OECD report on Private Investment into Infrastructure

In June 2018, the OECD launched a report of a 2 year in-depth research study on Private Investment into Infrastructure (available at: https://www.itf-oecd.org/private-investment-infrastructure). In this report, the OECD’s two initiatives, on the “way forward”, are both based on research at QUT, Australia.

In the first initiative, the OECD cite and endorse a new tool to measure Value-for-Money in Public-Private Partnerships (PPPs) and non-PPPs that is developed in this current ARC Value in Operations Australian Research Council grant (2017-2020) led by Associate Professor Adrian Bridge that includes 18 government and industry partners (comprising Infrastructure Australia; 10 Australian state and territory departments and seven industry organisations). The tool collects the total costs of infrastructure delivery (design, construction, operations and maintenance) and assesses its total performance to-date. Performance is then expressed per cumulative whole-life unit cost of delivering the new infrastructure.

The OECD aim to replicate this tool in European Roads and deliver the following benefits:

  • Benchmarking, identification and evaluation of best practice in the whole-life delivery of new infrastructure (including across delivery models and across jurisdictions);
  • Enduring post completion review tool, along with longitudinal data and trends in costs and performance;
  • Identification of delivery “turning points” i.e. the point at which additional spending delivers disproportionally more performance and the point at which reduced spending delivers disproportionally less performance. In other words, the points that depict the potential frontier of improvement in Value-for-Money; and
  • Advancing the design and cost management of new infrastructure through synchronizing design and cost. Currently, cost follows design or design follows cost, when advancing value for money demands that adjustments in the design/performance and corresponding changes in cost are developed and considered in a simultaneous fashion.

In the second initiative, the OECD are working with Associate Professor Adrian Bridge to develop a procurement decision making tool into a new “Procurement Design Assessment System” to apply across the OECD’s 36 member countries around the world. The procurement decision making tool addresses sub-optimal procurement decision-making in new major infrastructure projects – in order to achieve better Value-for-Money through their procurement and delivery. It was developed and empirically tested in a completed Australian Research Council grant (2009-2014) led by Associate Professor Adrian Bridge. This tool is cited by Australian’s Productivity Commission and is being live trialed by Infrastructure Australia to deliver the following benefits:

  • Based on the empirical evidence of $32 billion road and health projects used to develop and test the tool, we estimate the tool will double the chance the government delivers appreciably superior Value-for-Money, in contrast to using current procurement practice;
  • Based on scaling-up the likely cost savings the tool would have delivered – in relation to those projects studied in the above empirical sample, we estimate the model will save governments tens of billions of dollars in each $100 billion spent on infrastructure; and
  • A transparent approach to arriving at the procurement decision.

Further details of this tool are available at: https://eprints.qut.edu.au/76520/.

The presentation “The Procurement Design Assessment System: the roadmap towards it”,  made to the OECD by Dr Dejan Makovsek of the International Transport Forum and Associate Professor Adrian Bridge, is available at https://www.itf-oecd.org/private-investment-infrastructure and on Youtube.

For more information please contact:

Dr Adrian Bridge
Associate Professor Project Management
Civil Engineering and Built Environment
Science and Engineering Faculty
Queensland University of Technology