In Australia, Infrastructure Australia’s work on asset recycling, the protection of corridors for future
infrastructure development, and the sequencing of urban development and associated infrastructure.
In the United Kingdom, the NIC’s work on improving the resilience of existing infrastructure networks.
Project assessment processes in Australia have improved in large measure because of the work of thevarious national and sub-national independent infrastructure advisory-bodies. On the whole, projectbusiness cases are now better documented and more robust than a decade ago, albeit governments stillchoose to build projects that have received positive project appraisals, as is their right.
Each country faces its own infrastructure challenges, and has its own cultural and institutional context. A
model that works in some jurisdictions may not work in others. Each government therefore needs toconsider what governance and institutional challenges it ought to address, then determine whether and

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how the establishment of an independent body might offer a solution to those challenges. However, it isnoteworthy that most of the independent bodies have been given remits that focus on medium- to longer
term issues (broadly 5-30 years into the future). This suggests governments believe that:

while project decision making may have been improving (perhaps in response to earlier changes
in assessment processes), infrastructure strategy stills needs greater attention



an independent body (rather than changes within and between agencies) can help by:bringing a fresh, cross-sectoral perspective to the country’s infrastructure challenges and options
to address those challenges

fostering informed debate, based on rigorous analysis

supporting the development of some degree of consensus about the most promising solutions tothe country’s infrastructure challenges.

This requires the organisations to concentrate on policy reform and on shaping the priority, mix and broad
scope of projects that might be funded beyond the current budget cycle. In particular, the independentbodies’ advice on medium-term (five to ten year) investment priorities can help inform short-term
government decisions as to where to direct their budgets for planning and feasibility studies.
There is considerable value in independently assessing individual project proposals. However, whether
that assessment is undertaken by an independent body or some other specialist entity, such as theUnited Kingdom’s Infrastructure and Projects Authority, is a matter for individual governments. There arearguments in favour of both approaches. On the one hand, assessment by an independent body allows
the government to test whether the arguments which informed inclusion of an investment priority in aplan have been adequately reflected in the project proposal. Moreover, investment in large projects are
strategically important in their own right. On the other hand, project assessment is resource-intensive,
suggesting that the modest resources of the independent bodies might be better deployed in focusing on
strategic matters.
The independent bodies are sharing their experiences and learning from each other. The AustralasianI-bodies (now including Infracom) have met two to three times per year for the past five years. Increasingly,
the Australasian and UK bodies are also in contact. This “community of practice” approach reflects bestpractice efforts in other contexts, such as the OECD’s Network of Economic Regulators, which provides aforum for regulators – including those working in regulated infrastructure sectors – to compare experienceand new developments.
Sound institutions and processes are also fundamental to successfully addressing infrastructure
challenges. In this context, several countries have established independent bodies to provide fresh viewson their country’s infrastructure needs and how to deal with them. As the independent bodies are
relatively new, it is difficult to reach firm conclusions as to where and how they have improved
infrastructure decision making. However, the early results are encouraging: infrastructure planning anddecision making in these countries appears to be stronger than before those bodies were established. In
particular, they are providing a useful long-term, cross-sectoral lens to policy development and mediumto longer term investment. The bodies are becoming an established part of institutional settings in thosecountries. Other countries could benefit from adopting similar structures, albeit adapted to their own
institutional and cultural circumstances.

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Stewardship of existing assets
With the possible exception of digital infrastructure, most of the infrastructure that will be needed andused in 20, 30 or 40 years exists today. The long lifespan of most physical infrastructure gives rise to several
key challenges. Infrastructure assets must be:well-maintained, to ensure their continued availability to meet user needs

adaptable, i.e. able to be modified or used in a different manner as users’ needs change and astechnological and other changes emergeused optimally, to maximise user and other benefits, thereby deferring or avoiding the need forcapital expenditure

prudently developed and expanded, to ensure efficient expansion of the network to meet futureneeds.

It is apparent that these aspirations for asset management are not being realised on a consistent basis.
Moreover, there is now an additional imperative to better manage existing assets as part of broader efforts
to reduce greenhouse gas emissions. The ICS notes in its “Key findings” report, for example, that it is“essential that these [infrastructure] assets are most effectively and efficiently utilised, maintained andenhanced to net-zero carbon readiness.” The report indicates that achieving net-zero carbon readiness islikely to involve, among other things: a presumption of enhancing, repurposing or maintaining existing
infrastructure over developing options for new infrastructure; and a presumption against like-for-like
replacement of existing assets and the construction of new, single-organisation/purpose assets in favourof shared facilities (Infrastructure Commission for Scotland, 2020).
Over the last 20-30 years, many governments have corporatised or privatised utility infrastructure
networks, and established economic regulators to ensure that utility owners are operating efficiently andthat revenue from user charges is sufficient to ensure they remain going concerns capable of delivering
infrastructure services into the future. In this context, a number of questions arise:Can aspects of these regulatory approaches be applied to infrastructure sectors (e.g. the transport
sector) where user charging is less widespread, or where the funding of infrastructure remains
heavily reliant on government budgets?

What mechanisms exist to optimise maintenance expenditure?

What mechanisms exist to ensure rational trade-offs between spending on new projects andmaintenance spending?

Is there a case for the decision criteria adopted by the economic regulators to be changed so thatthe impacts of regulatory decisions on other infrastructure sectors are addressed?

Is there a case for the decision criteria adopted by the economic regulators to be changed so that
non-asset objectives can be addressed more effectively?

Maintenance of existing assets needs to be improved

Suboptimal asset maintenance practices are common across a range of jurisdictions and infrastructureclasses. For example, the ITF’s 2013 Annual Summit heard that the backlog in maintenance of US urban
public transport systems is valued at over USD 80 billion. The Forum noted that “infrastructure
maintenance has generally been underfunded to the benefit of new capital investments and this has

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deteriorated the present value and performance of transport networks. Many reasons were adduced forthis systemic bias towards new construction, but foremost was the political preference for high-visibility
ribbon-cutting over “hidden” expenditure on system maintenance” (ITF, 2014b).
Weaknesses in the management and maintenance of existing assets are not confined to the transport
sector. For example, in its 2017 assessment of US infrastructure, the American Society of Civil Engineers
observed, “With [drinking water] utilities averaging a pipe replacement rate of 0.5% per year, it will takean estimated 200 years to replace the system – nearly double the useful life of the pipes” (American
Society of Civil Engineers, 2017).
Applying regulatory approaches to additional infrastructure sectors

In this context, comparing approaches to asset management in sectors that are largely funded andmanaged by government (principally transport) with those that are largely funded by users and subject toeconomic regulation (utilities) is instructive. While the economic regulation of utility networks is notwithout its issues (OECD, 2017b) – e.g. data and information asymmetry, information overload for
consumers and risks of legal disputation – it appears that the regulatory approach provides a better meansof ensuring sound stewardship of existing assets. That said, limited direct evidence is available andconclusions must therefore be based more on observations about the processes than on measured
outcomes such as costs to users, service quality and integrity of the asset base.
A well-managed regulatory approach is more likely to elicit information on the condition of existing assets
and on what maintenance practices and expenditures might be required to ensure the asset meets users’
requirements, and will also provide a funding regime to meet the efficient cost of maintaining network
assets. However, those processes, while supportive of good outcomes, do not guarantee success andregulators have to deal with a range of challenges in discharging their responsibilities.
Lessons can be learnt from various infrastructure sectors. The Lisbon Charter, prepared by theInternational Water Association, provides guidance on the formulation of national and local public policies
for the sector, the creation of associated regulatory frameworks for water services, and good practice forthe implementation of such policies and regulations (International Water Association, 2015). The
principles underpinning the charter are relevant to most infrastructure sectors. They are:

effective water supply, sanitation and wastewater management make a positive contribution tosustainable development

the provision of services should enshrine accountability and transparencythe economics of service provision should be framed by long-term infrastructure investments andcost-recovery instruments



service provision should take into account the financial, social and environmental aspects of all
water resources

effective service provision relies upon the collective actions of interdependent stakeholders.

The key messages in these principles – the importance of accountability and transparency, the use of longterm cost-recovery instruments, the need for the regulated services to take account of a range ofconsiderations (not just financial ones), and the need for effective engagement with stakeholders – aresimilar to some of those set out by the OECD Network of Economic Regulators (OECD, 2014).
Transparency and funding arrangements are the principal areas of concern in applying an economic
regulatory model to non-regulated infrastructure. The transparency potentially afforded by economic

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regulation is likely to put into the public domain matters that governments might otherwise want tomanage and resolve internally, such as asset condition and prioritisation of spending. However, there areclear benefits to enabling open debate about the nature of the trade-offs involved.
Funding issues fall into two broad areas: firstly, debates as to whether non-regulated infrastructure should
be subject to user charging; and, secondly, if user charging is not applied, whether a regulatory type ofstructure inappropriately fetters governments’ fiscal discretion. For example, if a regulatory approachwere applied and it was found that the government should spend materially more to achieve certain
service standards, a government might argue that it is its responsibility to take decisions about both theoverall level of public expenditure and the balance of expenditure across portfolios.
Table 5: Regulatory functions that might be adapted and applied to non-regulated infrastructure
Function under the
economic regulation of
infrastructure

Could thisfunction beapplied to
non-regulated
infrastructure?

Comment

Determine need for asset
maintenance, capital
investment for otheroperating costs needed tomeet service standards overthe foreseeable future.

Yes

For regulated infrastructure, the regulator considers proposals fromthe owner/operator. In the case of non-regulated infrastructure, an
independent entity would consider submissions from:the relevant infrastructure agency and/or
the government (e.g. through the department representing the headof government and/or the Ministry of Finance).
As with the regulation of utility infrastructure, the mandate of an
independent body reviewing proposals from the government andinfrastructure agency could be specified so that the government still
decides which capital projects are pursued and how to deliver
maintenance.

Determine efficient costs
associated with the deliveryof maintenance and capital
investment

Yes

For regulated infrastructure, the regulator considers proposals fromthe owner/operator. In the case of non-regulated infrastructure, an
independent entity would consider submissions from the relevant
infrastructure agency and the public.

Set revenue requirements
over a defined regulatory
period (say five years,
although it could be longer),based on efficient costs and,in some cases, tariffs within
the overall revenue
requirement.

Possibly

In an environment where user charging is not applied or only partiallyapplied, the independent body could still make a recommendationon the total revenue required to maintain and develop the network
to meet required standards. Whereas in the case of regulated
utilities, the regulator’s determination would be binding, in the caseof non-regulated infrastructure, the independent body’s advice
would be a recommendation to the government. To address theneed for transparency, the recommendation would also need to bemade public.

Source: Working Group.

Nevertheless, principles along the lines of those mentioned above should be the starting point forconsidering how at least some of the attributes of a regulatory structure can be applied to infrastructure
sectors that are still funded mainly or wholly by general government. This is a different sort of independent
evaluation to that currently undertaken by the independent bodies. As noted above, they currently tend
to focus on broader strategic issues and the evaluation of individual projects or schemes. They do not lookat overall funding programmes and needs. Although the fiscal remit for the NIC requires some assessment

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of programmes and overall outlays, the result is one where the commission must fit the cost of its
recommendations within the given funding envelope; it does not have the remit to argue that the overallfunding envelope should be expanded to achieve certain outcomes.
Application of the above principles requires consideration of which elements of the regulated approach
could be applied or adapted to infrastructure that is not subject to user charging (or where charging meets
only a small share of costs). Within the regulatory framework and policies established by government,
economic regulators perform the broad functions set out in Table 5. The table offers some observations
about whether these functions could be applied to non-regulated infrastructure.

Such a process would shed light on the maintenance and capital needs of the infrastructure in question. It
would also clearly identify the service standards themselves and address the question of whether theyrequire reconsideration. In the case of transport, or other sectors where there are multiple means ofmeeting infrastructure needs, planning and policy setting would still need to be undertaken by thegovernment. For example, the government would still need to make choices about the balance between
various forms of public and private transport necessary to meet local needs.
If the approach is fully transparent, including publication of the independent body’s recommendations to
the government of the day, it has the advantage of placing information in the public domain against whichgovernment policies and priorities can be assessed.
Without the introduction of greater application of user charging in the transport sector, there are obvious
challenges in adopting a regulatory or semi-regulatory approach. However, the funding of an asset
manager within the government sector via user charges is currently being applied in specific cases. For
example, ASFINAG plans, finances, builds and maintains Austria’s motorway network. It is fully owned by
the Austrian government and is funded by toll revenues. The ASFINAG example shows that, although theapplication of user charging to the entire road transport network continues to present political and otherdifficulties, applying user charging to the most economically critical (and most heavily used) parts of theroad network, e.g. motorways with a manageable number of entry and exit points, is achievable. However,as noted by the OECD, creating an incentive framework for publicly owned infrastructure operators ischallenging (OECD, 2017b). A recent paper for the ITF comments on efforts in Australia to take a range of“no regrets” steps towards a broader system of road charging (Alchin, 2019). Those steps are still ongoing,highlighting the difficulties in this area.
However, it is possible to apply a contract-based model, in which the Ministry of Transport agrees to funda state-owned enterprise that has management responsibility for a portfolio of infrastructure assets at a
certain level, contingent on specified service standards being met, which can provide similar performance
incentives without requiring direct user charging. This model, in which a regulatory oversight bodymonitors performance against agreed indicators and standards, provides an improved evidence base toensure the accountability of asset managers (Makovšek and Veryard, 2016).
Optimising maintenance, and trade-offs between new projects and maintenance

The importance of good maintenance practices is broadly accepted, although it is not consistently realised
in practise. Underperforming assets – such as roads and railways that are subject to load restrictions, orelectricity networks that suffer from brownouts and blackouts – and assets that fail, e.g. bridges thatcollapse, impose immediate and sometimes long-lasting economic and social costs on society. Repairing
assets after their condition has degraded materially is more expensive than timely investment in routine
and preventative maintenance.

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As noted earlier, the ICS has argued in favour of a presumption that existing assets will be used in
preference to new investment. However, in various situations, infrastructure networks must be expanded
to address growing demand. Governments, infrastructure owners and operators need sound asset
management plans to provide the basis for striking a reasonable balance between these competing
imperatives. Striking an appropriate balance between the need for new investment and the need tomaintain existing assets is also a challenge (OECD, 2017a). This is true not only for government-funded
infrastructure, but also for infrastructure that is funded though user charges.
Asset management plans should be the result not only of technical considerations, but also input fromusers and other stakeholders. Decisions about where, when and how much to maintain existing
infrastructure assets are subject to the same economic and social expectations as investment in new
infrastructure. A strictly economic focus on maintenance would prioritise spending on more heavily utilised
assets that are important for the economic development of a region or country. However, this approach
may lead to underspending on assets that are required to ensure reasonable levels of accessibility andservice across a region or country.
Governments can improve the rigour and transparency of these decisions by ensuring that sufficient funds
are committed to enhancing agencies’ asset management planning. Similarly, when making their revenue
determinations, economic regulators could include an allowance in their revenue determinations forinfrastructure owners to collect and present comprehensive asset management data, then require theowners to present and use those data in seeking future determinations. Without this funding, and theasset management expectations that go with it, material improvement in decision making on the balance
between maintenance and capital spending seems unlikely. Asset management plans should be informedby:Condition assessments – this is a particular challenge for local infrastructure, where local council
capacities are often constrained by funding and their ability to employ and retain enough welltrained professionals with the requisite experience and skills.

Fit-for-purpose modelling of prospective demand.

Service standards – although these are politically contentious, they are vitally important to enable
governments, owners, regulators, users and the community at large to have some basis fordebating the aggregate level of spending on maintenance and new capital as well as the
distribution of that spending. Without published service standards, the levels of service that users
might expect are simply implicit rather than explicit.

Judgements about the nature and timing of technological change that is likely to affect the
infrastructure sector in question.

Such an approach would enable the parties to understand the economic benefit of existing infrastructure.
It would also enable an explicit valuation of the subsidies necessary to provide a target level of service
where user charges are either not applied or do not meet costs, and to clarify the extent of any under- orover-investment.
Adapting economic regulation to address broader objectives

The issues discussed earlier – notably the long-term resilience of infrastructure networks, the potential
benefits of cross-sectoral planning and the social impacts of infrastructure decisions (e.g. the equity
implications of user charges and/or differences in access to services) – raise important questions for the
economic regulation of infrastructure. In particular, questions arise as to whether and, if so how, economic

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regulation can address some or all of these matters. As Cifuentes (2016) notes, the objectives of economic
regulation in the infrastructure sector have generally been far more limited: “Internationally, the role orobjectives of economic regulators of infrastructure tends to include one or more of the standard economic
objectives of achieving economic efficiency, encouraging investment, promoting competition, mitigating
monopoly power, allowing cost recovery and protecting the interests of consumers.” As a result, the issues
mentioned above have generally fallen outside the regulators’ remit.
Moreover, the regulators themselves tend to be reluctant to take on new responsibilities, such as making
trade-offs between social and environmental objectives and traditional objectives such as securing
economic efficiency where there are natural monopolies and otherwise fostering competition. This
reluctance appears to stem from concerns at:a potential loss of clarity in their regulatory remit

the potential for “regulatory overload”.

