The secrets to successful infrastructure projects
Building coalitions of interest and developing long-term bi-partisan consensus are the keys to getting large scale city building infrastructure projects off the ground, says Arup’s director of city economics, Alexander Jan.
Jan (pictured) has worked on several landmark transport and infrastructure projects, among them the modernisation of nine of the 12 Tube lines serving London. He’s advised clients on the sale of Eurostar, the refinancing of the Channel Tunnel, and a range of road, port and airport transactions across Europe and beyond.
More recently, Jan led Arup’s work for the mayor on a £1.3 trillion London infrastructure plan to 20. He’s currently looking at how London can prepare for the advent of Crossrail – a new 120-kilometre rail link that is Europe’s biggest construction project.
Jan was in Australia recently to discuss financing options for the Sydney Metro extension, and he’ll be back in October to speak at the Metrorail Revolution session at The Property Congress on 19 October in Cairns.
His experience has taught him that most nations feel that infrastructure investment is an uphill struggle.
“Infrastructure takes a long time to build, it can create uncertainty during the planning phase and doesn’t always produce benefits that land within a political cycle,” he says.
The answer? “Build coalitions of interest and secure long-term consensus so politicians across the divide get behind projects and they don’t become political footballs.”
Easier said than done. But Jan says building consensus is achieved by “effectively articulating how these projects deliver solutions that matter to people – such as affordable housing and urban regeneration. When we can get the narrative around these stories right, it gains the consensus needed to see it through.”
While many Australian infrastructure projects – notably the high-speed rail along the Eastern Seaboard – have failed to meet the rigors of cost-benefit analyses, he says this shouldn’t be the final word.
“It’s quite hard to factor the strategic components of an infrastructure project into the equation. But as long as there is honesty around the debate about the strategic value of a project, I think political leaders are entitled to argue that strategic benefits will outweigh sometimes comparatively poor cost benefit ratios.”
The discount rate we use to value infrastructure schemes in Australia is perhaps a notable factor in their cost-benefit ratio results, he explains. “The rate is about twice that of the UK, which makes it harder to demonstrate the value of a project over 100 years,” he says.
“But if the long-term impacts of infrastructure are important, because they will create new towns or solve the housing affordability crisis, for example, then it’s important we reflect those preferences in decision making.”
Jan points to the Nine Elms urban regeneration project on London’s South Bank, which will deliver 16,000 new homes and 24,000 new jobs post-construction. Around three kilometres of the Thames will be opened to the public and a cluster of new tall buildings is taking shape around two new Tube stops – one at Nine Elms on Wandsworth Road and another at the redeveloped Battersea Power Station.
Before the extension to the Northern Line was proposed, the London Plan had already identified the areas as a major “opportunity area” that could unlock 12,000 new homes and 10,000 jobs.
But central to any successful project is a strong coalition of the willing, he says.
“You need the support of city governments, local councils, businesses and voters. And when all the parties are contributing to the cost, it makes for a much more compelling business case and is much harder for any central government department to kill off.”
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