Are you being served? Alternative infrastructure business models to improve economic growth and well-being

‌On Thursday 26 March, iBUILD launched a manifesto which draws upon our key findings to date to deliver a series of recommendations to unlock innovative business models for practitioners, local and national government.  Below are our key messages; supporting evidence is provided in the reference section and the full Manifesto document can be downloaded from here: iBUILD Manifesto 2015‌. 

Priority Action Area #1: Have a broader, integrated appreciation of infrastructure

Infrastructure is not just tracks, tubes and trunk roads.Failure to consider the resources that flow along these, the services they provide and the people and businesses that depend on them, will lead to investments that don’t deliver effectively. At the same time, it is crucial to understand how all these systems are interconnected; infrastructure depends on other infrastructure to work, not just technically, but also economically and socially. The UK’s infrastructure is amongst the most mature and interconnected in the world and therefore has a pressing need to adopt a broad, integrated and sophisticated approach to infrastructure planning.

Recommendation 1: Infrastructure planners, financers, engineers and other stakeholders need to use a broad, but appropriately specified, definition of infrastructure if they are to identify the full range of opportunities from alternative business models. 

Recommendation 2: Housing and ‘hidden infrastructure’, such as efficiency measures, should be considered alongside the large-scale capital investments with which they interconnect, within infrastructure and spatial planning processes. 

Recommendation 3: National reforms in policy and regulation are required to enable an integrated approach to local infrastructure planning that can identify, and has the capacity to exploit, synergies across infrastructure sectors. 

Priority Action Area #2: Enable action at the local scale that connects with the national

Every piece of infrastructure has to go somewhere; it is inherently local. Top-down approaches to infrastructure development and management stop locally-led and innovative business models from flourishing and discourage innovation. This also risks the wrong infrastructure being put in the wrong place at the wrong time because of a lack of local knowledge, engagement and ownership. These issues prevent the UK from maximising returns from infrastructure investment. The UK must devolve an appropriate and sensible proportion of infrastructure investment and responsibility to local institutions so they can deliver infrastructure that better reflects the different geographies, values and needs of the communities it serves, yet remain mindful of the national strategy.

Recommendation 4: National and local policy frameworks should be realigned to focus on delivering wider societal benefits and to enable local infrastructure business models to emerge that can provide local solutions that are complementary with mainstream systems. 

Recommendation 5: Effective operation of local alternative infrastructure business models requires greater fiscal decentralisation, complemented by a stronger and statutory devolved role for cities and localities in the planning, development and delivery of infrastructure.

Recommendation 6: Provide support for a wider range of innovative local infrastructure financing mechanisms, including tax increment financing, municipal bonds, social impact bonds and crowd source funding approaches. 

Priority Action Area #3: Capture long-term value of every kind

Infrastructure is not only about cash returns. Investment in infrastructure provides wider health, economic and environmental benefits for society; infrastructure converts financial value to social value. A new economic valuation system that recognises these long-term, whole-life returns is essential to maximise the benefits. Infrastructure must also be built for minimum whole-life costs. This might mean paying a bit more upfront for something that will last – and serve – for longer without the need for frequent maintenance; a resilient and sustainable infrastructure.

Recommendation 7: Incorporate measures of social and environmental benefit (and cost) into infrastructure appraisal frameworks to recognise the wider outcomes and ascertain the broadest possible set of mechanisms to capture revenue and other values. 

Recommendation 8: Implement a quantitative framework within the infrastructure appraisal process to assess the value of flexibility and resilience across the whole system over the longterm. 

Recommendation 9: Local authorities and infrastructure owners should apply resource assessments as a matter of course to identify the potential of land and infrastructure assets to generate long-term, stable revenue streams and not just one-off, short-term windfalls from selling-off assets. 

Recommendation 10: Employ a new approach to infrastructure economics that recognises the long-term and system-wide value of infrastructure provision. 

Priority Action Area #4: Deliver more efficient planning, procurement and delivery

Approaches to project financing, funding and delivery should not be chosen for political reasons. Mechanisms must be adopted that can best deliver the desired economic, social and environmental values, regardless of their political flavour. Many of methods and tools to enable this already exist: the Project Initiation Routemap, Building Information Modelling (BIM) systems, life-cycle assessment, so they must be used. These approaches support more efficient planning and procurement, minimise costs and human effort, preserve the environment, and maximise the potential to reuse and recycle materials and components in the future.

Recommendation 11: Implementation of the Project Initiation Routemap has been shown to have many cost reduction benefits and should be made standard practise for all public funded projects. 

Recommendation 12: Planning and design of infrastructure should consider the material and resource demands of infrastructure pipelines to identify opportunities for reducing waste in the construction and operation phases, whilst designing for end of life material recovery or repurposing of infrastructure. 

Priority Action Area #5: Accelerate the uptake of innovations through practical action and demonstration

Action often speaks louder than words. Alternative approaches to infrastructure business models are emerging. To quickly identify the most successful approaches and encourage their wide uptake locally, nationally and internationally, a number of ambitious demonstrator sites should be established.

Recommendation 13: Establish full-scale urban demonstrator sites for integrated infrastructure planning and testing of innovative infrastructure business models.