Moreover, there are considerations of legitimacy. For example, one commentator has observed, “thebroadening of regulatory responsibilities to account for social and environmental obligations can represent
a significant shift in the division of responsibilities between government and economic regulators. Such ashift may not sit easily within existing regulatory frameworks; and the resulting tensions have the potential
to impact detrimentally on the types of outcomes economic regulators are normally intended to promote;namely business certainty, investment and economic efficiency” (Decker, 2010).
These concerns are most evident in relation to the distributional impacts of regulatory decisions. It is
broadly accepted that, in a democracy, governments are best-placed to deal with the distributional
impacts of regulatory decisions, principally by transparently subsidising the infrastructure charges paid byspecific members of society. Regulators are not accountable at elections and are therefore not well-placed
to make those judgments. Where distributional matters are to be considered by a regulator, it is vital thatthe government provide clear guidance to the regulator on its role and the weight to be given to particularconsiderations.
There is little evidence that the economic regulators of infrastructure take account of cross-sectoralconsiderations when making regulatory determinations. This is likely to be largely a consequence of theregulatory “rules of the game” that the regulators must operate within. Owners and operators of regulated
networks might also resist such an approach. Thus, if cross-sectoral regulation is to occur, governments
will need to lead by changing the frameworks within which the regulators operate. This is not to argue thatcross-sectoral matters should not be considered; rather, it is to make the point that governments need toprovide direction and clarity as to their expectations.
A recent NIC study has considered some of these matters (NIC, 2019a). It concludes that, in the case of theUnited Kingdom:the current regulatory system needs to be adapted to meet the long-term challenges confronting
society, including achieving net-zero emissions by 2050, improving resilience in the water sector
and supporting an increasingly “digitalised” societygovernment needs to take a leading role in setting out a long-term strategic vision for the
regulated sectors, because infrastructure owners and regulators do not always have the rightincentives to do this

national regulators need to engage with devolved and local strategies

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

regulators should have duties to promote infrastructure resilience, support the achievement ofgreenhouse gas emissions reduction targets and collaborate with other regulators

regulators should regulate investment in strategic enhancements separately from maintenance ofexisting networks, using “competition for the market” and longer price controls where appropriate



The UK Regulators Network should have a stronger role and be supported by an independent
chair, developing more joint data sets and knowledge sharing.

These observations are also likely to be relevant in other jurisdictions.

The context for reform
Each country faces its own unique infrastructure needs and circumstances. However, some key challenges
are common across countries and across infrastructure sectors and, increasingly, they can be seen as interrelated. These include climate change, technological change, and the maintenance and replacement ofexisting assets. The environment in which these challenges must be addressed is characterised by fallingrates of productivity growth, rising international tensions, increasing pressure on public budgets, risinginequality and falling trust in public institutions. Governments, industry and society at large face difficult
decisions, many involving uncomfortable trade-offs, in managing these challenges. The need to address
this complex environment and make sound choices which consciously balance competing objectives has
driven the increasingly widespread adoption of strategic infrastructure planning and the progressive
expansion of the scope and content of these plans in many countries.
Notwithstanding changes and improvements in infrastructure planning practice, further improvement isneeded. Various strategic planning techniques can help anticipate and manage the impacts of an uncertain
future. These include: scenario planning, planning on a cross-sectoral basis and improvements in
consultation with those who will be using or affected by infrastructure decisions. However, the applicationof scenario planning remains comparatively rare, while cross-sectoral planning is on the frontier ofplanning practice. Both of these techniques aim to deal with complex systems. Presenting the results ofthat analysis in a way that is comprehensible to governments and the community at large is particularly
difficult. Governments, industry, academia and professional associations should continue to apply andimprove those techniques, despite these difficulties

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4. BROADENING THE SCOPE OF INFRASTRUCTURE APPRAISALCHAPTER 4
Broadening the scope of infrastructure appraisal
This chapter discusses current infrastructure appraisal practices, highlights key criticisms and considers
how appraisal practice can be expanded to ensure that all the relevant impacts of infrastructure
investments are taken into account in the decision-making process.

The role of cost-benefit analysis
Decisions about investment in road, local transport and passenger rail infrastructure are rarely based on
private sector commercial principles. Among the reasons for government intervention in such decisions
are the absence of a transparent method of charging road users for the benefits they derive from theinfrastructure and the presence of monopoly and network effects, which inhibit the development of acompetitive market for providing transport infrastructure. In addition, transport infrastructure and its use
have impacts that extend well beyond the interests of the providers and users, including impacts on theenvironment, air quality and greenhouse gases.
The method

CBA provides decision makers with a method for assessing the return to society that a proposed
infrastructure investment can be expected to achieve. As a methodology, CBA is founded on welfare
economics principles. The CBA measure of social returns is based on the value of benefits that the usersof the scheme will derive, including the improvement in accessibility (measured in terms of time savings),
improvements in journey quality and any other cost savings. A broad CBA should also include a range ofimpacts that must be quantified indirectly, such as the impacts of the transport project on the risk ofaccidents and injury, on local communities in terms of effects such as noise and pollution, and on wider
concerns such as climate change.
Research conducted over the last half century has substantially improved the evidence base regarding howtransport users and those affected by a project value the outcomes of a project and how these values canbe expressed in monetary terms, thus facilitating this broader approach. Moreover, monetary values forsuch effects as time savings, reductions in fatalities, improvements in air quality are now well establishedand most countries have either compiled their own sets of values or adopted values derived from studies
carried out by comparable countries (IER Stuttgart, 2005).15 This means that CBAs are increasingly adopting
a broader scope, which incorporates monetary values for the social and environmental impacts ofproposed projects into the core analysis. This is essential to ensure that the full impact of a proposed
project is understood and weighed appropriately.
The specification and design of the project will determine the size of a project’s impacts when comparedwith scenarios in which the project is not constructed or an alternative project is built. Estimates oftransport users’ responses to the improvements delivered by the new infrastructure can be developed on
the basis of knowledge of how users value time and other cost savings, and of the expected extent of thesesavings. This, in turn, will provide the analyst with an estimate of the responses to the project in terms of

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choices of route, mode, time of travel, destination and other key variables. Changes in people’s travel
choices will also have an impact on the external impacts of transport, such as local and global pollutants,that can be estimated from the changes in travel patterns that take place. When combined withprojections of travel demand over the life of the project, the costs and benefits over the project’s lifetime
can be estimated.
Its uses

CBA provides decision makers with an understanding of the likely outcomes of a project or policy. It showswhether the benefits to transport users and to others affected are likely to exceed the costs and so helps
the decision maker understand whether there is a strong case for approving the project. A project can beconsidered to be in the national interest if the mix of social and financial returns is expected to exceed the
project’s costs. The costs are generally funded by taxpayers, who are part of the same population as thebeneficiaries. CBA helps the decision maker reach a view on priorities and to choose between mutually
exclusive options when faced with several projects competing for a limited budget. A well-conducted CBA
also provides decision makers with information about aspects of a project that cannot easily be quantified
or valued. If these impacts are considered likely to be significant, the decision maker can then make an
informed judgement about the relative importance of the quantified and unquantified impacts whenreaching a decision about whether to approve a project.
There is a risk that decision makers will interpret the results of a CBA as being in conflict with their intuition.
For example, a public transport improvement aimed at influencing mode choice and emissions might resultin existing public transport users reaping the greatest benefits. Analysts must work to ensure thatdecision makers understand CBA methods, the way in which it simulates a market-based assessment, andthe information it gives them about the choices and trade-offs that they face.
The use of a common CBA methodology and consistent benchmark values for key variables (e.g. the valueof a statistical life) has the further advantage of facilitating a consistent approach to decisions abouttransport projects across different transport modes, by the different institutions responsible. Even where
responsibility for setting some values, such as the value of time savings, is delegated to the relevant
authority, CBA ensures that such variations are transparent and, in most cases, supported by evidence
about transport users’ preferences.
Undertaking a CBA is only one step in the project planning process. Decision makers also require evidenceof funding availability and of any potential revenues in order to demonstrate the financial case for the
project. At the same time, the sponsor will need to show the capability to procure the project effectively,
to allocate and manage the risks, and to provide for the maintenance of the assets over their lifetimes.

Wider economic benefits
While the majority of the benefits of a transport infrastructure project generally accrue to transport users,
such as time savings and associated user effects, a comprehensive CBA must also identify the impacts onother affected members of society. There are well-developed techniques for measuring and putting amonetary value on changes in the environmental externalities of a project, including changes ingreenhouse gases, local air quality and transport-related noise levels.
More recently, work has been undertaken to develop methods that extend the analysis of the external
impacts of a project to incorporate its effects on the wider economy. These can include impacts on
productivity, labour supply and investment. These effects, described as “wider economic benefits” (WEBs),52

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extend the scope of project analysis into the realm of impacts on the macroeconomy, usually at a local orregional level. In essence, the focus is on estimating the extent to which output and employment may
increase in the aggregate (i.e. at the economy-wide level) as a result of the transport infrastructure
investment. This will occur if the investment successfully addresses some existing market imperfections.
Wider economic benefits may be real and significant, particularly in the case of larger projects designed tohave transformative impacts, suggesting that including them in the appraisal of such projects will be
important to achieving a comprehensive assessment of expected impacts. The methodology adopted must
avoid the risk of double-counting impacts that are already captured in the CBA. This can occur due to
confusion regarding the conceptual nature of some impacts. Venables (2016) highlights this point:
Transport improvements enable savings in transport and communication costs for firms, workers, andconsumers, enhancing effective proximity. In turn, cheaper, more reliable and faster transport may allow
firms to change the way in which they organise their logistics or production (e.g. just-in-time
manufacturing technologies). These gains are user-benefits, and are accounted for in calculation of thosebenefits. They should not be double-counted as a wider economic impact.
Such evidence as has been published suggests that WEBs are generally substantially smaller in size thanthe benefits that accrue directly to transport users. For example, the United Kingdom’s Department forTransport guidance16 notes that “where productivity impacts are relevant, they are generally in the rangeof 10% to 30% of total transport economic efficiency user benefits”. However, analysis of a few, very large
and transformative projects, such as the Grand Paris Express currently under construction, have concluded
that wider economic benefits are likely to constitute a significantly larger proportion of the total project
benefits.17
Productivity impacts

There is a well-established relationship between aggregate levels of investment in infrastructure and therate of growth in a country’s GDP. At least at certain stages in the cycle of economic development,
countries that invest more in infrastructure aimed at relieving constraints on capacity tend to experiencea faster rate of economic growth (Aschauer, 1989), albeit that some research suggests that this effect isdependent on the quality of infrastructure investment decisions.18 Recent analysis of the potential causesof this finding has focused on the role of urban agglomeration on productivity and on the role of transport
infrastructure in enabling a change in the level of agglomeration.
Research undertaken at Imperial College London (Graham, 2007) and elsewhere on the relationshipbetween transport, cities and productivity has established a measure of “economic mass” (the term“effective density” is also used) or agglomeration. There are two parts to the measure of economic mass.
The first is the number of workers in each zone in the city, with the zones often defined to correspondwith the structure of zoning adopted in the transport model used in estimating the changes in travel
patterns for the CBA for the project. The second is the level of accessibility (in terms of travel time andcosts) between that zone and all other zones, with the value of the measure for the other zones eachweighted by the number of employees in that zone. Thus, transport costs are an integral part of themeasure of economic mass. Analysis of data on productivity – defined as output per worker – shows acausal relationship between economic mass and productivity. Thus, investment in transport increases
economic mass, in turn increasing productivity. Better connected cities are more productive places. The
effect of changes in economic mass on productivity in any zone in the city declines with distance from the
project, with negligible productivity effects in zones more than around 20 kilometres from the project.

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Cities that have experienced an increase in economic mass induced by a transport scheme tend to benefit
from a second-round effect. Firms relocate to the city, while existing firms expand, because of better
access to workers, suppliers and customers and because each expanding or relocating firm benefits fromthe increase in productivity from the first-round effect. Thus, both components of the economic mass termchange – each nearby zone has become more accessible and each zone has an increased employment
density because of the relocation of activity. The UK Department for Transport appraisal guidance19
defines the first-round effect as a “Level 2”, or static, impact and the changes following from the relocationof economic activity as a “Level 3”, or dynamic, impact. The “Level 1” analysis is restricted to the moreconventional benefits of time and cost savings, and social and environmental impacts.
Induced investment

The economies of all countries change continuously. Existing firms expand or contract: new firms are
established and others close. Transport infrastructure is one factor that influences firms’ decisions. The
business and regulatory environment and the quality and skills of the labour force are some of the manyother factors that firms take into account when planning their future. Transport is an enabler of economic
growth, but is not the sole cause.
In certain cases, transport investment can generate new or additional investment and employment –i.e. investment that, in absence of the project, would not take place. For example, better infrastructure
can attract foreign direct investment which, by introducing new management methods and working
practices, can boost productivity. These effects may, over time, spill over to domestic suppliers. The extent
to which transport investment on its own can be the cause of additional economic activity is context
specific and differs from place to place and from country to country.
Importantly, investment induced by a transport project in one location may often displace activity thatwould have taken place elsewhere. The extent of unemployed or underemployed resources in the local
economy that would be drawn into productive activity by the transport project will determine theassumption made in the economic appraisal about whether displacement is less than 100% and thescheme therefore has a net impact on total employment. In some countries, such as the United Kingdom,
the default assumption for all transport appraisal purposes is that, at a national level, 100% displacement
occurs and there is no net additional impact on the level of employment.
Investment in transport infrastructure, by changing the attractiveness of different locations, can change
the locus of economic activity. Where such displacements of economic activity occur, the main benefits ofsuch changes to the firms that take advantage of the new infrastructure are reflected in the time savingsand vehicle operating cost savings that form part of the conventional CBA. However, certain effects of suchchanges fall into the WEB category, as they are additional to the factors that have influenced the decision
taken by the firm or household. When a transport scheme induces a firm to move to a new location andthat location is one where the measure of effective density is higher than in their former location, theincrease in the density of employment and, hence, productivity as a result of that move benefits all firms
in the new location. This benefit is necessarily larger than the sum of the costs due to reductions ineffective density in the locations from which the firms have moved. However, it is important to ensure theanalysis only weighs the net benefits of these density changes – i.e. offsets the costs due to density
reductions in areas that lose companies or workers against the benefits due to density increases in areasthat gain them. The net density benefit is additional to those measured in the conventional approach: therelocating firm does not consider, in its decision to move, these impacts on other firms.20
The benefit attributable to the project due to workers who move is delivered by both the increase inemployment density and the increased productivity of the jobs to which the workers have moved.
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However, there is some uncertainty about the extent to which workers who move to a location where
productivity is higher benefit from spillover effects and become as productive as existing workers in that
sector and location. UK practice has tended to test the sensitivity of the results of this part of the WEB
appraisal by also including a scenario that assumes that workers who move to a more productive location
continue to have lower productivity than the existing workers in that location. New infrastructure can also
result in a firm deciding to move to a less productive place. By increasing the accessibility of an area, interurban road projects can induce firms to take advantage of lower rents, and potentially wage costs, by
locating outside the urban area. However, this has the effect of reducing the effective density benefits
accruing to firms that remain in the agglomeration – i.e. of imposing “wider economic costs” which will, atleast partly, offset the WEBs.
Employment impacts

Infrastructure that reduces the time or other costs of the journey to work will have some impact on thewillingness of economically inactive potential employees to join the labour market. The extent of this
impact depends on the extent to which the project reduces barriers to access to work for those who areon the margins of the labour market and on the demand for labour with the skills of this group of potential
workers. There are close linkages between the impacts of infrastructure on investment, as describedabove, and its impacts on employment. In most cases, changes in the level and location of investment will
have corresponding effects on the location and level of employment. Assumptions about the extent of job
displacement and of any net employment increase should follow those made in the assessment ofinvestment effects.
CBA provides decision makers with a national-level assessment of project impacts. However, the impactof a project on local or regional labour markets is often a key policy objective. Additional modelling of
relocation and land-use changes, as described below, is needed to show whether the project is likely todeliver these regional policy objectives and can help to indicate what additional measures might beneeded.
As noted above, investment in infrastructure changes the relative attractiveness of different locations andcan lead to firms deciding to relocate or expand. In a fully employed economy, a shift of activity to alocation with improved infrastructure results in less economic activity in other locations. If effective density
differs between these locations, the overall level of economic activity will change because productivity
differs between locations. Decisions taken by firms about location choice include consideration of the costof access to labour markets, thus linking the employment and the investment effects of a project. Landuse planning decisions such as authorising an increase in the supply of land for housebuilding will also havean impact on employment, enabling firms to access a larger labour market at a lower cost.
Quantifying wider economic benefits – first-round agglomeration impacts

The transport model used to quantify the changes in travel time and other costs experienced by users ofa project also plays a major role in estimating the extent of the wider economic benefits. Quantification of
the first-round effects – the impact of the changes in transport user costs on productivity – requires dataon the average gross value added or wages per worker in each of the zones in the transport model, datathat in most cases are segmented by broad industrial category. Two further terms are required: 1) anelasticity of productivity with respect to effective density; and 2) a distance decay function, which is basedon evidence of the decline in the change in productivity with distance from the zones through which the
project passes. With this information, the change in economic output in each zone and in each segmentof the urban economy can be estimated and added to the conventional estimate of the user benefits.

