WHY IS COST NECESSARY?
Infrastructure is crucial to achieving positive economic and social development outcomes including poverty reduction. Up to 30 percent of public budgets is spend on infrastructure, across sectors such as transport, energy, water, health, education, and housing.
The design and construction of infrastructure is a major global business, with competition and partnerships between international and local firms and the global dissemination of technology and practices. The sector also receives high levels of foreign direct investment in addition to international and regional development aid. This means that the concerns about mismanagement and corruption in the sector have both local and international significance.Without significant improvements in the delivery of public infrastructure, up to US$5 trillion could be lost annually by 2025. An international effort to improve infrastructure delivery is therefore essential. Losses in public infrastructure have a negative effect on the quality, safety, and value of the built environment. Specific investigations have found extremely large losses in some cases, including projects that were paid for but never built and projects that collapsed with injury and loss of life.
Factors contributing to the problem include:
- Poor management practices
- Institutions whose processes are unclear and unaccountable
- Complexity of the infrastructure project cycle
- Diversity of organisations and individuals involved
- Capture by powerful government or business interests for organisation or personal gain.
The negative impact can be seen in many ways, including:
- Waste of public funds
- Unsuitable, defective, or dangerous construction projects
- Unfair competition and reduced entry into the market
- Undermining of the law
- Poor economic and social development outcomes.