The current world population is at 8 billion as of August 2021. To place this in perspective we have grown by just over 1 billion in the last 10 years.
Population growth needs more infrastructure investment, although at what cost when rail projects for example, go over budget by an average of 45%, and their demand is overestimated by 51%. It is also estimated that bridges and tunnels incur an average of 35% cost overrun. For roads it is 20%.
Repeatedly we see these mega projects run over budget and over time, although no nobody seems all that surprised. The key question is: if it all goes so badly, the prospect of bankruptcy looms for companies delivering these projects will place pressure on regulators to permit unscheduled price increases. Or governments will inject taxpayers’ money into these projects.
The combination means customers and taxpayers bear more risk than it would appear from the regulations governing these infrastructure projects.
Any big project carries a big opportunity for failure. But regularly going over time and over budget implies that there are systematic errors at work. That means these problems can be identified and addressed, though technology system capturing this data and provide insight before risks and cost blowouts occur.
Governments, investors, and owners need to take an active role in putting together disciplined project teams. It is not enough for them to have a vague theoretical overview of how the project should be delivered and how it will be managed. They need to create a detailed, practical approach to deal with such likely eventualities as managing quality risks, escalating contractor’s costs, and replacing old technology systems. An experienced project manager is not enough. Players must assemble a team that has all the requisite skills, including legal and technical expertise, contract management, project reporting, regulatory approval, stakeholder management, and government and community relations.
The world needs to keep building infrastructure projects to deliver the economic and social goods that billions of people lack and to create the economic growth that will pay for them. But if we continue to deliver bad projects, this has consequences that go well beyond a specific road, tunnel, or rail system.
It is estimated globally infrastructure investment spend will need to be at $94 trillion between now to 2040, this is 19% higher than would be delivered under the current trends.
The time is now to get it right, or at least better, which is good for everyone.
To learn more about how Mastt can turn your capital and construction portfolio teams into an efficient, effective, data-driven organisation please feel free to contact us at mastt.com or email at firstname.lastname@example.org
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