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The values of the sectoral elasticities and of the distance decay function are derived from econometricstudies using time series and/or cross-sectional data from different cities; the costs of using the transport
network; and the volume of trips, employment densities and the productivity of the different sectors of
the city’s economy. Such studies are data-intensive and complex. Where local data on sectoral elasticities
and on the decay function are not available, default values can be adopted, such as those found in the
UK Department for Transport’s guidance in TAG Units A 2.1-A2.4 and the associated TAG databook(UK Department for Transport, 2019).
Quantifying wider economic benefits – second-round agglomeration impacts

The methods needed to quantify the second-round agglomeration effects that result from a change in thelocation of economic activity are significantly more demanding than those used to estimate first-roundeffects. The transport model that serves to estimate the changes in the trips made by those who benefit
from the project is, for the most part, based on the assumption that these changes have no effect on landuse. Estimation of these land-use changes requires supplementary economic modelling, for example usinga Spatial Computable General Equilibrium (SCGE) or Land Use and Transport Interaction (LUTI) model, so
as to take account of the changes in the costs incurred by firms in doing business in different locations andof their responses to the changes in such costs as a result of the transport project. LUTI models use dataon access to labour, customers and suppliers and on rents in different locations, together with data on
land-use planning regulations and restrictions, to estimate the changes in location made by firms in orderto reduce their costs or increase their profitability in response to the transport project.
LUTI models were initially developed to help land-use planners appreciate the likely effects on traffic flows
and public transport demand of approving housing and commercial developments as part of acomprehensive rezoning strategy. However, political approval for the rezoning of an area at an increased
density, which might justify a new public transport link or more highway capacity, may not be forthcoming.
Good practice therefore requires that a range of scenarios about the extent of the proposed rezoning
should be modelled in the analysis.
The LUTI model is supplemented by an economic model to estimate the impacts of the transport andland-use changes on GDP and on government revenues. In some applications of LUTI-based economy
models, the component used to estimate effects on tax revenues and productivity relies entirely on theland-use change and the changes in effective density caused by the changes in the location of
employment.21 The methods of SCGE,22 however, also take direct account of any efficiency gains to thefirm of the relocation decision and of gains to developers, as well as providing a more comprehensive
assessment of the changes in tax and government revenues. In addition, many applications of both
LUTI/economy models and SCGE models take account of further potential impacts on productivity andgovernment finances. These include the second-round effect of spending from the demand generated by
the agglomeration impacts on investment and on employment and the consequences of both funding the
project and of the tax revenues generated on public finances.
The labour market effect of workers moving to a different job in a more productive location is estimatedthrough the same method used to estimate the relocation decisions made by firms. The relocation decision
depends in part on the availability of labour, with an improvement in transport infrastructure making alocation more attractive both to workers and employers. The monetary value of such changes for inclusionin the CBA is determined by the additional tax revenues paid by those who move to a more productive,
and so higher taxed, job.
The worker’s decision to change location is based on the change in post-tax earnings and in transport costs
when compared with the previous job and its location. The transport user’s benefit for the worker who
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relocates is measured through conventional transport appraisal methods – the rule of a half for generated
trips. Since the worker could always have earned the increased income by changing workplaces before theimprovement in transport infrastructure but chose not to do so, there is no additional benefit to theworker from the higher post-tax earnings: they compensate for the longer journey to work or otherattributes of the more productive job. But additional to this is the incremental tax revenue from theseworkers – additional when compared with their previous place of work. The additional tax revenues on theincreased pre-tax earnings is counted as a source of wider benefits as it permits all other taxpayers to pay
marginally less (assuming total tax receipts remain unchanged).
There are several sources of evidence on the impact of a reduction in the costs, time and inconvenienceof the journey to work on the economically inactive but adequately qualified labour force. The
UK Department for Transport’s guidance is based on evidence of the effects of tax and social security
benefits on labour force participation and on the assumption that a change in the generalised costs ofcommuting has the same impact as the equivalent change in post-tax income. The benefit is valued taking
the same approach as for the change in job location, based on the change in income tax payments, on the
grounds that the individual’s change in employment status was determined by the increase in post-tax
income made possible by the project.
Data requirements for estimating WEBs will differ between countries according to the level of spatial detailat which information is published. The UK Department for Transport’s Wider Impacts Dataset23 provides
an example of what is needed to estimate this source of benefit.
A well-conducted CBA makes allowance for the inevitable uncertainty about values and methods andabout projections of future demand, costs and values. In this way, decision makers can assess a numberof scenarios for each project and understand which projects are the more likely to yield positive net
benefits in a wide range of plausible scenarios. The nature and extent of WEBs are at least as uncertain as
the key CBA variables: for example, land-use related benefits that depend on zoning changes may not berealised, or may be reduced in scale, if lobbying by local populations prevents or reduces the extent of theassumed rezoning. More generally, because the methods of estimating WEBs are less well established,
their extent is likely to be more uncertain than are key CBA variables. While setting out an economic
narrative, as described in Section 4.3 below, helps to reduce the “black box” nature of the WEB estimates,
the limitations of the methods used to estimate WEBs and the uncertainty that inevitably is part ofpredictions of local economic impacts remain. Decision makers should be aware of these limitations andWEB estimates should be identified separately from those of CBA. WEB analysis should be reported in atransparent manner that allows decision makers to understand the key assumptions underpinning theanalysis, the level of uncertainty attached to them and the effect of these assumptions not being borneout on the estimated benefits.
When should an assessment of wider economic benefits be undertaken?

Modelling and estimating wider economic impacts is data-intensive and adds to the resources required for
preparation of the overall project appraisal. Such additional analysis is likely to be justified only where
projects are likely to have impacts that go beyond those of a conventional transport scheme – i.e. reducing
congestion, reducing accidents and improving the local environment. The resources required to estimate
the first-round impacts are significantly less than those needed to estimate second-round impacts. Thereis therefore a case for estimating these first-round impacts even if land use is assumed to remainunchanged (i.e. there are no second-round effects). Projects aimed at relaxing constraints on land for
housing and business development, and which are associated with proactive policies such as improvement
to the urban realm, are among those likely to merit the more comprehensive modelling of land-use change

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and the implications of such changes for WEBs. The aims of the project sponsors and the promoter’s visionof how the transport project will interact with these wider policies will be a more relevant consideration
than the capital costs of the scheme. It is unlikely that any but the highest cost schemes will merit the full
assessment of wider economic impacts. In the case of smaller schemes, much useful information can beprovided through a well-constructed economic narrative, as described in the following section.

Integrating WEB assessments with traditional CBA
As noted above, WEBs, when quantified in terms of the agglomeration impacts and the additional tax
revenues from workers moving to more productive jobs, count as additional impacts to those included in
traditional CBA. In addition, if evidence suggests that a project might have the effect of bringing into thelabour market workers who would otherwise be inactive, the benefit of their participation in the labour
force also counts as an additional impact.
Even if full quantification of these WEBs is infeasible, a qualitatively based economic narrative cancomplement the CBA and other project analyses. Such a narrative can inform policy makers and others
about how the scheme is expected to deliver the predicted WEBs and what additional policies anddecisions may be needed to build on the expected improvements in accessibility and ensure theproductivity and other wider impacts are obtained in practice. A well-constructed economic narrative
might start with an assessment of the economic development of the urban area or region and its strengths
and weaknesses, and describe the opportunities that arise from the project. This assessment should
outline the steps that can be taken by both the public and the private sectors to realise those opportunities.
Additional considerations will be the skills of the labour force, measures to upgrade these and to ensure awell-functioning housing market in response to the relocation of economic activity.
An assessment of the institutional framework, including the roles of the different national, regional andlocal authorities responsible for delivering the transport and other related interventions needed for the
successful delivery of the strategy should form part of the plan set out in the economic narrative. The
narrative should also set out incentives for these bodies to deliver the economic strategy and the role ofthe private sector in developing and delivering the land-use change and the subsequent changes to theeconomic structure of the city. A description of the roles of the key actors in delivering the strategy and of
the interactions between them will provide decision makers with information on the part that they willneed to play in delivering the wider benefits.
The economic narrative should also identify transmission mechanisms and describe how the
improvements in accessibility delivered by the scheme improve productivity, labour supply and othereconomic variables. The aim of this stage of the assessment is to ensure that the economic narrative
remains founded on the processes through which the WEBs are quantified and modelled. Transport is anenabler of higher productivity and is rarely its sole cause. The narrative should ensure decision makers
understand the additional measures that need to be implemented to build on the transport project and todeliver the desired outcomes. The assessments of the strengths and weaknesses of the local economy, ofthe labour force and of the business environment, as described above, will help clarify the complementarymeasures needed to maximise the value of the transport investment. An appreciation of the project’s
potential to deliver economic benefits can help those responsible for its implementation to identify thecritical success factors for the package.

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4. BROADENING THE SCOPE OF INFRASTRUCTURE APPRAISALMetrics – BCR and GDP effects

CBA is founded on welfare economics concepts. It clarifies the comparative societal welfare impacts ofdifferent investments by assessing the utility, or value, people place on the impacts transport investment
will have on them. It is not intended to measure the effect of an investment on the national economy,
defined in terms of GDP, a macroeconomic metric that conforms to national accounting conventions andwhich is restricted to marketed goods and services. Impacts such as savings in travel time on leisure trips
or environmental impacts figure in CBA methodology but are not part of the conventional national GDP
accounting process.
However, most governments have an objective of raising productivity and so of increasing GDP as anindicator of the growth in a country’s prosperity. One of the strengths of the appraisal of the WEBs of atransport scheme is that these impacts can be valued either in the context of a welfare framework, as
described above, or in terms of GDP and national accounting methods. The increase in output per worker
is caused by the transport investment, the costs of which are already part of the cost-benefit calculation.
No additional input is required of the workers who benefit from working in a better-connected city, withthe opportunities that this facilitates. The CBA includes both the additional post-tax income earned byworkers and the tax they pay on these earnings from which society as a whole benefits. These additional
pre-tax earnings also will be counted in a country’s national accounts as a measure of increased
productivity and hence as an impact on GDP. In this respect, the welfare impact and the GDP effect are
identical.
The additional earnings generated by the relocation of economic activity are treated differently in a CBA
and a GDP metric. The welfare benefit gained by those who change where they work is measured throughthe change in transport costs they experience, with the most marginal person who moves gaining aminimal benefit and hence the average traveller who moves jobs getting half of the benefit of existingusers. Added to this is the social benefit from the additional tax revenue on these higher earnings. But the
GDP metric counts the entire increase in output since the additional time spent in commuting or the
additional demands on the worker when in the higher paid job do not count as costs in the GDP calculus
to be offset against the increase in productivity.
Estimates of the GDP effect have helped decision makers understand the potential for raising funds for
major projects. Such estimates can show how much of the initial capital costs might subsequently berecovered through tax payments on the additional income generated by the changes in the location of
economic activity caused by the project. An analysis of the GDP effects of London’s Crossrail scheme
helped to make the case for the introduction of the business rate supplement, an additional local tax leviedon all large firms in London, which provides around a third of the funding for the scheme.
Equity impacts and regional effects/economic rebalancing

One of the criticisms sometimes levied at CBA is that it is unfair, as it is said to favour higher income users
and regions. Many of these criticisms are unjustified. Most countries adopt a national average value fortime savings for any given journey purpose. This policy of treating all travellers’ time savings as of equal
worth, despite evidence of a higher willingness to pay by higher income groups, is one way of ensuring alltransport users are treated equally in the conventional appraisal method.
Changes in the structure of many countries’ economies towards greater agglomeration in the mostproductive conurbations have had the effect of increasing the gap between the richest and the poorest
parts of most economies. Moreover, recognition of the contribution that transport investment can maketo increasing the productivity benefits of agglomeration and the tendency to invest in places where the

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benefits are the highest has risked increasing this divergence. As noted above, the evidence used toquantify agglomeration effects is based on the differences in output per worker between locations andhence shows greater returns in higher income locations. However, there have been strong politicalpressures in many countries in recent years to reverse this imbalance and to target transport infrastructure
to the less prosperous cities and regions.
The methods used for appraising WEBs and the associated impacts on local and regional GDP can help
decision makers understand the trade-offs they face when deciding where to target transport investment
and what additional measures might increase the returns to investment in the regions they wish to favour.
For example, policy makers might decide to adopt measures that shift the allocation of new housing
construction to lower growth regions. In such a case, the modelling and appraisal of the project’s WEBs
will help decision makers understand the effect of such a policy on labour supply, the effect of this changeon the attractiveness of the region to employers and the extent to which the policy enhances thefirst-round impacts on transport users derived from conventional CBA.
Sustainability impacts

CBA and the methods used for modelling the effects of a project on traffic and travel patterns are generally
capable of demonstrating the likely impact of the project on many, if not all, of the set of sustainability
objectives. For example, traffic modelling methods are used to show how changes in highway
infrastructure influence traffic volumes (including induced traffic) and vehicle speeds and hence the net
effect of the scheme on greenhouse gases, air quality and noise levels. There are well-established values
for changes in such environmental impacts, often based on data from epidemiological and other studies.
Impacts on landscape, biodiversity and heritage are more difficult to value and decision makers are often
given a qualitative assessment of these impacts as part of the information to inform their choices.
Individual transport projects are not in themselves the way of delivering a sustainable transport policy. The
assumptions and monetary values that are derived from the overall policy of moving to a more sustainableeconomy should form inputs to the CBA model. For example, a shift to electric vehicles will reduce thecosts of motoring in most countries, unless associated with other changes in the way motorists pay forroad use, as well as having an impact on emissions, noise and carbon. An appraisal of an infrastructure
project that includes a scenario for the electrification of the vehicle fleet should therefore incorporate
assumptions about road users and external costs in the appraisal of the options for the scheme. Theseassumptions will also form part of the case of the do-nothing default option.
Integrating the different dimensions of appraisal

As noted in the opening section of this chapter, CBA aims to provide decision makers with the information
they need to judge whether a specific project provides a mix of social and financial returns that are
expected to exceed its costs. This information also helps decision makers choose between mutually
exclusive projects and to rank projects where there is a budget constraint and not all schemes withacceptable benefit/cost ratios can be funded.
However, the ratio of benefits to costs is not the only consideration of relevance. As noted, not all theimpacts of a project can be expressed in monetary terms. For example, many countries lack robust
techniques for deriving monetary values for the impacts of infrastructure on certain environmental
outcomes. The UK Department for Transport’s Guidance 24TAG Unit A3 sets out means of deriving aqualitative scale to assess the impacts of a scheme on unquantifiable variables including landscape,townscape, historic environment, biodiversity and the water environment. A seven-point scale, ranging

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from largely beneficial to largely adverse, is used and forms an integral part of the appraisal. Thus,
decision makers are presented with a mix of quantified, monetised impacts and impacts which, while thecategorisation is based on a consistent method, are described in terms of their relevance and weight in
the decision.
The role of the decision maker is to consider the trade-offs in choosing between options. For example,
approving a scheme with, for example, benefits valued at EUR 25 million and costs of EUR 15 million andrejecting an alternative with the same benefits, costs of EUR 10 million but, unlike the higher cost option,with an adverse impact on both landscape and biodiversity shows that the decision maker puts an implicit
value of at least EUR 5 million on saving the environment from these adverse impacts.
Decision makers often also face a choice between projects with higher net benefits in a more prosperous
part of the country and a project with lower net benefits that benefits a region where productivity is lower.
A policy that favours investment in parts of the country that are already experiencing higher than average
growth might be criticised as inequitable, despite its greater contribution to national prosperity. A set ofappraisals that cover projects in different locations and include both conventional benefits and wider
economic impacts can give decision makers valuable information about the trade-offs between
considerations of inter-regional equity and national productivity growth.
Decisions on transport infrastructure inevitably involve the exercise of judgement. A well-conducted CBA,
supplemented by WEB where needed and other relevant analysis can help to inform such decisions andprovide the decision maker with a yardstick for assessing criteria that are not easily quantified andexpressed in money terms.
Linking project appraisal and selection with strategic plans

Infrastructure plans, even at the strategic level, are generally objective led. Objectives such as eliminatingbottlenecks, improving the accessibility of more remote areas, increasing the size of the labour market
accessible to the major conurbations or increasing cohesion all influence the direction of strategicplanning. Linking these strategic objectives with indicators, such as congestion hotspots, traffic flows andjourney time maps, provides a means of identifying locations where there is an a priori case forintervention. Colour coded maps of networks and traffic flows are an invaluable tool in building thestrategic case. Such maps can show where there is a divergence between the relevant strategic objectives
and the performance of those parts of the network.
Below this strategic level is a process of option generation and appraisal. In some cases, the set of options
might extend to more extensive interventions, such as new regulations on all vehicles to improve air quality
rather than attempting to address this policy objective through individual projects. In most cases there will
be infrastructure-based interventions, whether new links or improvements at junctions, capacity
enhancements or the use of new technologies to manage the network better. Each of these options will
undergo the various stages of CBA, starting with a high-level sifting exercise in advance of full quantificationand prioritising against the set of criteria that relate to the high-level strategic objectives. As the options
are narrowed and practical considerations, such as whether the option is a feasible one and can bedelivered to the required timescale, are taken into account, the next stage is to undertake a more detailed
specification of the short-listed options and embark on the quantified CBA. In this way, the top-down
strategic planning and the bottom-up appraisal process are linked.

