A new report from RICS recommends boosting levels of private sector investment into private public partnerships (PPP) to deliver infrastructure in a more efficient and effective manner.
The global study, which focused on infrastructure as an asset class, found PPPs to be the most credible and recognisable source able to make up the investment shortfall, based on the greater value for money they can offer.
The report also found a need for a more systematic approach to infrastructure provision from government, which would see a sustained commitment to infrastructure investment through ‘ring fencing’ of investment levels as a percentage of GDP.
As a result of the findings, RICS is recommending resources be allocated to educate investors and stakeholders on the benefits of PPP. In addition, RICS is calling for a robust and credible data framework for PPP projects through the development of a performance index.
Other proposals contained within the report include a requirement to improve the use of existing infrastructure, as there is currently an inherent bias towards new build projects. In addition, government should encourage the adoption of new technologies to facilitate the more efficient management of infrastructure.
The report found some encouraging progress in the UK to date. The government remains committed to partnership based procurement and has recognised the need for reform in order to bolster value for money. However, there remains a need for greater awareness amongst the investment community on the opportunities and risks associated with infrastructure investment.
Dr Clare Eriksson, RICS director of global research and policy, says: “It is vital that investment in infrastructure is increased to ensure the UK remains competitive and continues to attract multi-national corporations. This research supports PPP as a viable solution to the UK’s current infrastructure investment deficit and we at RICS call for the government to raise awareness of the opportunities infrastructure presents as an asset class.”
The PPP model has been increasingly advocated in response to the infrastructure investment challenge since the global financial crisis. Worldwide, there have been 1,376 PPP projects across 40 countries, with a combined capital value of circa USD485bn from 2005 to 2012.
Evidence was collated to examine the global infrastructure challenge from five markets: Australia, Canada, India, the UK and US.