The developed world looks set to embark on a strategy of spending its way out of recession. Many countries have announced significant programs of public works to create jobs and pump billions of dollars into the economy.
Globally, the amount of money in play is extraordinary. The UK government has allocated £1 billion for a new road construction project over the next few years, and the Australian government $4 billion. In the US, the proposed spend is $375 billion over five years, along with a new job creation plan that includes $10 billion for public infrastructure.
These are undoubtedly impressive sums, but questions remain about just how well this money will be spent. Governments need to understand that throwing more money at new projects is not a viable option. Building new roads requires significant public consultation and debate. Such projects are, therefore, subject to rejection and delay. Even the current strategy of bringing forward existing projects will still require consultation.
If a government wants to put money back into the economy today, building a new road is not the answer. Once the consultation and planning processes have been completed, it will take at least two years for new investment to reach the market and create new jobs.
If governments want an immediate boost to the economy, the way forward is through structured, planned road maintenance programs. This type of investment will create jobs now, but it will also deliver an important secondary economic benefit. Improving the standard of the road network will also boost business productivity and profitability.
Moreover, there are important engineering reasons why spending money on new construction projects is not a good idea. Systemic underfunding – often spreading over decades – has left road networks across North America, Europe and Australia in extremely poor, and often unsafe condition. Adding new road infrastructure without addressing the maintenance problem will simply add to this funding problem, estimated at over $1 trillion in the US alone.
Indeed, the gap between required and actual maintenance budgets has actually increased in recent years in an unrealised search for greater efficiency.
The result has been a quantifiable deterioration in the quality of the road network and a maintenance policy that works on a ‘worst first’ basis, with no strategic planning. The result is unplanned and extended road closures and disruption that undermine the economy and enrage the electorate.
The impact of this sustained lack of commitment to maintaining the road network is staggering. In the US, a 2007 study by the National Surface Transportation and Revenue Commission found that it would cost $225 billion each year for 50 years to upgrade and maintain the national network of roads and bridges. The American Society of Civil Engineers estimates that the US would need to spend $1.6 trillion over the next five years to bring the nation’s infrastructure up to a good standard.
In 2006, the government-funded Eddington Report into the future of Britain’s transport infrastructure estimated that congestion could cost the British economy £22 billion a year in lost time by 2025.
The situation is just as bad in Australia. A 2006 PWC review estimated the potential aggregate backlog for all Australian local councils across the country to be $14.5 billion. PWC estimated it would require $2.16 billion per year for the next ten years to clear the backlog.
But the solution is not simply to fund more maintenace crews. Very few of the relevant public sector bodies have the detailed asset information required to either prioritise work or build a strong case for a strategic maintenance program. Furthermore, once those investments have been made, there is no mechanism in place to allow improvements in performance to be monitored, in order to justify each decision.
To enable investment prioritisation, highway maintenance managers need detailed insight into the state of every asset and a complete picture of the performance of the road network.
There is no doubt that by addressing congestion problems, governments across the developed world could deliver significant benefit to hardpressed businesses. But cherry-picking the most attractive, headline-grabbing new build projects is not going to deliver any economic value. It is simply political expedience.
Yet if those tasked with road maintenance are to access funding, they need to be able to justify the investment. If this money were made available today, how should it best be spent? Why should funds be directed to a specific project, and how can government ministers feel confident that it is the right project, and that it will deliver real value?
Investment in road infrastructure is always welcome. But by addressing decades of underfunding in maintenance and embarking upon planned and managed maintenance strategies, governments have the opportunity to reinvigorate the economy with new jobs, and deliver a much-needed productivity boost.
Russell Loarridge is in charge of sales and marketing with the British transport software supplier, Exor.