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Issues in cross-border strategic infrastructure planning
Infrastructure planning in respect of assets that serve communities in two or more countries or
self-governing regions entails specific challenges that must be managed successfully to ensure efficient
infrastructure choices can be made, implemented and sustained over time. This section outlines two
significant case studies of cross-border infrastructure planning and management, highlighting the natureof the challenges faced in each case; the institutions, policies and mechanisms used to address them; andproviding an assessment of the outcomes. It then proposes general lessons for policy makers dealing withcross-border infrastructure planning issues.
The Danube RiverThe Danube is the longest river in the European Union and a vital artery for millions of people and uniquenatural habitats. With its 2 857 kilometres, the Danube is a significant route of transport, trade, energy,
migration, social and cultural exchange. Touching ten different countries, the Danube River is the world’s
most international river. The Danube region is home to more than 115 million inhabitants, living in very
diverse countries with significant differences in culture, language, religion, social cohesion, political
integration and level of economic development. The region stretches from the Black Forest (Germany) to
the Black Sea (Romania-Ukraine-Moldova). Some of these countries are among the world’s wealthiest,
while others qualify as developing countries under World Trade Organization or United Nations definitions.
Some are EU member states, while others are EU candidates or keep the status of EU neighbour countries.
Apart from these differences, the region is also marked by long history of political conflicts, showing thedelicate situation in the region. Therefore, several instruments have been developed to foster andfacilitate cross-border and transnational co-operation, some of which could serve as best practice
examples for other regions with a similar background.
Definition of the region

The Danube region refers to 14 countries identified by the EU and defined as the so-called Danube macroregion. A strategy to boost the development of this region was proposed by the European Commission
and endorsed by EU member states, creating the EU Strategy for the Danube region (EUSDR).25 The main
goal is to jointly address common challenges faced by EU member states and third countries in the samegeographical area, which shall benefit from strengthened co-operation contributing to the achievementof economic, social and territorial cohesion.26 The Danube region comprises ten riparian countries of theriver itself (Germany, Austria, the Slovak Republic, Hungary, Croatia, Serbia, Romania, Bulgaria, theRepublic of Moldova and Ukraine) and four countries taking part in the EUSDR linked to the river basin
either via important tributaries (e.g. Sava) or via their close historical and economic ties: theCzech Republic, Slovenia, Bosnia and Hercegovina, and Montenegro. Nine of the countries are EU
members (Austria, Bulgaria, Croatia, the Czech Republic, Germany, Hungary, Romania, Slovenia and the
Slovak Republic) and five are non-EU countries (Bosnia and Herzegovina, Moldova, Montenegro, Serbia,
and Ukraine).

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Figure 2: The Danube region – territorial coverage

Source: European Union.

Economic and political situation in the region

A major issue for infrastructure policy co-ordination is the very diverse economic status of the countries
concerned. Average GDP per capita across the region as a whole is only about two-thirds of the EU averageand less than 60% of that of OECD countries.27 However, some countries, especially on the upper part of
the river, are among those member states of the EU with the most highly developed regions (EU economic
performance by NUTS-2 in 2015),28 and among the highest scorers on the UN Human Development Index(HDI).29 Others are among the weakest performing economies in Europe and, in some cases, even qualify
as developing countries under HDI or World Trade Organization rules. In addition, many countries show
great internal differences between the capital and other urban areas and the countryside.
Actors in the Danube region

The EU is present in the region through both its general policy programmes and funds and some specificinfrastructure-based initiatives. The newly established Transport Community30 brings together the EU anda number of non-member states from South East Europe in an initiative aimed at the integration oftransport markets of the South East European Parties into the European Union transport market. This
includes action in the areas of technical standards, interoperability, safety, security, traffic management,social policy, public procurement and environment, for all transport modes except aviation.
In recent years, the People’s Republic of China has increased its economic presence in the region by way
of both its One Belt One Road initiative and the 17+1 initiative. The Russian Federation has a traditionallystrong political and economic presence and is a member of several international organisations, such as the
Danube Commission. The Danube Commission supervises the implementation of the 1948 Convention on
Navigation on the Danube, which provides for free navigation on the river in accordance with the interests
and rights of the contracting parties and supports its further development. The commission has worked toaddress environmental protection issues connected with navigation on the river and has driven
fundamental change in the way fairways are maintained and developed. The United States is present in
the region both via North Atlantic Treaty Organization and via the so-called Three Seas Initiative.
The most important Danube river-related international organisations, apart from the EU, are:

the Danube Commission, which deals with inland navigation

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4. BROADENING THE SCOPE OF INFRASTRUCTURE APPRAISALthe International Commission for the Protection of the Danube River, which deals with theenvironmental protection of the Danube river basin

the United Nations Economic Commission for Europe (UNECE), which contributes to thedevelopment of transport infrastructure through two projects: TEM for roads and TER for
railways.31

The EU Strategy for the Danube region: Cross-border co-operation in strategic infrastructure
planning

The EUSDR is designed as a policy framework, specifically established for countries in, or adjacent to, theDanube River basin. As a “macro-regional strategy”, it offers an integrated framework to address common
challenges faced in a defined geographical area that includes both EU member states and third countries.
It is intended to benefit all parties via strengthened co-operation, contributing to the achievement of
economic, social and territorial cohesion.32
The EUSDR was jointly developed by the European Commission, together with the Danube region countries
and stakeholders, in order to jointly address common challenges. The strategy seeks to create synergies
and co-ordination between existing policies and initiatives taking place across the Danube region.
The goals of the EUSDR are laid down in an Action Plan, which represents a central working document andintegrated response to the common set of challenges and opportunities. In 2020, the EUSDR Action Plan
underwent a major update since 2010 streamlining, concentrating and updating the so-called targets andactions, putting them into a strategic background, and providing links to embed the EUSDR into other EU
and national funding and financing programmes.
The EUSDR’s working programme is structured in four so-called thematic pillars, as set out in the EUSDR
Action Plan. These pillars define the main goals of the strategy:connecting the Danube regionprotecting the environment in the Danube regionbuilding prosperity in the Danube regionstrengthening the Danube region.

These pillars are sub-divided into 12 so-called priority areas (PA), two of which mainly cover the issue oftransport: PA1a (waterways mobility) and PA1b (rail-road-air mobility), which are co-ordinated by Austria
and Romania (PA1a), and Slovenia and Serbia (PA1b). These two PA have the following targets, which
determine what concrete projects are to be supported by the EUSDR:
PA1a:

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

Increase cargo transport on the river by 20% by 2020 compared to 2010.



Remove obstacles to navigability, taking into account the specific characteristics of each sectionof the Danube and its navigable tributaries and establish effective waterway infrastructure
management by 2020.

Develop efficient multimodal terminals at river ports along the Danube and its navigable
tributaries to connect inland waterways with rail and road transport by 2020.



Implement harmonised river information services on the Danube and its navigable tributaries andensure the international exchange of river information services data preferably by 2020.

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4. BROADENING THE SCOPE OF INFRASTRUCTURE APPRAISALSolve the shortage of qualified personnel and harmonise education standards in inland navigationin the Danube region by 2020, taking duly into account the social dimension of the respective
measures.

PA1b:

Support efficient freight railway services and improved travel times for competitive railway
passenger connections between major cities in the Danube region by 2030.

Support fully functional multi-modal TEN-T core network corridors by 2030.

Support the development of efficient multimodal terminals at sea, river and dry ports in the
Danube region and ensure their connectivity and access through the integration of all modes oftransport and efficient logistics services by 2030.

Support improvement of the regional air connectivity and the implementation of the Single
European Sky Initiative.



Facilitate the improvement of secondary and tertiary roads in the Danube region.

Support safe and sustainable transport and mobility in the Danube region.

The EUSDR does not have its own administrative structure or a dedicated budget. Rather, it relies on otherresources, such as INTERREG (Danube Transnational Programme) and the CEF (the Connecting Europe
Facility). Its added value is that it offers participants a platform to co-ordinate their needs, programmes
and projects with regard to transport infrastructure specifically. Both PAs have produced significant
achievements, which serve as positive examples of cross-border co-operation on strategic infrastructure
planning. The following describes some of these.
Achievement 1: Fairway Rehabilitation and Maintenance Master Plan (Pa1a)33
In 2012, a majority of the Transport Ministers of the Danube region signed the “Luxemburg Declaration”,
which committed them to implementing effective waterway maintenance measures. A “Fairway
Rehabilitation and Maintenance Master Plan” (FRRMP) for the Danube and its navigable tributaries wasdeveloped within the framework of the EUSDR and endorsed by the Danube Ministers of Transport in
December 2014. Their commitment was reconfirmed by ministerial declarations in June 2016 andDecember 2018. The Master Plan was also on the agenda of the Ministers of Transport during the AustrianPresidency of the Council of the EU in 2018. Key parts of the Master Plan are being implemented throughthe FAIRway Danube project (2015-20).
The FRMMP highlights national needs and short-term measures to ensure the efficient and effective
realisation of harmonised waterway infrastructure parameters along the entire Danube and its navigable
tributaries within the existing legal framework (especially the UNECE’s AGN agreement [European
Agreement on Main Inland Waterways of International Importance] and Belgrade Convention)34 and along
the lines of the Luxemburg Declaration. It includes an overview of existing critical waterway sections or
locations, needs, and actions.
The FRMMP also estimates the required investment and operational costs per country needed to achieve
the required service levels. These service levels are defined by the above two conventions. The AGN divides
European waterways of international importance into different classes (I to VI), with different
requirements for a guaranteed water depth over a specified amount of days per year for each class. The
Belgrade Convention requires the parties to keep their part of the Danube in a navigable state, a term now
generally understood to mean in a state consistent with the AGN requirements.

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4. BROADENING THE SCOPE OF INFRASTRUCTURE APPRAISALWith its ten riparian states, the Danube is also the most international river in the world. In addition, its
hydrological, morphological and biological status differs greatly between the upper, central and lower
Danube. Therefore, the FRMMP contains a description of the situation in each riparian state at the time of
the creation of the plan (2014), including information on the responsible authorities, critical locations andtheir length, major problems, etc.
The waterway management authorities governing the Danube and its navigable tributaries have estimatedthe costs of bridging the gap between the status quo in fairway maintenance and management and thecommon minimum levels of service at EUR 93 million. This total comprises investment costs of about
EUR 84.9 million and operational costs of about EUR 8.1 million. The main investment needs are fordredging equipment, riverbed surveying and fairway marking.
As a consequence of the master plan, the countries concerned initiated the CEF-funded project FAIRway
Danube, which led to the development of national action plans35 on fairway maintenance andrehabilitation. These contain a status report, hydrological conditions at critical areas, monitoring ofactivities, ecological status, budget status and an outlook for each country. They are updated twice a year.
Achievement 2: Transport study for the Danube region (2017) (PA1b)36
The purpose of this study for PA1b is to present an overview of the transport modes and identify regionaltransport projects that are relevant at country level and important for the Danube region, while achieving
the maximum geographical coverage. The study describes the socio-economic characteristics of theregion, the transport networks and the links between them in the light of transport policy. It also describes
population trends and future transport needs in the region.
For road and rail, the study shows a significant disadvantage of rail in terms of the modal split. For demand,national transport operations prevail for both for passengers and freight.
For air transport, yearly passenger traffic increased from 125 million to 146 million trips in the five years
to 2015 (i.e. by 17.3%, or 3.5% per year), while cargo volume rose from 843 tonnes to 915 tonnes per year
(8.5%, or 1.7% per year). Significant shares of passengers and cargo transit through the hubs of Munich
and Vienna (respectively 44% and 67% in 2015), while other primary international airports are in
Bucharest, Budapest, Prague and Sofia and the airports of Belgrade and Zagreb are regional hubs in theWestern Balkans. All have different needs in terms of infrastructure adaptation to meet user needs. For
example, whereas most people travelling from or through airports in southern Germany and Austria arebusiness travellers, those travelling within the Western Balkans are usually migrants or tourists.
The basic findings of the study were that road will most likely keep its advantage over the other modes,that the overall population of the region will decrease (albeit with different trends at country level) andthat GDP will increase, leading to higher passenger and freight demand, especially in road transport,
especially in the Western Balkans. Bottlenecks were found to result largely from lack of compliance with
infrastructure with technical standards, lack of capacity (e.g. near urban areas), deterioration due to lackof maintenance, and differences in track gauge for rail (with Moldova and Ukraine).
In order to better assess infrastructure requirements at an international level, the study divides the
Danube region into nine “functional regions”, based on the following five criteria:

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choice of the basic spatial entity by disaggregating the EU member states, the accession countriesof the Western Balkans and the neighbouring countries

spatial interactions: analyse the spatial interactions among basic spatial entities relying on theintensity of the flows of freight and passengers of the land transport modessocio-economic homogeneity
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4. BROADENING THE SCOPE OF INFRASTRUCTURE APPRAISALtransport context: to what extent the functional regions identified are embedded in the context
of the TEN-T/CEF corridors, South-East European Transport Observatory and Eastern Partnershiptransport networks

measures of accessibility.

