Future-Focused Investments to Support a Sustainable Future

17 February 2023 Alex Kats Author avatar

Providing a National Standard for Best-Practice Infrastructure Development and Assessment


Assessing potential infrastructure projects

A country the size of Australia, with cities and towns across a wide landscape, has tremendous infrastructure, but to continue to thrive, it constantly requires new projects or upgrades to existing ones. Infrastructure Australia (IA), which sits alongside government, was founded in 2008, and according to David Tucker, the Chief of Project Advisory and Evaluation, it has “a mandate to provide evidence-based analysis and advice on reform and investment priorities to help deliver better infrastructure outcomes for all Australians.” IA was the first such body, but there are now “equivalents in every state and territory,” and they often work together.

The main role of IA is to assess and analyse potential projects through their ‘Assessment Framework’. This is a “structured and objective approach that we use to assess infrastructure project proposals, and it is applicable to all sectors and geographies.” Its main feature is that it “ensure a rigorous planning and analysis process.” It has consistent and current guidelines, but to keep it constantly up-to-date, it is refreshed regularly, with the most recent update coming in July 2021. This “reflects the latest thinking and best practice, and now applies to submissions we assess at every stage of the project development cycle.” Potential projects get referred to IA if there is “more than $250 million in Australian government funding committed, or for inclusion on the Infrastructure Priority List.”

This list is crucial to the operations of IA. It is a “national, independently verified and evidence-based list of investment opportunities for governments of all levels to consider.” Its real purpose is for “governments and the community to have confidence that all proposals on the list have clearly demonstrated their significance to the nation and will bring value to our communities.” As such, the 2021 list “identified a $59 billion project pipeline,” whilst as of the end of May, already on the 2022 list, there are “149 proposals representing infrastructure opportunities across every state and territory.”


Ensuring up-to-date guidelines

For a project to make it on the list and to be assessed, it needs to move through “a series of progressive stages with appropriate analysis and evidence.” This rigorous process means that “government and the community can have confidence in our infrastructure choices.” Each stage is underpinned by policies and guidelines “making it easy for our teams to use and navigate.” The entire process was created though collaboration with the Department of Infrastructure and the various state bodies and thus “aligns to national, state and territory guidelines.” Within the process, things like stakeholder engagement, sustainability, resilience, risk and an economic appraisal are also included. “We’ve updated our cost-benefit analysis methodology and revised some of our assessment criteria.” This means that each proposal is considered “beyond the BCR (benefit-cost ratio) because the BCR is not the sole determinant of project suitability or value.” As such “we’re committed to updating the guidelines to ensure that they remain fit-for-purpose, and that they continue to reflect best practice advice.”

There are also “three overarching criteria that we apply to every proposal at every stage of the process:”

  • Strategic fit – “Is there a strong case for action? Does the proposal align to the achievement of stated goals, and is there a clear fit with the community?”
  • Societal impact – “Is there a social, economic and environmental value of the proposal and its contribution to community?” This includes “sustainability and resilience to ensure that it is clearly demonstrated by evidence-based analysis.”
  • Deliverability – This is about “assessing whether the proposal is capable of being delivered successfully, whether risks have been appropriately identified and sufficiently mitigated, and whether there is a plan in place to realise the benefits.”

“Put simply, each proposal is assessed to see how it seeks to address a problem, whether the proposal is the best response for that problem, and how any risks are to be managed.”

The framework does this with “transparency and logic, and considers non-economic benefits as well,” including quality of life and other factors. To be successful, each proposal must “provide a clear narrative that justifies an investment and the objectives that are prioritised by government and communities.”


Sustainability is a crucial factor for infrastructure projects

One of the reasons why there continues to be a great influx of proposals and projects is because of the rise in natural and other disasters. Future-proofing infrastructure is a big factor in project development these days, especially because “the annual cost of natural disasters in Australia is projected to rise from $18.2 billion this year to $39.3 billion by 2050.”[1] This is particularly concerning because the infrastructure sector as a whole “accounts for about 70% of Australia’s emissions.”[2] With this in mind, “sustainability and resilience are key focus areas for Infrastructure Australia,” and this was a major theme “in the 2021 Australian Infrastructure Plan that we released last September.”[3] IA is particularly concerned about this issue because the disasters and chaos of the last few years are “a warning sign for the uncertainty and risk that lie ahead.” Though infrastructure is only one factor in the mitigation, it is “required to ensure that Australia’s assets, network systems, communities and places are resilient.” As such, the plan provides guidance on sustainable materials and practices, and “considers the tension between environmental and cultural values versus economic and social drivers, which will vary depending on location.”

With this plan in mind, the refresh of the Assessment Framework included these considerations as well, and therefore any proposal needs to demonstrate sustainability and resilience as well. Overall, with sustainability included, “we do not attempt to compare different proposals against each other. Instead, we use the framework as a guide to assess the need and the value of each proposal on its own merits.” To ensure that Australia has the infrastructure it needs for today and for the future, “we take a holistic approach to assessment that looks beyond the economic impact.” That is the only way that Australia can have “a sustainable future” with the infrastructure that it needs.

 

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