Three Suggestions to Plan for Infrastructure Projects
Italy can't afford to build expensive roads, a fact which translates into off-putting tolls for drivers. The new highway linking Brescia to Bergamo and Milano (BreBeMi) is a case in point. It was opened a few months ago but has yet to see significant traffic of vehicles.
The concession for the infrastructure in project finance without public funds was assigned in 2003, on the basis on an investment forecasted to be €772 million. The high cost of forced purchases, the construction of new sections of roads around junctions to appease local administrators, and the need to coordinate the investment with the railway line parallel to the highway, have led to total civil engineering costs of €1.61 billion, to which VAT and financial charges to compensate different classes of investors had to be added, thus arriving at the grand total of €2.427 billion for the whole investment.
In order to cover these costs, the average toll charged was set at 15.8 eurocents per kilometer, compared to the 7 eurocents charged by the parallel and competing A4 highway, in order to reap a total value of €1.205 billion at the end of the 20-year concession, i.e. 75% of the net investment in infrastructure. The result of these choices was a flow of traffic well below expectations and the likely need for major public outlays twenty years down the road. It's clear there needs to be a quantum leap in planning for infrastructure.
A combination of various elements, such as subpar growth in the 2001-2007 periodo, a 9% GDP decrease in the 2007-2013 period, especially due to the -24.5% drop in manufacturing, have radically changed transportation habits in Italy, with a general contraction of the industry and a weakening of competitiveness on the international scale, although with significant territorial variations (the south suffers the most).
The new economic framework and fiscal austerity force operators to take a new approach in the selection, financing and management of new transport infrastructures. Three are the objectives that need to be pursued.
Firstly, planning and hierarchy of infrastructural needs must be made through quantitative, cross-industry assessments that compare various scenarios and the costs and benefits for all environmental and social stakeholders, so that the analysis of the strategic context is sound.
Also the decision-making process about road tracks and technology must evaluate in a systemic way the services offered by the infrastructure being built, so to add complementary revenues, as well as study a phase-in model by which costs grow in line with the needs of total demand. Lastly, the direct and indirect beneficiaries must be well understood so that they can be involved in the valorization of the public work, also through innovations in forms of financing. But the assessment of transport infrastructure should not be the exclusive province of traffic engineers and landscape architects, economists must also have a key role, so to ensure that the issue of performance against objectives, and of efficiency compared with available resources, are actually taken into account.