Following this approach, the following nine functional regions were identified: Southern Germany andWestern Austria; Eastern Austria and Slovenia; the Czech Republic and the Slovak Republic; Hungary;
Croatia and Bosnia and Herzegovina; Montenegro and Serbia; Bulgaria; Western Romania; and Eastern
Romania, Moldova and provinces of Ukraine. Based on a number of criteria, 23 priority projects wereidentified for road, rail and aviation in the region.
In conclusion, good cross-border infrastructure and services promote economic development andcontribute to improving people’s living conditions. In many parts of the Danube region, it also contributes
to promoting stability in the region.
The Öresund region37

The Öresund region consists of the regions closest to the Öresund strait between Denmark and Sweden.
In Sweden, the major cities involved are Malmö (Sweden’s third-largest city), Landskrona, Helsingborg andLund. The region involved is Skåne, covering 33 local municipalities in the southernmost part of Sweden.
Copenhagen, the capital, is the dominant Danish city in the Öresund region. Other major cities are Roskilde
and Elsinore, though both are much smaller. Two formal regions in Denmark are normally seen as involvedin the Öresund region: Hovedstaden, surrounding Copenhagen, and Sjaelland (Zealand), covering thenorthern part of Zealand. There are 46 local municipalities in the two Danish regions. A total of 3.8 million
inhabitants live in the region, of whom 2.5 million are on the Danish side.
Figure 3: The Öresund region

The 1991 decision to build the Öresund Bridge was taken by the national governments and was intended,in part, as a means of regenerating Malmö and Copenhagen, both of which had suffered from structural
economic declines, with little new development replacing the shift away from traditional industrial
production and ship-building during the 1970s and 1980s. The decision to build the Öresund Bridge wasintended to boost the regional and national economies, and to connect Scandinavia more closely to the
EU internal market. It was designed to integrate labour and housing markets on both sides of the bridge,
linking lower priced accommodation on the Swedish side to a more buoyant job market on the Danish side.
The project was just one component of a suite of multi-sectoral policies for economic rejuvenation basedon investment in higher education, research facilities and technology-based industrial parks in both
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Copenhagen and Malmö. Integrated development planning across sectors was the key to the Oresund
fixed link successfully delivering the benefits foreseen in project appraisal (OECD, 2006).
The project led to the establishment of new collaborative structures and organisations at the regional andmunicipal levels and has prompted progressively greater collaboration across the Öresund region in many
fields over the subsequent three decades. The Öresund Committee was, among other things, responsible
for fostering closer regional co-operation, including on transport issues generally. However, formalplanning responsibilities have largely stayed with the national government agencies and ministries in thetwo countries.
Regional co-operation was seen by many stakeholders as having faltered during the 2010s. This led to a2018 reorganisation which created the Greater Copenhagen area, which included the Skåne and Halland
regions of Sweden. Transport planning and public transport are areas of responsibility of the new regionalbody.
For some time, the closest co-operative arrangements have been between the municipalities. There are
two main examples of this in the transport space: 1) the plans for a new fixed link between Helsingborg
and Elsinore, with the two cities being heavily engaged in the project and preparations; and 2) the plans
for an extension of the Copenhagen metro system to Malmö. The Copenhagen and Malmö municipal
governments have been the main actors in this project.
The Öresund Bridge
In 1991, the Swedish and Danish governments signed the agreement to construct a combined bridge andtunnel across the Öresund strait, and it was officially opened in July 2000. The Öresund Bridge is a 16kilometre road and railway connection between Denmark and Sweden. It consists of three parts: a bridge,
an artificial island and a tunnel. The eight-kilometre bridge is constructed on two levels, with trains runningon the lower level and cars on the upper level. The artificial island, Peberholm, connects the bridge with afour-kilometre tunnel that ends at the Copenhagen central station. The car journey across the bridge takes
10 minutes and a train trip between central Malmö and Copenhagen takes 35 minutes.
The traffic flows on the Öresund Bridge have greatly exceeded expectations. Over 70 million cars havecrossed the bridge and almost 300 000 regular customers use a “BroPass”. The main drivers for commuting
across the strait have been the lower housing prices on the Swedish side and higher wage levels on theDanish side. Initially, 41% of the bridge traffic was commuters. In recent years, a widening exchange rate
gap has further strengthened this effect. In practice, the bridge has significantly expanded the size of thelabour market.
In 2019, an average of 20 400 vehicles crossed the bridge each day. Car traffic continues to predominate,however the growth in freight traffic has been substantially greater than that of private vehicles in the past
two decades. While the total volume of traffic crossing the bridge increased by around 150%, to 7.5 million,
between 2001 and 2019, the number of trucks (> 6 m in length) approximately quadrupled to 0.6 million.
Bridge crossings by trucks accounted for 51.5% of all truck crossings of the Öresund strait in 2012.
Rail traffic across the bridge comprises commuter traffic, mainly the local Öresund trains, and international
freight traffic that connects Sweden to the European continent. Between 2001 and 2011, rail freightincreased by almost 50%, to a peak of around 31 million tonnes, before stabilising at 28-30 million tonnes
in subsequent years. Approximately 6 500-7 000 freight trains ran each year before 2010, while numbers
in subsequent years have been significantly higher, at 8 500-9 000.38
Rail passenger numbers rose progressively from around 5 million in 2001 to a peak of 12 million in 2015,
before stabilising at similar levels in subsequent years. The construction of the City Tunnel in Malmö has

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reduced the journey time to Copenhagen central station to 35 minutes, as well as improved access via thetwo new stations opened as part of the project. The train now departs six times per hour in peak periods.
The Öresund regional trains run from Kalmar, Karlskrona and Gothenburg through Malmö and
Copenhagen to Elsinore. Most (75%) train trips have both their point of departure and final destination inthe Öresund region.
To increase interest in events taking place on the other side of the Öresund, the Öresundsbro Konsortiet,
the company operating the Öresund Bridge, has focused on leisure trips and created new incentives forpassengers and other users (e.g. “Snabbtursrabatten” and “Club Öresundsbron”).
Governance, financing and organisation
The Öresundsbro Konsortiet was created to build, finance and operate the Öresund Bridge. It is jointly
owned by the Danish and Swedish governments.39 The company is required to guarantee a high level ofaccessibility to, and security on, the bridge and secure the repayment of the loans raised to finance its
construction. The agreement signed by the Danish and Swedish governments requires the construction,
financing and operations of the bridge to be financed by user fees. In addition to tolls paid by road traffic,
the Swedish Transport Administration (Trafikverket) and the Danish Agency Banedanmark pay an annual
fee for using the railway.
The Helsingborg-Elsinore connection (HH-link)
In the two decades since the opening of the Öresund Bridge, a number of published reports havepointed to the future need for another fixed link in Öresund. EU Interreg-funded projects have been avehicle for joint strategic planning exercises in the Öresund region. One of these, the IBU Öresund
report on infrastructure and urban development (Infrastruktur och byutveckling i Öresundsregionen,2010) was the result of co-operation between the three regional governments (Skåne, Zealand andHovedstaden) and 25 other parties and has played an important in promoting a future HelsingborgElsinore connection (HH-link). The report took a regional development perspective, highlighting thepossibilities for future growth and international competitiveness based on assets of the whole Öresund
region. The construction of an HH-link was one of a number of measures proposed to achieve theseoutcomes. The HH-link is currently in an early planning phase.
Figure 4: The proposed Helsingborg-Elsinore connection

Note: Two tunnels (passenger train – persontåg – and motorway – motorväg)
illustrated for the fixed HH-link.
Source: HH-gruppen.

The proposed HH-link comprises two tunnels for railway passenger traffic across the Öresund strait
between the central station Knutpunkten in Helsingborg and the central station in Elsinore; a tunnel forrail freight traffic between Ramlösa and Snekkersten; and two tunnels for cars between Malmöleden and
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the Elsinore motorway’s ending. Its expected capacity is 16 000 cars daily, 2 000 trucks, 120 passenger
trains and 75 freight trains.
The IBU report predicts an HH-link will enhance integration in the whole Öresund region, creating newopportunities for economic growth. It is also expected to divert rail freight traffic from the Öresund Bridge,
increase the reliability of the transport system as a whole across the Öresund strait and contribute tomodal shift from road to rail. The report includes a CBA of a combined project incorporating the HHconnection and a motorway and railway (Ring 5) that would connect Elsinore and Köge on the Danish side.
This concludes the project has a positive present value and that the project could be financed via user
charges over a 30-year period. A report commissioned by the city of Helsingborg and carried out by PwC
in 2013 reached a similar conclusion. It also highlights the need for competitive regions to attain a certain
critical size and have good internal communications.
The HH-link is estimated to increase cross-border commuting by 40-50%. The estimated cost is
DKK 32 billion (EUR 4.3 billion), including adjacent connections. Ring 5, which is both a motorway and arailway, is estimated to cost DKK 18 billion. Ring 5 is considered a prerequisite for diverting freight trains
onto the HH-connection, connecting Elsinore with Köge bypassing Copenhagen. Most of the traffic on
Ring 5 is expected to be of regional character and only 10% to be transit.
A further step in the planning for another fixed link was taken as a part of an overall transport analysis
carried out for the Swedish and Danish governments during 2014 and 2018 (Sverigeförhandlingen). The
committee recommended that the analysis be carried forward. A joint Danish/Swedish strategic analysis
has been arranged, following a joint ministerial declaration on the scope of the analysis. The analysis isbeing carried out during 2018-20 and will be published late in 2020 or early in 2021.
Governance, financing and organisation
Transnational infrastructure projects are traditionally undertaken by national governments; however,there are alternatives that include other actors. The PwC report identifies four possible models forfinancing and implementing the HH-link: 1) the traditional model; 2) the Sund & Baelt (state guarantee)
model; 3) a Nordic public-private partnership (PPP) model; and 4) a private alternative. The Sund & Baelt
model was used when constructing the Store Baelt Bridge and the Öresund Bridge, and will be used for
the Fehmarn Baelt connection.
In the traditional model, the investment would be publicly funded and the public sector would bear the
project risks. The Sund & Baelt model is expected to yield efficiency gains compared to the traditionalmodel, via the creation of a specific-purpose entity, but the public sector also bears the project risks. The
Nordic PPP model is expected to yield similar efficiency gains as the Sund & Baelt model, while also shifting
project risks to the private sector. The private alternative has the advantage of not requiring public funding.
Project completion time is expected to be reduced in all of the non-traditional models. However, the nontraditional models entail political risks (e.g. in the event of changes of government yielding policy changes)
in relation to regulations and the tendering process. In the ongoing strategic analysis, the Danish Sund &Baelt model has been chosen as the main alternative to analyse.
One issue in relation to the financing of an HH-link is that it is not currently included in the EU TEN-T
network. This reduces the probability that EU funding would be made available and, consequently, thegovernments are considering whether to propose the inclusion of this link in their respective proposals forthe imminent updating of the TEN-T network maps. A recommendation to this effect may result from theongoing strategic analysis.

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The Metro-line extension Copenhagen-Malmö
The proposed Copenhagen-Malmö Metro-line extension, hereafter referred to as the Metro, is a third joint
Swedish/Danish infrastructure proposal in the Öresund region. It originated in the 2000 document “Malmöoch Köpenhamn – en stad” (Malmö and Copenhagen – One City), in which the two cities agreed to work
towards a common goal: “In 2025, Copenhagen-Malmö should have developed into one combined, wellintegrated and sustainable major city, promoting growth throughout the region” (City of Copenhagen“Kommuneplan” and City of Malmö “Översiktsplan”). Figure 5 illustrates the proposed extension (dottedblue line).
Figure 5: Proposed Copenhagen-Malmö metro extension

Source: Transport Data Lab (2013).

The two cities began investigating options for a Metro connection in 2011. The project received EU
research grants for 2012-13 and a project involving seven studies was conducted to explore the effects ofa Metro from different perspectives. The report40 illustrated the dynamic effects of a Metro with regard
to economic growth and increased transport capacity and included four scenarios for developing the
project by 2032. Two reports focused on the costs and benefits of the Metro and on methods forcalculating these, and others focused on its impacts on labour markets and business, research anddevelopment, culture and events, and international competitiveness. These were followed by a third
investigation phase, completed in 2017, while a fourth phase of reports is to be published late in 2020.41
A train trip from Malmö Central station to Copenhagen Hovedbanegård passing over the Öresund Bridge
today takes 35 minutes. A direct metro is expected to reduce the journey time to 15-20 minutes,

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depending on the number of stops. The project cost was estimated in 2013 as DKK 22 billion, including acontingency allowance of 50%. This estimate has since been revised to DKK 30 billion.
Governance, financing and organisation
The report, “Results and assessments of the Öresund – Copenhagen – Malmö metro pilot project 2013”(Resultat og vurderinger I forprojektet Öresundsmetro Köpenhamn Malmö 2013”, analysed several
possible models for the construction and operation of the Öresund Metro. The national governments ofDenmark and Sweden are seen as the natural leaders of the project, with possible contributions from local
governments. One option is that the national and local governments could share responsibility for boththe construction and operation of the project. The 2013 report assumes that the national government will
finance the construction of the tunnel and presents three models for the operation of the Metro:a national grants model, where financing is allocated by the national banks or taken up as loanson the international financial market with national guaranteesthe Öresund model (i.e. the state guarantee model)

a PPP model, in which private capital would come from pension funds, with a 25-year contract
period.

The report favours the Öresund model, with potential financial contributions from the private sector, as
the most promising option for further consideration. No decisions have so far been taken in regard to theÖresund Metro.
Comparing the Danube and Öresund cases

A comparison of the Danube and Öresund cases highlights the wide range of different contexts in whichcross-border co-operation takes place. On the one hand, the Öresund project required co-operation
between only two countries which have similar economic circumstances, are culturally linked and have astrong history of co-operation. This has meant that developing the necessary collaborative relationships
has been relatively straightforward, notwithstanding the fact that the relevant regional and municipal
governments have also been involved. The projects discussed have been developed with limited EU
involvement.
By contrast, the Danube involves a much larger and more culturally and economically diverse group ofcountries which have not always enjoyed positive relationships. In this context, the development of ashared vision and specific targets is an important step in order to be able to foster better transport
planning and common action, albeit one which is challenging to maintain in the long term, as countries’
strategic views change over time. The role of the European Union, as a major international organisation ofwhich the majority of relevant countries are members (and others aspiring members), has been of
substantial importance in this regard. In particular, it has financed strategy studies that have assisted in
the development of shared objectives and targets and, in turn, helped to underpin the development oflevels of co-operation that may otherwise not have developed or survived.
However, a common feature is the need to ensure that feasible and generally acceptable financing models
for the realisation of the infrastructure plans are established at an early stage.

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5. EX POST MEASUREMENT OF INFRASTRUCTURE PERFORMANCECHAPTER 5
Ex post measurement of
infrastructure performanceThis chapter sets out the rationale for systematically conducting ex post evaluation of major infrastructure
projects. It does this by highlighting the key differences between ex post and ex post assessments anddiscussing, in this context, the means by which ex post evaluation can contribute to better project appraisaland selection processes. It goes on to identify the challenges faced in conducting ex post evaluation andsummarises common approaches to measuring the performance of infrastructure assets. Finally, itconsiders how the results of ex post assessments can be used in the strategic assessment of infrastructureneeds.

Differences between ex ante and ex post assessments
Ex post appraisal occurs during the preparation of an infrastructure project. It sets out the strategic
rationale as part of the business case for the project, considers options for design and delivery, estimatesthe expected costs and benefits of each option, applies discounting to help compare options over time,and selects a preferred option using the net present value and BCR metrics (HM Treasury, 2018).
The ex post appraisal informs decisions as to whether to proceed with a project and which delivery options
to choose, based on assessment of the project’s expected impacts on societal welfare and comparative
assessments of the best use of public funds. Chapter 2 of this report discusses current practices in project
identification, appraisal and selection in a range of ITF countries.
Monitoring takes place before, during and after project delivery. It involves collecting data on the baseline
before the project begins, details of the project delivery, and the impacts and outcomes of the project
after it has been completed.
Evaluation is the systematic assessment of an infrastructure project’s design, implementation andoutcomes. Ex post evaluation takes place after the project has been delivered. However, planning for the
ex post evaluation should commence at the design phase and continue throughout the lifetime of the
project. This approach improves the quality of the evaluation by ensuring that data needs are identified ex
post and arrangements are put in place to ensure that the relevant data are collected.
Together, monitoring and ex post evaluation identify the actual impacts of infrastructure projects.
Measuring these impacts yields three key benefits. First, it enables the evaluator to assess whether the
project’s performance has been consistent with the expectations identified in the ex post analysis. Second,it enables lessons to be drawn to improve appraisals, and design and delivery decisions in future projects(OECD, 2015). Third, it generates new evidence to inform infrastructure strategy and assessments ofinfrastructure needs. The following discusses each of these benefits in greater detail.

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The value of ex post evaluation
Ex post evaluation assesses the results of an infrastructure project compared to the expectations set out
in the business case and ex ante appraisal, incorporating:

the objective(s) the project is aiming to achievethe value of expected costs and benefits, and the resulting value-for-money assessment (netpresent value and BCR)

other expected outcomes, including the performance of the infrastructure in operation and wider
impacts.

