INDIA’S INFRASTRUCTURE DELIVERY LED ECONOMIC RECOVERY

A REPORT FINDS THAT BY 2030 INDIA WILL BE SPENDING US$500 BILLION (OVER 37 TRILLION) A YEAR TO ACCOMMODATE ITS RAPIDLY EXPANDING POPULATION. Around the world, good infrastructure is vital for socioeconomic prosperity, both directly through investment and jobs, and indirectly through thing like improvements to transport connectivity and access to clean water. Globally, the cost could be as much as US$900 billion. This financial burden, combined with a perceived lack of delivery capability due to project delays and mismanagement, risks severely damaging public confidence in the sector; something we cannot afford when community buy-in is so critical to establishing and achieving positive outcomes. The Main Issues Identified:

1. Lack of clarity of outcome when deciding on which schemes to take forward. Often decisions are driven by political pressure rather than rigorous cost and benefit analysis.
2. The poor predictive abilities of project teams in their early stages, who are pressured into providing fixed point price estimates and programmes well before accurate predictions are possible or realistic.
3. Procurements based on 'cheapest price' rather than 'value' to fit within unrealistic initial budgets. On large and complex projects, 'cheapest price' procurement is a false economy.

INDIAN INFRASTRUCTURE DELIVERY India is no different and, unfortunately, not all infrastructure projects are properly planned and delivered, resulting in delays, cost overruns and underdelivery against expected benefits. The negative impact of this is significant, with calculations showing that, in India, this could result in an additional cost of INR 10,820 billion by 2030. New economic data in the report 'A Blueprint for Modern Infrastructure Delivery', authored by international construction and consultancy company, Mace, finds that by 2030 India will be spending US$500 billion (over 37 trillion) a year to accommodate its rapidly expanding population. Other large countries will also incur equally large infrastructure spends. Infrastructure provides the foundations for economies to grow and lives to improve. Gradually easing restrictions notwithstanding, networks around the world face longer term strategic challenges. India is no exception.  Since the global COVID-19 pandemic took hold at the start of 2020, infrastructure delivery and its role in society has changed dramatically in nature. For instance, at its peak, the COVID-19 pandemic caused a 73% drop in public transport use in India. By Q1 FY21 end, there were 1,698 Central projects under implementation across India - 469 mega projects (each costing INR 1000 crore and above) and 1,229 major projects (each costing >INR 150 crore. To shift the balance and to put things right, including implementing independent scrutiny panels on big projects, the country would need to shake up the way the sector runs procurement and, spend more money upfront to properly examine, scope and plan the scheme. GLOBAL INFRASTRUCTURE & ECONOMIC RECOVERY According to the World Bank, the impact of lockdown measures and behavioural changes in response to COVID-19 caused the most severe global contraction since the Second World War. Economies around the world are hit hard by the impacts of the virus, and many governments have positioned infrastructure deployment as a core part of the remedy. The need to improve delivery is stark. According to Mace's data, up to 80% of large infrastructure schemes are delivered late and over budget, and then underdeliver on benefits. These challenges must be addressed so as not to undermine the global infrastructureled economic recovery; evidence of change through successful delivery is essential to boosting public confidence in the months ahead. It is nearly universally accepted that good infrastructure has significant benefits for the economy and peoples’ quality of life. The UK currently has an infrastructure pipeline of £600bn with a predicted annual spend of £65bn a year by 2030. A recent study found that 80% of all large projects globally experience cost or programme overruns. The recent Bangkok metro project, for example, came in at 70% over its original budget. With COVID-19 placing greater emphasis on the importance of infrastructure as an economic multiplier, it is more important than ever that we get this right. The major projects and programmes must have clarity of direction and outcome-focused decision making to ensure they do not become a burden, but rather an enabler for post-pandemic growth. This does not mean these projects were failures. If the primary outcome was to deliver to cost and time then they have failed, but if the outcome was regeneration or economic growth, then many of these projects could be a success. This is why having clarity over desired outcomes is so important. According to the calculations, world economy could be losing $1.5 trillion (£1.2tn) a year by 2030 due to the late delivery of major infrastructure projects. This is simply not good enough.