Megaprojects are large-scale, complex ventures that typically cost $1 billion or more, take many years to develop and build, involve multiple public and private stakeholders, are transformational, and impact millions of people.
Keeping Economies and People Healthy:
The way we live and, crucially, where we live, is changing fast. This rapid urbanization presents many challenges. One of the most urgent is how to provide infrastructure solutions that can cope with the stress caused by this massive expansion of populations in concentrated spaces. Established cities must build, maintain, and upgrade extensive transport, power, water and telecommunication networks, in order to keep up with the demands of economic development and population growth. This infrastructure is necessary to continue to progress societies and improve living standards.
Avoiding the potential negative economic consequences of insufficient or failing infrastructure should therefore be considered a core business and societal concern – one that requires long-term planning and investment.
- The Challenges of Aging Urban Infrastructure
In developed economies, it can be easy to take infrastructure for granted: Something that’s always been there and always will. But that is not necessarily so, as years of underinvestment in critical areas is now catching up with countries around the world. If the lack of investment isn’t addressed, it could erode future growth, causing challenges for millions of people that could impact businesses with lost worker productivity, decrease quality of life for the general public, and even cause – or exacerbate – health issues.
Putting aside for a moment the need to renew and expand our infrastructure, even maintaining current infrastructure is a challenge.
Many major cities in the developed world are reliant on transport networks originally built decades ago, and face a continual process of maintenance and improvements.
The problems of integrating new improvements or systems with existing infrastructure are complex, and require significant investment in time, planning and money to ensure essential services can be maintained alongside major engineering works. What’s more, new projects have been hampered by constraints to public sector budgets following the financial crisis, and so finding alternative funding models may prove vital to their success.
- Connecting cities for growth
The challenge of modern transport is not just about what happens within city limits. Just as important is the need to connect major urban centers to facilitate economic activity – as well as to ensure that vital supplies can make it through to expanding urban populations and businesses.
For emerging economies, ensuring the efficiency of the supply chain is essential for continued export-based growth. With the economy slowing, being able to transport raw materials, components and products with speed is increasingly important. Just as no business can succeed if it can’t gain access to the supplies and customers it needs, neither can today’s rapidly-growing cities succeed without reliable links to sources of raw materials and markets. To maximize the potential of urban economic growth, investment in extra-urban supply chain routes, including transport links, is vital.
- The need for long-term investment
Whether it’s in funding new projects to improve transport links, mobility, connectivity and supply chain logistics, or in updating aging systems to address similar needs, significant long-term planning and investment is vital to help cities evolve to meet the needs of the future.
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Given the current relatively low cost of borrowing, public financing remains central to addressing the infrastructure shortfall, especially for higher risk projects such as high-speed rail networks, but governments around the world will increasingly need to rely more on private sector investment.
In addition to responding to the shifting needs of urbanizing populations, one of the outcomes of rapid urbanization may be to facilitate a more focused and concentrated approach to infrastructure investment. If approached well, risk and return on infrastructure investment will become better managed and boost economic growth. This in turn should stimulate further investment, creating a virtuous circle of development and improvement.
There are many challenges caused by aging infrastructure and rapid urbanization – but also much opportunity. The sheer scale of the need means that new, creative approaches to development and financing are required, which, in turn, will lead to more efficient, productive and healthier cities – and people – around the world.