Understanding project outcomesThis allows an assessment of how successful a project has been in achieving its stated aims, and whether
the expected value-for-money outcome was achieved.
As well as reviewing whether the expected costs and benefits were realised, the evaluation can identify
and quantify any unforeseen externality impacts (whether positive or negative) that emerged during thecourse of the project’s development and operation. These unanticipated impacts can be substantial in sizeand careful assessment of them as part of ex post evaluation can provide useful insights to inform future
investment decisions and, if required, guide the development of mitigation measures. Evaluation provides
an opportunity to explore the reasons for divergences between ex ante expectations and actual outcomes.
This is particularly important in identifying lessons for future projects.
Learning lessons for future project design, appraisal and delivery

The accuracy of future ex ante appraisals can be improved by comparing ex post project outcomes withthe expected outcomes identified in the ex ante appraisal. Elements of the appraisal that may benefit fromthis approach include assumptions, projections and modelling methodologies. Understanding the extent
of the uncertainty inherent in project appraisal can contribute to better scenario analysis, while
information on the nature and extent of systemic bias (typically optimism bias) can provide a basis forcorrecting for such biases in future analyses.
Such benefits are unlikely to be achievable via analysis of a small number of individual ex post assessments.
This points to the need for ex post analysis to be completed systematically on all significant infrastructure
projects, so that a clearer picture of how appraisal inputs and procedures should be revised can be
developed over time using meta-analysis (UK Department for Transport, 2016).
Evaluation can also yield lessons for improving the design and delivery of similar infrastructure projects inthe future, by exploring what worked well, what could be improved and why. Evaluation may also lead toa better understanding of how different procurement and financing models affect outcomes.
If infrastructure is delivered according to standard, well-established methods, evaluation may provide
limited value. However, where a project uses innovative approaches to planning, construction or financing,
it is particularly important to research how well these work in practice and how they can be improved forthe future. A post-implementation review by the project team may provide some insights, but significantly
greater value is likely to be obtained by employing independent evaluations, based on transparent
information provided by the project team, to assess the effectiveness of new approaches.

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Producing new evidence

In addition to learning lessons applicable to the appraisal and delivery of future projects, ex post evaluation
can generate new empirical evidence to inform future strategic assessments of infrastructure needs, andimprove understanding of the wider economic benefits (WEBs) of infrastructure (OECD, 2016). Thesebenefits can be achieved if the ex post review goes beyond measurement of the direct impacts of the
project to include evaluation of its wider impacts on the performance of infrastructure networks, theenvironment and economic outcomes such as productivity, wages and employment.
As with learning lessons for future appraisals, building a reliable evidence base that captures the full rangeof impacts of different infrastructure types, in different contexts, requires a system of robust, regular andconsistent ex post evaluation of infrastructure projects to be implemented. While this is necessarily
relatively resource-intensive, it will ultimately support better decision making, leading to infrastructure
choices that better meet identified needs and achieve better value-for-money outcomes.
Enhancing confidence

Ex post assessment can have an important role in enhancing and maintaining confidence in ex ante projectappraisal processes. By systematically assessing actual outcomes against proponents’ initial claims for
project performance, ex post assessment introduces an important element of accountability to theprocess. This may be particularly important where such assessments are commenced prior to projectcompletion, as is the practice of the United Kingdom’s National Audit Office. In addition, the ability of ex
post assessment to act as a feedback mechanism, which improves the accuracy of future ex anteassessments, can also underpin greater public and stakeholder confidence in those ex ante assessments(ITF, 2017a).

Challenges for ex post evaluation of infrastructure
Both the long-term nature of infrastructure investments and the wide range of impacts that must be taken
into account pose challenges for the evaluation process. The evaluation of the indirect impacts, orexternalities, associated with projects is particularly problematic. Two key considerations are the timing of
infrastructure projects and impacts, and methodological challenges and data limitations.
Timing of infrastructure projects and impacts

Infrastructure projects typically have long construction phases and their benefits are delivered overextremely long useful lifespans. These characteristics add to the difficulty of evaluating infrastructure
impacts in a robust and timely way. In many cases, the full benefits of a project are only realised after an
extended delay. For example, traffic levels have been observed to take up to five years to adjust andstabilise following the completion of new road infrastructure projects. Observing and measuringsecond-round impacts such as induced changes to land use is similarly only feasible after a significant delay.
Ex post evaluation is therefore necessarily a long-term commitment.
These long lags mean that there is limited scope to use the findings of an ex post evaluation to improve
the performance of the infrastructure that has been evaluated. Infrastructure is, in general, difficult andexpensive to modify. Whereas a policy can be adjusted to reflect shortcomings revealed via evaluation
findings, it may not be possible to improve an infrastructure intervention that is poorly designed or locatedin the wrong place. This implies that the main benefits of ex post evaluation are the systemic ones –DEVELOPING STRATEGIC APPROACHES TO INFRASTRUCTURE PLANNING © OECD/ITF 2021

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i.e. their impact in improving future ex ante analysis and on better understanding future infrastructure
priorities.
Methodological challenges and data limitations

Policy evaluation is most accurate when it can be carried out using randomised allocation to a treatmentgroup who are exposed to the policy and a control group who are not. The randomisation allows theevaluator to control for factors other than the policy that might cause differences in outcomes. This is why
randomised controlled trials are generally considered the gold standard of evaluation.
The nature and cost of infrastructure projects means that it is rarely possible to run randomised controlled
trials or pilot schemes. Because infrastructure is generally fixed in place, people and businesses cannot be
randomly allocated to a treatment or control group in the same way as in other types of public policy. Even
if this were possible, the high costs, long lag times and network benefits of infrastructure would makerunning small pilot schemes impossible for many types of project.
To understand causality, the observed impacts need to be compared with a counterfactual of what would
have happened without the intervention. The lack of random allocation when evaluating infrastructure
projects introduces risks to successfully isolating the causal effect and accurately quantifying the project
impacts.
The first risk is reverse causality. Although evaluators usually want to measure how infrastructure affects
a particular outcome, changes in the outcome being measured may cause changes in the infrastructure
planning. This happens because the location of infrastructure is not random, but is chosen because of anarea’s characteristics. For example, it may be difficult to establish whether a new road stimulated anincrease in local economic activity, or whether the road was built in response to an actual or anticipatedincrease in local economic activity. Either would result in an observed positive correlation between roadbuilding and economic activity, but the direction of causation is more difficult to identify (Venables, Laird
and Overman, 2014).
The second risk is attribution: understanding what benefits can be attributed to the intervention rather
than to other factors. Infrastructure projects are often accompanied by other policy and economicchanges, making it difficult to isolate the impact of the infrastructure alone. For example, where transport
investment is used as part of a wider policy package to regenerate an area, it can be difficult to identify
the contribution of transport investment to the area’s subsequent growth as distinct from otherinterventions such as planning changes and tax breaks.42
The attribution issue is particularly acute for the wider impacts of infrastructure schemes. To take theexamples of broadband and transport infrastructure, it may be straightforward to measure how these areused, but it is more difficult to isolate their impacts on local economic growth from other policies andwider economic trends. This is particularly problematic where WEBs have been identified as a key elementin the business case justifying the investment. Moreover, WEBs from infrastructure may arise throughchannels such as improving the effectiveness of an entire network. These broadly spread benefits are
particularly challenging to measure because of the difficulty of distinguishing between users and places
affected by the infrastructure, and a control group that is unaffected.
The most challenging circumstance is where the interactions between infrastructure projects are ofinterest, as might be the case when multiple schemes are deployed to try and improve local economic
performance. Most measurement approaches are designed to measure impacts of projects in isolation, so
will struggle to capture interactions between projects.

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A related issue is being able to appropriately identify and isolate the relevant scope of the project to beevaluated. Particularly where the economic impacts of infrastructure projects rely on complementary
investments or land-use changes, if these other factors do not occur as anticipated at the ex ante appraisalstage, then the project outcomes might not meet expectations for reasons unrelated to the infrastructure
project itself.
Finally, while data availability is necessarily a less acute issue in carrying out ex post evaluation than for exante assessments, the challenges can nevertheless be substantial. The ITF has previously referred to the“fleeting” nature of data and emphasised the need for data collection to be planned from the outset, as
post-hoc reconstruction of relevant data sets is often impossible. France’s transport observatories were
one model for ensuring systematic data collection and analysis. These bodies collect data, set benchmarks
and public audits of transport projects, and have been found to greatly improve data quality for transport
schemes (ITF, 2017a).
Data issues are particularly significant in the context of measuring WEBs. High-quality evaluations of
economic impacts often require labour market and business data with large sample sizes and a high degreeof spatial detail. This is gradually becoming more feasible as administrative data become more readily
available and data science analysis of novel data sources improves, but the availability of these kind of data
has been very limited in the past in some countries.
The next two sections discuss the characteristics of a sound ex post evaluation, including means ofaddressing the challenges identified in this section.
Common approaches to measuring infrastructure performanceThis section briefly discusses three common approaches to measuring infrastructure performance: direct
performance measures, outcomes monitoring and impact evaluation.
Infrastructure performance measures

Measurement of infrastructure performance is a first step toward identifying infrastructure impacts andneeds. By comparing performance between places and sectors, over time and against desired standards,
areas of weak performance can be identified which indicate shortfalls in infrastructure provision (NIC,
2018b). A framework of infrastructure performance measures should meet a number of criteria to ensurethat they provide meaningful information about infrastructure needs:

Objectives: The measures should have a clear link to society’s objectives for infrastructure, so thatthey measure relevant outcomes.

Consistent: The outcomes measured, as well as the framework and methodology for measuring
them, should be kept as consistent as possible across time and sectors. Applying the same
framework across different infrastructure sectors should help to identify data gaps: for example,
there may be good data on reliability of energy supply but not on reliability of travel time.

Comparable: The performance measures should also aim to be comparable across regions andcountries. This requires measurement methodologies to be aligned. To improve comparability
between places, measures should ideally not vary directly with geographic or population scale.

Quantified: The measures should be quantitative, to facilitate their use in analytical assessment ofneeds and impacts, and to make them more comparable across time, sectors and places.

Manageable: The total number of performance measures should be limited, so that they are
manageable to maintain and review.

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5. EX POST MEASUREMENT OF INFRASTRUCTURE PERFORMANCEThe UK National Infrastructure Commission (NIC) developed a framework of infrastructure performancemeasures that meets these criteria, to inform its assessments of infrastructure needs (NIC, 2018a). This
framework classifies each measure as belonging to one of the six “domains” of volume, resilience, quality,
cost, environment and efficiency. Most of these domains are applicable across all sectors of economic
infrastructure, which helps to meet the consistency criterion.
The NIC’s chosen measures are aspirational as well as practical, including some topics for which economic
valuation methodology is still being developed, such as design and natural capital. The commission aims
to fill data gaps in this framework by working with stakeholders to identify appropriate measures, and by
developing its own metrics such as transport connectivity (NIC, 2019a).
International agreement on a framework, methodology and infrastructure performance measures would
help regions and countries to compare their outcomes measures. This is a challenge, but other areas of
economic statistics have successfully moved towards international harmonisation, greatly benefiting
cross-country evaluation of policy and performance.
Outcomes monitoring
Much of the ex post measurement of infrastructure interventions will be based on the monitoring ofoutcomes such as:adherence to planned milestones and the overall timetablethe level of outputs delivered, compared to what was plannedadherence to planned costs and the overall budget

performance metrics post-opening, compared to what was forecast

impacts on outputs in the wider system that are expected to be influenced by the infrastructure.

Impact evaluation

In addition to monitoring approaches, evaluation may be used to estimate the impact of the intervention
in comparison with the counterfactual situation in which it did not happen. This requires special techniques
to overcome the methodological challenges set out above. Some common approaches include:78

Before versus after. This common counterfactual simply entails comparing the performance of the
new infrastructure with that of the old infrastructure it replaced. A weakness of this approach isthat it does not account for any other changes that may have affected performance.



Difference in differences. This is an example of a quasi-experimental approach. It mimics anexperiment that randomly allocates subjects to two groups: treatment and control. The change inperformance associated with the new infrastructure (compared with the old) is compared withthe change for similar infrastructure that has not received improvement. The impact of theintervention is calculated as the change in performance for the new infrastructure minus that forthe comparison infrastructure.

Area comparison. A variation of the above, where the infrastructure is expected to produce effects
for a particular geographic area, for example local economic effects. Spatial data for the variablesof interest for the area around the infrastructure can be compared with those for a comparison
area that had similar characteristics in the “before” period. There are various forms of comparison
that use statistical methods to create a close match between the treatment area and a comparison
area.

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Different forms of infrastructure will require different counterfactual approaches. Essentially, simple
before-versus-after comparisons may suffice when it can be assumed that performance levels are directly
caused by the infrastructure while more complex approaches are necessary where performance measuresare expected to be also influenced by other factors.

Examples of ex post measurement practices
The following briefly summarises ex post performance measurement practices in two specific contexts in
the United Kingdom: local government growth promotion policies and strategic road schemes.
United Kingdom: What Works Centre for Local Economic Growth

The United Kingdom’s What Works Centre for Local Economic Growth was established in October 2013 toanalyse what policies are most effective in supporting and increasing local economic growth. It is fundedby the Economic and Social Research Council and government departments.43 The centre has produced aseries of evidence reviews on the impact of local economic policies, drawing on the global literature. The
foci of these reviews were economic impacts such as employment, incomes and productivity.
A stringent approach was taken to the determination of acceptable evaluation standards, with a score of
Level 3 on the Maryland Scientific Methods Scale (difference in difference, instrumental variable,
discontinuity design or randomised selection approaches) established as the minimum acceptable level ofevidence. This filtering reduced the large literature to a relatively small number of robust studies.
The evidence reviews most related to infrastructure were broadband, transport, estate renewal, public
realm, and sport and culture. In general, these reviews highlight the limited number of high-quality
evaluations. For example, on broadband, of 1 000 evaluations reviewed, only 16 met the centre’s minimum
standards. Of these, eight looked at employment effects and only two found a positive impact.
To encourage the production of higher quality evaluation in the future, the centre:runs workshops on how to best use evaluation findings to improve outcomes for local economies



engages local and national policy makers in collaborative projects with academics and policy
experts to increase evaluationpublishes advice and toolkits to encourage more frequent and robust evaluations of policies that
aim to support local growth, including infrastructure.

United Kingdom: Highways England post-opening project evaluations andDepartment for Transport strengthening links report

In the United Kingdom, Highways England uses a consistent methodology in the ex post evaluation ofstrategic road schemes (Highways England, 2019). This post-opening project evaluation (POPE)
methodology entails measurements of key metrics of interest such as traffic flows, journey times andsafety levels at three stages:


before opening

one year after opening

five years after opening.

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5. EX POST MEASUREMENT OF INFRASTRUCTURE PERFORMANCEThe approach uses before and after comparisons to assess to what extent the expected benefits of theintervention have been delivered. As part of this, an ex post BCR calculated as part of the five years postopening study and compared with the ex ante estimate.
By adopting a consistent methodology to evaluate a large number of road schemes, POPE is able to both
identify trends in the extent to which interventions deliver their planned benefits and assess how
post-opening performance differs for different types of project, such as motorways and dual carriageways.
This system has led to improvements in the accuracy of estimates of the likely costs of future projects,
reducing the average error in forecast costs from 20% to 2% between 2000 and 2009 (Highways England,2015).
The UK Department of Transport published a report on Strengthening the Links between Appraisal and
Evaluation (UK Department for Transport, 2016). Among the steps proposed for this was the introductionof appraisal handover packs to ensure that key analysis and assumptions from appraisal are carriedforward for use in evaluation.

Using evidence from ex post measurement in the strategic
assessment of infrastructure needs in the United Kingdom
Performance measures are needed to identify areas of strength and weakness in current infrastructure
systems. To support the development of such measures, the UK National Infrastructure Commission
published a framework and an example set of infrastructure performance measures, as described above.
Having identified infrastructure needs, responding with appropriate strategic plans requires evaluation
evidence to enable the impacts of previous projects on infrastructure system performance and the wider
economy to be understood. Evidence of how these infrastructure impacts have varied by context is also
vital for getting infrastructure strategy right. This might include understanding differences between urban
and rural locations; or in different policy and institutional settings, such as levels of devolved governance.
The NIC set out priorities for the country’s infrastructure over the next 30 years in its National
Infrastructure Assessment (NIC, 2018c). It relied on evidence from ex post measurement to help it makeinformed judgements. This included a review of the evidence on the links between infrastructure andeconomic growth, on the operational benefits of full fibre broadband, and on the historic construction
costs of nuclear power stations (NIC, 2017a; 2018c: 21 and 37).
The commission also noted inconsistencies and systematic weaknesses in infrastructure appraisal andevaluation. For example, it found that journey time savings from major road schemes tend to be lower
than forecast, and that better evaluation of the performance of past projects would help inform choices
between public and private finance (Highways England, 2015; NIC, 2017b). Consistent and publicly
available ex post data on the costs and performance of infrastructure projects are rarely published, withefforts to conduct ex ante appraisals disproportionately greater than to evaluate ex post. The commission
recommended that, to better inform decision making, ex post cost and performance data should bereported systematically for projects with life cycle costs above the following thresholds:


GBP 10 million for flood management



GBP 100 million for roads

GBP 500 million for rail.

