Discussion on Infrastructure and Fiscal Constraints: What Can Be Done?

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Discussion on Infrastructure and Fiscal Constraints: What Can Be Done?

A community’s physical infrastructure (streets, roads, sewers, bridges, etc.) is the lifeline that supports (along with a strong human infrastructure) the economic growth and development of a city.

As such, its health and condition has a direct impact on the quality of life for an entire community to compete effectively for jobs and resources.  While this relationship is a widely accepted one, there is also consensus at the municipal, state and federal level of government that the infrastructure in American cities is far past its life span and is in need of significant investment and repair.

More specifically, the issue that’s present on the minds of many communities including cities such as New Orleans is how to pay for the much needed repair and upgrades to our aging infrastructure. This issue goes beyond an infusion of resources to meet the needed immediate investment and repair.

Clearing existing infrastructure maintenance backlogs and figuring out revenue sources for long term infrastructure projects and maintenance beyond the initial investment play an important role in addressing this issue.

While most large municipalities and middle weight cities are grappling with this issue, addressing infrastructure challenges is more pressing in communities that are strapped fiscally such as the case in New Orleans and the State of Louisiana given its wide spread fiscal constraints. Granted, New Orleans has an infusion of federal dollars from FEMA for street repair related to Hurricane Katrina but city leaders will admit that the financial need is well beyond the federal dollars received and that the city cannot rely on federal support long term to solve local infrastructure issues.

Anything short of a federal infrastructure initiative similar to the early WPA programs will require creativity, leadership, citizen engagement combined with public and private will at the local level to ultimately solve this issue.

In this context, the community will need to figure out how to make the most out of what it has and begin to examine ways to re-frame, re-position, target and allocate scarce resources for greater production and efficiently. In most case this is easier said than done give backlog of projects, declining resources and a citizenry pressing for attention to the issue.

While there is a great deal of information on the subject of infrastructure need in American cities, the McKinsey Global Institute and Infrastructure Practice have identified three broad types of moves that could help deliver savings for cities and communities facing fiscal constraints:

  1. Optimize project portfolios. One of the most powerful ways to reduce the overall cost of infrastructure is to avoid investing in projects that neither address clearly defined needs nor deliver sufficient benefits. Choosing the right combination of projects and eliminating wasteful ones could save significant resources yearly.

  1. Streamline delivery. This area presents an opportunity to save millions annually and accelerate timelines. To streamline delivery, it will be necessary to speed up approval processes, invest heavily in the early stages of project planning and design, and structure contracts to encourage time and cost savings.

  1. Make the most of existing infrastructure. Rather than invest in costly new projects, governments can address some infrastructure needs by getting more out of existing capacity. Boosting asset utilization, optimizing maintenance planning, and expanding the use of demand-management measures can generate savings yearly.

While the resource and fiscal constrain issue is a real hurdle in dealing with the infrastructure challenge, communities will need to move toward comprehensive infrastructure project planning and focus less on singular projects to maximize limited resources.

The key to this path according to McKinsey lies in developing a well-functioning system which provides for a separation between political and technical competencies with clarity about roles and responsibilities. More important, work diligently toward greater stakeholder management,  and community communication as it relates to project timing, updates and community impact through, better operational and financial information to the community at large.

While the resource issue remains the biggest challenge, the suggestions discussed in this piece provides some food for thought as communities such as New Orleans work through the infrastructure in its current reality, that is, limited resources.

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