We need to develop more holistic business cases to unlock the potential of infrastructure to improve people’s lives and transform communities, writes Kerry Scott, Mott MacDonald’s Global Practice Leader for Social Outcomes.
In the world’s major developed economies, we’ve been building infrastructure for more than 200 years. We’ve also been connecting it all up — but not always very well.
While some elements of our built environment are carefully planned, it has largely grown in an ad hoc way. Individual assets have been designed and delivered in silos, rather than as part of a grand vision.
What has emerged is a "system of systems" — multiple assets and systems that are connected to and dependent on one another. A complex, interconnected machine, which underpins our communities and provides the essential services on which people depend.
Delivered in the right way, infrastructure can improve the accessibility of housing and amenities, reduce poverty and inequality, widen access to jobs and education, make communities more resilient to climate change, and promote public health and well-being.
Social outcomes like these are the very purpose of infrastructure: to serve society and improve the quality of people’s lives.
Yet the current business case system does not enable us to factor in and place a value on such outcomes. Traditional methodology looks at only what can be monetized.
The focus is on the short-term economic return of assets in isolation. We don’t assess the "success" or performance of assets in terms of how they fit into the system of systems and deliver long-term outcomes that benefit the whole of society.
Only when a holistic approach to business cases is adopted, one that recognizes this interdependency between infrastructure and society, will we be able to secure greater investment for infrastructure projects that deliver more inclusive social outcomes.
Outcomes should drive development
Consider the link between social development and economic output. Transport networks, for example, that are made more accessible and inclusive through investing in public transport, cycling, and walking will open up opportunities for employment, education, and training.
This will foster economic activity from groups that are often marginalized, including job seekers, low-income families, and young people.
Improving access to secure and stable employment boosts people’s spending power, stimulating demand for goods and services. More jobs mean more tax revenues for local and central government. Lower levels of deprivation will reduce demand placed on public services. In short, reducing income inequality is good for business.
There are also economic opportunities to be realized from making our built environment more accessible for people with diverse needs, such as older and disabled people, to shop, eat out, and socialize.
In the US, a recent study found that 56 cents of every dollar spent came from someone age 50 or older (source: AARP). The total disposable income of people of working age with disabilities is nearly $500 billion (source: American Institutes for Research).
What really counts is lasting social change
We should of course be driven by the social outcomes we want to realize, not just by the lure of economic returns.
Holistic infrastructure planning involves recognizing the potential of assets to convert financial value into societal value, moving beyond benefit-cost analysis to capturing whole-life benefits.
We need to reevaluate how to evaluate success, reappraise what growth means. Typically, growth is measured in terms of increases to gross domestic product and gross value added, or the number of jobs created. These are very worthy and beneficial outputs, but they only get us so far.
Delivery of better social outcomes will require the infrastructure sector to see things through a wider, more inclusive lens than the metrics that traditional economic appraisal and theory dictate. It involves understanding how impacts might be distributed and experienced by different sections of society.
Measurement will need to be reoriented — looking at what really counts, rather than what we can count.
Increasing ambition, fulfilling potential
As an industry, we must be more ambitious and prioritize lasting social change. We need to adopt a more integrated approach to infrastructure planning, financing, and delivery, one that recognizes the long-term, system-wide, and societal value of infrastructure provision.
At a macro level, by addressing the deficiencies in current business case models, we will help to develop the system-based strategy for managing infrastructure that is needed to ensure all assets — existing and new, and the connections and interdependencies between them — function effectively as a system of systems.
If we succeed in this, we will unlock the full potential of infrastructure to fulfill its ultimate purpose — serving society and improving people’s lives and livelihoods. We will be able to transform communities, contributing to a future society that is economically prosperous, socially equitable, and environmentally sustainable.