The commission also recommended that there should be a focus on ensuring the comparability of ex anteand ex post cost estimates, as well as cost estimates undertaken in different sectors. All public bodies
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taking decisions on strategic economic infrastructure should publish the forecast costs and benefits of
their major infrastructure projects at each appraisal stage and at a suitable point after completion (NIC,
2018c: 100-102).

Criticisms and responses
The case for undertaking systematic ex post evaluation of infrastructure projects is often questioned, bothon the basis that it is time- and resource-intensive and because it is argued that little productive action
can be taken in response to the findings, in many circumstances. If the performance levels of a power
station or flood defence are below expectations, it may be neither possible to improve them by reengineering nor cost-effective to scrap them and start again. For this reason, infrastructure operators,
policy makers and politicians may be reluctant to have ex post evaluations undertaken that have thepotential to reveal deficiencies in major infrastructure projects.
However, the value of ex post evaluation of infrastructure performance is primarily found in its ability to
improve the planning of future projects. Understanding the failures of a completed intervention cansuggest improvements for future interventions. Evaluation can improve the accuracy of ex ante appraisal
via more realistic benefit and cost assumptions, tighten delivery mechanisms, and increase understandingof the risks associated with changes in background assumptions. This is a vital input to strategic
infrastructure planning and its value is likely to be substantially greater if ex post assessments are
conducted by bodies independent of project proponents, who can bring a disinterested view to the task
(ITF, 2017a).
Understanding the impacts of infrastructure on people, the economy and the environment helps toprioritise investment and make interventions that are appropriate to the place and context. Yet evaluating
the wider impacts of infrastructure is extremely difficult, due to the challenges of attributing causality toidentified impacts. However, improved data and methodologies are helping to expand the stock of robust
evidence. Higher quality evaluations can also be achieved by ensuring their timing, processes and methods
are established and appropriate data collection is begun at the outset.
While the challenges of ex post evaluation are substantial, best practice examples from across the OECDshow that effective evaluation is possible. This can include the use of a range of simple but effective
techniques, such as consistently monitoring project outcomes. When done properly, ex post measurement
adds much value to strategic infrastructure planning.

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6. CONCLUSIONS AND RECOMMENDATIONSCHAPTER 6
Conclusions and recommendations
Many governments have now adopted some form of strategic plan to guide infrastructure investment
decisions. However, while the adoption of a strategic plan appears to be a developing trend, the form of
these plans varies widely: national transport plans appear to be relatively common, as are sectoral andregional plans. The integration of such plans into larger national plans is much less common. Where
strategic plans exist, consistency with the plan is generally an important criterion in project selection
decisions, albeit projects are frequently also required to meet financial benchmarks, typically specified incost-benefit terms.

Adopting strategic infrastructure plans
Strategic plans enable project selection decisions to be taken in a co-ordinated manner, taking account ofsynergies between projects, weighing the competing claims of different sectors and providing theopportunity for investment decisions to be oriented toward national priorities, rather than taking suchdecisions on a piecemeal basis. However, the scope, focus and content of strategic infrastructure plansvary considerably. Plans are not always clearly linked either to funding envelopes or to individual projects,
or project pipelines. Where this linkage is absent or limited, they have much less influence on projectchoice.
The value of strategic planning is, at least potentially, enhanced by the fact that the current context is one
in which the degree of uncertainty regarding some of the major drivers of infrastructure demand has
probably never been greater. In this context, an additional change that would be likely to haveconsiderable value is for governments to make greater use of scenario analysis in their planning andproject decision making. However, there is to date only limited evidence of movement in this direction.
Another key contextual element is that an increasingly engaged citizenry is demanding a greater say ininfrastructure planning. Notwithstanding the complexity of infrastructure planning, especially wheremultiple scenarios and interactions might have to be communicated, governments should increase theirinvestment in consultation. This helps them make difficult trade-offs, enable users and taxpayers to debate
the issues in question and, ultimately, provide the social licence for the decisions taken.
In the transport sector, more than in most others, infrastructure plans and programmes require significant
government spending. Proposals to expand user charging have multiplied in recent times, and progresshas been made in some areas, particularly in relation to major motorways. However, many user-charging
proposals fail for want of political and public support and that transport infrastructure will constitute amajor call on government financing at least into the medium term in most countries. Transport plans
therefore need to be founded on a solid understanding of government finances and transport’s plausible
share of those finances.
Finally, governments should continue to explore opportunities for cross-sectoral infrastructure planningand decision making. The major challenges facing nations and the globe – climate change, declining rates

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6. CONCLUSIONS AND RECOMMENDATIONS

of growth in productivity and pressure of public finances, among others – will require greater collaborationand co-ordination across infrastructure sectors.
Recommendation: Governments should adopt a strategic approach to infrastructure planning. This should
be communicated clearly via an explicit, detailed and periodically updated strategic infrastructure planthat, at a minimum, addresses all the main physical infrastructure sectors, and which has regard toplausible scenarios bearing on the demand for and supply of infrastructure. There should be clear linkages
between strategic infrastructure plans and individual project selection choices.
Recommendation: Strategic infrastructure plans should be linked to explicit infrastructure funding
envelopes, with project pipelines identified, at least in broad terms, in order to ensure the practicability
and credibility of the plan and its consistency with project-level decision making.

Independent infrastructure advisory bodies
There is an apparent correlation between recognition of the need for strategic planning and moves toestablish independent infrastructure advisory bodies. There is, to date, limited practical experience withthese bodies. However, early indications are that the independent and expert advice on infrastructureneeds and priorities that these bodies are able to provide has the potential to significantly improve theinformation base for decision making at the political level and, hence, the quality of those decisions.
Involving independent bodies may also help to increase the credibility of governments’ infrastructure
programmes, by adding transparency and accountability.
Recommendation: Governments should consider the merits of establishing independent infrastructureadvisory bodies with a charter to provide transparent, expert advice on:long-term, cross-sectoral infrastructure strategy, planning and policy development

infrastructure investment, notably on priorities for medium- to longer term investment.

Evidence to date shows that these bodies constitute a low-cost and effective means of improving andcomplementing existing processes.
Existing infrastructure advisory bodies fall into two broad categories. The first focuses exclusively on
strategic matters, such as planning, policy and the identification of broad investment needs. The second
also has a role in relation to specific projects, notably including assisting with project development and in
the evaluation of proposals.
Infrastructure decision making is often highly political in nature, yet the typically long-term nature of theinvestments requires that decisions be informed by independent, expert advice, provided in a transparent
fashion. This means that the governance arrangements applied to independent advisory bodies will besignificant determinants of their likely success. Establishing independent advisory bodies by statuteenhances their ability to provide frank and fearless advice as well as their credibility with a range ofstakeholders. However, other mechanisms can also be employed to achieve these objectives. The formal
status of these bodies is therefore less significant than the quality of the governance arrangements towhich they are subject.
Recommendation: Arrangements for the establishment of independent bodies should address key
governance principles, such as those identified in the OECD’s Principles for the Governance of Regulators.
In particular, advisory bodies should be required to publish their advice to governments and governments
should be required to respond to that advice in a timely manner.

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Methodological issues
Project appraisal is subject to an explicit, standardised process and methodological requirements in mostcountries, with CBA being at the heart of the methodological process in virtually all cases. Quality
assurance through review of the project appraisal by a body that is independent of the project proponent
is widely, but not invariably, used. Such independent scrutiny can contribute substantially to the overall
quality of project appraisal and selection and help guard against optimism bias.
While CBA is almost invariably central to project appraisal, there is some variation in the effective
weighting of the CBA result. Many countries report that proposed projects must, in effect, meet certain
benchmarks (e.g. have a positive net present value or meet a minimum BCR) in order to be eligible forapproval. However, a number of countries report that CBA is one among several analyses conducted andthat these are considered separately, rather than additively. Consequently, a positive net present value
may be neither a necessary nor a sufficient condition for a proposed project to be selected.
Differences in the required scope of CBA may be significant in explaining some of the apparent differences
between countries in decision criteria. Indirect valuation techniques enable a broader CBA than
traditionally used to be developed, for example, by taking a range of sustainability impacts into account.
However, there remain limitations on the potential to integrate all significant impacts within a single
analysis. For example, the fact that CBA is not well suited to addressing distributional impacts is frequently
significant, and may be increasingly so in a context in which governments are increasingly looking towardmajor infrastructure projects as a means of achieving regional economic rebalancing.
Recommendation: Infrastructure project appraisal should, as far as possible, be based on a consistent andtransparent methodology.
The appraisal methodology should be sufficiently broad as to be able to capture all substantial effects ofthe proposed project, including environmental/sustainability, health and safety, resilience, anddistributional impacts, as well as wider economic benefits (where relevant). Addressing these impacts, as
far as possible, through an expanded CBA which includes monetised values for key social andenvironmental impacts will contribute to a more integrated analysis that enables different investment
options to be more readily compared. The quality of project appraisals should also be assessed by an expert
body that is independent of the project proponent.
Appraisals of large-scale infrastructure projects increasingly incorporate consideration of wider economic
benefits (WEBs). This implies a major change in approach, in that it adds an element of macroeconomic
analysis to the microeconomic CBA approach that forms the core of traditional project appraisal.
Assessments of WEBs are both data- and resource-intensive to conduct, particularly if extended to include
second-round impacts. Conversely, WEBs are likely to add only 10-30% to traditional benefit estimates forall but the most transformative projects. There is significant uncertainty attached to most WEB estimates,
due to factors such as the need to identify and estimate displacement effects. However, WEB analysis canhelp to provide a clearer picture of the beneficiaries of the project, which may in turn assist in identifying
funding options.
Recommendation: A selective approach to the use of WEB analysis should be adopted, focusing on thelargest scale projects, particularly those that have objectives extending beyond those traditionally pursued
via transport infrastructure projects.
Where WEB analysis is used, care should be taken to avoid double-counting of impacts already captured
in the CBA. WEB estimates should be accompanied by discussion of the nature and extent of theuncertainties involved. Project appraisal should clearly separate WEB from CBA and other relevant

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6. CONCLUSIONS AND RECOMMENDATIONS

analyses in order to clarify the impact of WEBs on the overall outcome of the appraisal. Where appropriate,
scenario analysis should be included.
Recommendation: The OECD/International Transport Forum publishes a review of government and private
sector infrastructure-related responses to the COVID-19 pandemic, including:

how it sees demand for infrastructure (especially transport and telecommunications
infrastructure) changing

whether, and to what extent, governments and private infrastructure providers and users arechanging their strategic and asset management plans, project appraisal processes, andprioritisation of projects as a consequence of those potential changes.

Stewardship of major infrastructure assets
Infrastructure assets almost invariably have long lifespans. This means that efficient asset management
can significantly reduce the life cycle cost of infrastructure provision, particularly by ensuring thatmaintenance is appropriately scheduled and costly remedial work prevented. Responsibility for asset
management should be clearly allocated and financial transparency in relation to asset performancerequired, to provide the right incentives to favour effective management.
Recommendation: There should be a formal policy framework to guide decisions on the stewardship ofmajor infrastructure assets.
The objective should be to ensure efficient asset utilisation, maximising availability and performance, andminimising life cycle costs through the use of performance standards, optimal maintenance and upgrade
scheduling. This implies financial and potentially functional separation of asset ownership andmanagement and clear financial accountability and incentives. That is, a corporatised and regulated
approach should be adopted where adequate competition is absent. Infrastructure managers should be
subject to periodic, public audits of their compliance with performance standards, asset management
capabilities and performance.
Recommendation: Governments should review their infrastructure regulatory frameworks.
The review should be conducted to determine whether there are opportunities to support integrated
approaches to cross-sectoral planning in order to avoid unintended consequences.

Ex post assessment
Recommendation: Ex post performance assessment should be undertaken for all major projects
Ex post assessments should be conducted using standard frameworks and methodologies to ensure they
provide meaningful information about infrastructure needs. Meta-analysis of these assessments should
be undertaken to better inform future infrastructure policy.
Research shows that ex ante estimates of infrastructure performance err systematically toward optimism.
Improving understanding of the reasons for this apparent systemic bias, and its expected extent, can be a
powerful means of improving ex ante analysis, by correcting for these apparent biases and pointing toward
key risks. Detailed ex post assessments of major infrastructure projects are needed to achieve this end.
They can also help to identify the need for remedial actions in relation to completed projects and increase
the likelihood such actions will be undertaken in a timely manner. Conducting audits of ex ante business
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cases during the construction phase can similarly aid in the timely identification of issues and encourage
appropriate revisions to project plans.
Recommendation: National infrastructure institutions and statistical agencies should co-ordinate
internationally to develop a framework of consistent infrastructure performance measures.
Performance measures can help identify strengths and weaknesses in infrastructure systems, and toevaluate the impact of past interventions. Successes in international harmonisation of other areas of
economic statistics suggest the potential to develop comparable measures of infrastructure performance,
which can underpin broader, international comparisons. The measures should be quantified and aligned
to society’s objectives for infrastructure. This would help countries and regions to compare outcomes andidentify best practices to inform their infrastructure plans.

Cross-border issues
Recommendation: Where cross-border infrastructure projects are adopted, they should preferably be
managed by a specific-purpose body with all parties represented. Policy objectives and performancestandards should be clearly specified and appropriate governance, funding and accountability mechanisms
clearly established.
As the discussion in Chapter 4 demonstrates, many important natural infrastructure assets serve
numerous, often quite different, economies and societies. Developing shared infrastructure can be an
important way to achieve efficiencies of scale and scope and enable the delivery of higher quality
infrastructure services more quickly. By deepening economic inter-dependence, such arrangements canalso promote further efficiency gains, as well as functioning as a force for stability and positive
engagement.
However, the effective operation of shared infrastructure necessarily imposes important challenges. These
will be particularly acute where larger numbers of countries or regions must co-operate and where there
are greater differences between them in terms of economic circumstances and/or cultural perspectives.
Addressing these challenges effectively requires an appropriate institutional architecture, clear policy
objectives, and agreed allocations of responsibilities.

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NOTES

Notes

1

Responses were received for Australia, Austria, Canada, Chile, France, Hungary, Ireland, New Zealand, Slovenia, Sweden and theUnited Kingdom.

2

One of these countries, the United Kingdom, is expected to publish a National Infrastructure Strategy in late 2020.

3

Though not for motorways, which are the responsibility of DARS, a separate state-owned enterprise, or for the main port).

4

Projects that fall below this threshold contribution are also required to be subjected to a CBA-based appraisal process.

5

New Zealand is, at the time of writing, developing a standardised benefits realisation framework, which will apply to all transport
infrastructure projects.

6

Projects that are jointly funded by federal and state governments as part of “national partnership agreements” are required to have postcompletion reports undertaken; there is no requirement for either independent involvement in their development or publication of thereport.

7With the possible exception of the implications of the COVID-19 pandemic – which, if it is relevant, is instructive on the need to use
strategic analysis techniques.

8

The Edelman Trust Barometer has been published for 20 years. It can be found at: https://www.edelman.com/trustbarometer. The Pew
Research Center in the United States also publishes longitudinal research on public trust in institutions. The Pew Research Center’s trustrelated work can be found at found at: https://www.pewresearch.org/page/2/?s=trust&topics=trust-in-government.

9

The Welsh government has established a National Infrastructure Commission for Wales (NICfW) to support independent, better-informed
advice on a longer term strategy of infrastructure investment, incorporating the principles of the Well-being of Future Generations(Wales) Act 2015. The NICfW is a non-statutory, advisory body. Its remit is to focus on the economic and environmental infrastructureneeds of Wales over 5-30 years. The commission will also consider the interactions of these needs with “social infrastructure”, such as
schools, hospitals and housing. However, the NICfW is not expected to consider and advise on social infrastructure needs in detail. The
advice provided by the NICfW will be strategic and forward looking in nature. Advice on existing or upcoming infrastructure schemes will
not be part of the commission’s remit.

10

In September 2013, Sir John Armitt published an independent review on long-term infrastructure planning in the United Kingdom. The
recommendations in the Armitt Review received widespread support and in large part have now been adopted by the current
government, contributing to the establishment of the National Infrastructure Commission. The report is available at:https://www.policyforum.labour.org.uk/uploads/editor/files/The_Armitt_Review_Final_Report.pdf.

11

In its recent Australian Infrastructure Audit, Infrastructure Australia started to address social infrastructure, including health and agedcare, education, social housing, and “green, blue and recreational infrastructure”. See Infrastructure Australia (2019).

12

At the request of the minister, Infrastructure Australia can also address other infrastructure.

