As governments have come to realize the risks associated with relying solely on cost-benefit analysis for infrastructure prioritization, they are looking for ways to enhance the accuracy of their project appraisals. Our latest report with Oxford Global Projects explores alternatives to CBA including emerging methodologies and real-world case studies. Beyond saving time and money, effective project prioritization supports the development of equitable, sustainable, resilient, and future-proof assets for decades to come.
Infrastructure spending has long been employed by governments to stimulate infrastructure investments. In 2021, for instance, the United States issued the US Bipartisan Infrastructure Law, which introduced US$550 billion in new spending, with US$284 billion allocated to surface transportation.1 Similar global initiatives include the United Kingdom’s National Infrastructure Strategy and the European Union’s NextGen program. In fact, in 2022, G20 central governments set aside almost US$1 trillion for infrastructure investment.2 However, for these ambitious programs to drive economic recovery, address social issues, mitigate the effects of climate change, and meet the needs of the communities they serve, governments must get program funding right. Before that can happen, governments must understand how best to prioritize the potential infrastructure projects that they can select from.
Despite a traditional reliance on cost-benefit analysis (CBA) to prioritize infrastructure investments, both experience and research have exposed its critical weaknesses which we explored in the first report of this series, ‘Why governments must look beyond cost-benefit analysis’.
Our latest report with Oxford Global Projects explores a variety of supplementary approaches that provide viable alternatives to CBA along with best practices governments can use to strengthen the outcomes of their infrastructure investments. We also look at emerging methodologies and share some real-world case studies that exemplify how they can be used.
By investing in a more rigorous analysis upfront, governments can save significant resources when it comes time for infrastructure project execution. Beyond saving time and money, effective project prioritization can enhance social outcomes and support the development of equitable, sustainable, resilient, and future-proof assets that bolster citizen trust while meeting the needs of multiple stakeholders for decades to come.
1 “The US Bipartisan Infrastructure Law: Breaking it down,” McKinsey & Company. November 12, 2021. Accessed at https://www.mckinsey.com/industries/public-and- social-sector/our-insights/the-us-bipartisan-infrastructure-law-breaking-it-down
2 “Transformative Outcomes Through Infrastructure,” Global Infrastructure Hub. Accessed at https://infrastructure-outcomes.gihub.org/