13

The “how” options are not public at this time. However, based on the “Findings report”, they are likely to cover: the quantum andprioritisation of investment in new assets, strategies for managing existing assets, including means of securing greater utilisation ofexisting infrastructure; improvements in design; and greater use of data in decision making.

14

The Scottish government first introduced the language of inclusive economic growth in its 2015 Scotland’s Economic Strategy, although
the principles are evident from its first strategy in 2007. Scotland, as well as New Zealand, is also a founding member of the Wellbeing
Economy Governments partnership within the Wellbeing Economy Alliance (https://www.gov.scot/groups/wellbeing-economygovernments-wego). The alliance’s vision for a global economy that delivers human and ecological well-being sits well with the Scottish
government’s ethos. In addition to the economic landscape, Scotland passed a bill to achieve net-zero emissions by 2045, five years
ahead of the United Nations Paris Agreement. It is within this political backdrop that the Infrastructure Commission for Scotland has madeits recommendations for Scotland’s infrastructure over a 30-year period.

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15

www.gov.uk/government/publications/international-comparisons-of-transport-appraisal-practice16

https://www.gov.uk/government/publications/webtag-tag-unit-a2-1-wider-economic-impacts-may-2018.

17

The Grand Paris Express is expected to yield benefits of EUR 77.5 billion, of which EUR 34.5 billion derive from the WEBs of agglomeration
benefits (EUR 14.3 billion) and the value of long-term job creation (EUR 20.2 billion).

18

Some research suggests that countries with high levels of expenditure on relatively less productive infrastructure are likely to have lower
economic outcomes for a given level of aggregate investment. See, for example, Egert, Kozluk and Sutherland (2009).

19

http://www.gov.uk/government/publications/webtag-tag-unit-a2-1-wider-economic-impacts-may-2018

20

The UK Department for Transport’s TAG guidance – TAG Unit A2.2 – includes as an additional investment impact the land developed for
housing or business purposes that is dependent on the transport project. This somewhat specialist case, in which a lack of transportcapacity prevents consent for a change in land use, is outside the scope of this Chapter.

21

https://www.researchgate.net/figure/Overall-structure-of-a-DELTA-based-model_fig1_263143333.

22

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/371810/2-economy--wider-impactsassessment.pdf.

23

www.gov.uk/government/publications/tag-economic-impacts-worksheets.

24

www.gov.uk/guidance/transport-analysis-guidance-webtag

25

https://danube-region.eu

26

The EUSDR has operated since 2012 and was established via the European Commission Communication on a European Strategy for the
Danube region of 8 December 2010, the European Council Conclusions on the European Union Strategy for the Danube region of 13 April
2011 and the EUSDR Action Plan (currently under revision).

27

https://danube-region.eu/joint-statement-of-ulm-on-the-eu-strategy-for-the-danube-region.

28

Source: Economic Performance by NUTS-2 in 2015, on an EU-wide (top) and macroregional (middle) comparison, Study on Macroregional
Strategies and their Links with Cohesion Policy.

29

http://hdr.undp.org/sites/default/files/2018_human_development_statistical_update.pdf.

30International organisation established by the treaty establishing the Transport Community Transport Community in 2017:https://www.transport-community.org.

31

https://www.unece.org/trans/main/tem/tem.html; https://www.unece.org/trans/main/ter/ter.html.

32

The EUSDR has operated since 2012 and was established via the European Commission Communication on a European Strategy for the
Danube region of 8 December 2010, the European Council Conclusions on the European Union Strategy for the Danube region of 13 April
2011 and the EUSDR Action Plan (currently under revision).

33

www.viadonau.org/fileadmin/content/viadonau/02Infrastruktur/Dokumente/2014-11-13_Masterplan_Instandhaltung_
Wasserstrasse.pdf.

34

European Agreement on Main Inland Waterways of International Importance:
https://www.unece.org/fileadmin/DAM/trans/doc/2019/sc3/ECE-TRANS-120r4efr.pdf; Convention regarding the Regime of Navigation on
the Danube: www.danubecommission.org/uploads/doc/convention-en.pdf .

35

www.fairwaydanube.eu/national-action-plan-updates.

36

https://transport.danube-region.eu/wp-content/uploads/sites/2/sites/2/2019/09/Intermodal_Study_Danube_region2.pdf

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6. CONCLUSIONS AND RECOMMENDATIONS

37This case study is substantially based on Hasselgren and Lundgren (2014).

38

https://www.oresundsbron.com/en/info/railwaystatistics-on-oresund-bridge.

39

Oresundsbro Konsortiet is owned by Svensk-Danska Broförbindelsen SVEDAB AB and A/S Öresund. A/S Öresund is 100% owned by Sund &Belt Holding A/S, which is owned by the Danish government. SVEDAB AB is owned by the Swedish government. The two companies eachappoint four members to the governing board of Öresundsbro Konsortiet. The board appoints a chairman and vice chairman.

40

Visionsrapport Öresundsmetro mellem Köpenhamn og Malmö – en shuttle der gör Köpenhamn og Malmö till bydele i same by” at:https://interreg-oks.eu/webdav/files/gamla-projektbanken/se/Material/Files/Oresund/Projekter/xresundsmetro_final.pdf.

41

https://oresundsmetro.com/en/knowledge-bank42

For example, evaluation of the UK Jubilee Line Extension as described in Worsley (2014).

43

https://whatworksgrowth.org/about-us

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ANNEX A: COMPARISON OF THE FORM AND ROLES OF AUSTRALIAN SUBNATIONAL INFRASTRUCTURE BODIES

Annex A. Comparison of the form and rolesof Australian subnational infrastructure bodies

Basis forestablishment
Legal form

Composition of the
Board

Roles

Infrastructure New South
Wales

Infrastructure Victoria

Building Queensland

Infrastructure
Tasmania

Infrastructure South
Australia

Infrastructure Western Australia

Legislation

Legislation

Legislation

Administrative

Legislation

Legislation

Government agency

Body corporate

Statutory body

Part of the
Department of State
GrowthBody corporate

Body corporate as agent of the
Crown

Chair, not more than fivemembers with private sector
experience (appointed by theelected head of thegovernment – the Premier),
the CEO of Infrastructure
New South Wales, and theCEO of the Department ofPremier and Cabinet (DPC),
Treasury, Department ofIndustry and Regional
Development, andDepartment of Planning andEnvironment.
 Policy advice (including
preparation of 20-year
strategy and a 5-yearplan).
 Sectoral strategies.
 Project evaluations(“gateway” reviews,
typically not published).
 Various roles in project
implementation – some at
the request of the Premier,i.e. the head of thegovernment.

Chair, deputy chair, twoother directors appointed
on the recommendation of
the responsible minister,CEO of the DPC, Treasury,
Department of Planning andEnvironment.

Chair, four other Board
members, Auditor General,
Under Treasurer (in effect),the CEO of the department
administering the act.

 Preparation of a 30-year
infrastructure strategy(following public
consultation).
 Development of five-yearplans.
 Policy advice on mattersrequested by theminister.
 Support agencies in thedevelopment of sectoralplans.
 Undertake and publish
research.

Focused on projects, rather
than policy and planning,particularly on:
 CBA framework.
 Assistance in preparing
proposals (projects
AUD 50-100 million).
 Evaluation of proposals.
 Preparation of businesscases (projects> AUD 100 million).
 Preparation of a project“pipeline” document
after state budget.

DEVELOPING STRATEGIC APPROACHES TO INFRASTRUCTURE PLANNING © OECD/ITF 2021

 Development of a
30-year strategy.

 Assess andprioritise all major
publicly funded
infrastructure
investment
proposals, leading
to a ten-year
project pipeline.

 Provideindependent andobjective advice
about proposals

Seven-person Board
comprising four private
sector representatives(including the chair)nominated by the
responsible minister, andthe CEO of the DPC,
Treasury and a
representative from theland-use planning andinfrastructure
department.

 Up to ten members. The CEOsof the DPC, Treasury andPlanning Department areboard members.
 Government members cannot
exceed the number of
non-government members.
 Board members must have,
between them, expertise
across a broad range ofinfrastructure sectors.

 Promote efficient,effective and timely
co-ordination,planning,
prioritisation, delivery
and operation of
infrastructure.
 Prepare a 20-year
strategy and 5-year
reviews.
 Statement of capitalintentions, i.e. major
projects(> AUD 50 million) that

 Prepare a 20-year state
infrastructure strategy(including public
consultation), covering
investment and policy
reforms.
 Assessment of major
infrastructure proposals withan expected capital cost over
AUD 100 million.
 Provide policy advice on othermatters, in conjunction with(or on behalf) of stateagencies.
 Post-completion reviews.

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ANNEX A: COMPARISON OF THE FORM AND ROLES OF AUSTRALIAN SUBNATIONAL INFRASTRUCTURE BODIESInfrastructure New SouthInfrastructure Victoria
Building QueenslandWales Leading the
procurement ofparticular projects.

Scope

Seemingly, there is norestriction in the legislation.
Strategies, etc. cover a wide
range of economic and social
infrastructure.

Seemingly, there is norestriction in the legislation.
Strategies, etc. cover a wide
range of economic andsocial infrastructure.

Definition in act covers all
sectors. Focus is on
investment which may
have significant economic,
environmental or social
impact on the state.

Annual budget

AUD 8.9 million (2018-19)

AUD 9.8 million (2017-18)

Number of staff

45 (at June 2018)30 full-time equivalents(FTE) (at June 2018)

AUD 23.4 million (201718). Building Queensland
can charge agencies forservices provided(c. AUD 15.8 million
in 2017-18).
27 FTE (at June 2018)96

Infrastructure
Tasmania
to the Minister for
Infrastructure andthe Treasurer.

 Responsibility forco-ordination of
all major
infrastructure
funding
submissions to
the Tasmanianand Australian
governments.
Appears toconcentrate ontransport and water.

Unclear (butprobably under
AUD 1.5 million)

Unclear (butprobably only 3-4)

Infrastructure South
Australia
should proceed within
five years.
 Evaluation of projects
with an expected
capital cost over
AUD 50 million.
 Prepare otherstrategies as it sees fit
or as requested by theminister.

Infrastructure Western Australia“Infrastructure” notdefined. In practice,therefore, scope is as
determined by the Boardor the minister. It covers
economic and social
infrastructure (including
housing, cultural andrecreational facilities andwaste).
AUD 2.0 million (201819)

Definition is not limited toparticular classes or sectors of
infrastructure.

6 FTE

Not available.

DEVELOPING STRATEGIC APPROACHES TO INFRASTRUCTURE PLANNING © OECD/ITF 2021

Not available.

ANNEX A: COMPARISON OF THE FORM AND ROLES OF AUSTRALIAN SUBNATIONAL INFRASTRUCTURE BODIESInfrastructure New SouthInfrastructure Victoria
Building Queensland
Wales
Reports to:Premier.
 30-year strategy is Minister responsible forreported to parliament.
the act.
 Government detailed
 Agencies in relation to
response to strategy toparticular projects.
be published within one
 Not stated in legislation
year of presentation tobut (presumably) toparliament.
Cabinet when projects
are considered for final
 Nominated minister
where he/she requests
funding decision.
advice.
 Some business cases are
released publicly (in fullor in part).
Government obliged
to adopt
recommendations?

 Government agencies toco-operate with
Infrastructure New South
Wales.
 No, though strategies andplans are to be adopted(with/without alteration)and be made public, orreferred back to
Infrastructure New South
Wales.

 Government agencies toco-operate with
Infrastructure Victoria.
 No, though government
required to respond to
strategies and plan within
one year.
 Infrastructure Victoria
required to report in eachannual report on its
assessment of thegovernment’s progressagainst the five-year plan.

 The act appears to besilent on this matter.
 2017-18 annual reportstates that the
government accepted
Building Queensland’s
recommendation onsome of the 11 detailed
business cases it
prepared.

DEVELOPING STRATEGIC APPROACHES TO INFRASTRUCTURE PLANNING © OECD/ITF 2021

Infrastructure
Tasmania
Minister for State
Growth and,separately, to theTreasurer, and to theSecretary of the
Department of State
Growth.

Infrastructure South
Australia
Minister responsible forthe act.

Unclear. But probablynot.

 Minister must adopt
recommended 20-year
strategy and statementof capital intentions
with or without
amendments (or refer
it back to
Infrastructure South
Australia.
 Infrastructure South
Australia can advise
minister it does notagree with
amendments made by
the minister and makethat advice public.

97

Infrastructure Western Australia
 Premier. Premier must submit
to parliament within 60 days(+28 days if strategy is
resubmitted to Infrastructure
Western Australia).
 Premier on other matters.
 Publication of annual work
programme.

 Government agencies must
co-operate with Infrastructure
Western Australia.
 Government must provide
response to parliament within
six months.
 Premier and Treasurer todevelop/publish a ten-year
state infrastructure
programme (SIP) within threemonths of the state budget,showing how it reflects thestrategy (to the extent towhich the government
supports the strategy).
 Premier to publish summary
report on major projects
within six months of receiving
report from Infrastructure
Western Australia.
 Infrastructure Western
Australia to publish annual
report in progress against thestrategy, having regard to
government response and
SIP.

ANNEX B. WORKING GROUP PARTICIPANTS

Annex B. Working Group participantsWorking Group participant affiliations were provided at the time of their participation in meetings.

Philip GRAHAM (Chair)

National Infrastructure Commission, United Kingdom

Stephen ALCHIN
Richard ALLEN
Maximilian BAUERNFEINDHeiner BENTE
Julien BRUNEL
Chris CAMPBELL
Sysser DAVIDSEN
Rex DEIGHTON-SMITH
Garret DOOCEY
Jagoda EGELAND
Erik ERNITS
Alexander GALETOVICInfrastructure Australia
International Monetary Fund
Austrian Ministry for Transport, Innovation and Technology, Austria
Civity.de (private consulting firm)
SNCF Réseau, France
Department for Transport, United Kingdom
Danish Ministry of Transport, Building and Housing, Denmark
International Transport Forum (ITF), France
Department of Transport, Tourism and Sport, Ireland
ITF, France
Road Administration, Estonia
Hoover Institution, Stanford University
National Planning Department, Swedish Transport Administration,
SwedenStrategy Unit, Swedish Transport Administration, Sweden
ITF, France
Norwegian Public Roads Administration, Norway
DRI
Department for Transport, United Kingdom
ITF, France
Transport Canada
Department for Roads Infrastructure Development of the Ministry,
Hungary
Swedish National Road and Transport Research Institute (VTI), Sweden
VTI, Sweden
ASFINAG Construction Management, Austria
ITF, France
ÖBB-Infrastruktur AG, Austria
National Infrastructure Commission, United Kingdom
Ministry for the Ecological Transition, France
Infrastructure Commission for Scotland, United Kingdom
Department of Planning, Land Use and Transport, Ireland
Ministry for Innovation and Technology, Hungary

Björn HASSELGREN
Ulla Stina INGEMARSSON
Young Tae KIM
Oskar Andreas KLEVEN
Tomaz KOSIC
Mark LEDBURY
Dejan MAKOVSEKJames McCRAEÁrpád Alexandru
MOGYORÓS
Jan-Eric NILSSON
Johan NYSTROM
Matthias PANOZZOStephen PERKINSViktor PLANKJames RICHARDSON
Pierre-Alain ROCHE
Tony ROSE
Alan SCARLETT
Ferenc SZABÓ

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ANNEX B. WORKING GROUP PARTICIPANTS

Abel TEFERA
Scott THACKER
Alexander WALCHERTom WORSLEYFranc ŽEPIČ
Felipe SAAVEDRA

Swedish Transport Administration, Sweden
United Nations Office for Project Services
ASFINAG Construction Management, Austria
University of Leeds, United Kingdom
Ministry of Infrastructure, Slovenia
Permanent Delegation of Chile to the OECD, Chile

DEVELOPING STRATEGIC APPROACHES TO INFRASTRUCTURE PLANNING © OECD/ITF 2021

99

Developing Strategic
Approaches toInfrastructure Planning

International Transport Forum
2 rue André Pascal
F-75775 Paris Cedex 16+33 (0)1 73 31 25 00
contact@itf-oecd.org
www.itf-oecd.org

Published: 02/2021 | Photo credit: Ingus Kruklitis/ShutterstockThis report documents trends in theuse of strategic planning in a rangeof countries and the associatedestablishment of independent
infrastructure advisory bodies. It
documents practices in the areasof project identification, appraisaland selection. It considers theappropriate scope of impact
assessments, including the use ofwider economic impacts and the roleof ex post evaluation in contributing
to better appraisals of future
investments. Finally, it looks at how
the effective stewardship of existing
infrastructure assets can maximise
their ongoing productivity.