The OECD Recommendation on the Governance of Infrastructure highlights several good practices, including ensuring decision making is informed by the need for value for money, ensuring the affordability of new infrastructures, disclosing total costs over the entire asset life cycle, and providing a transparent, independent and impartial expert assessment to test project costing, fiscal sustainability, time planning, risk management and governance.
In terms of value for money, each government judges what the optimal combination of quantity, quality, features and price should be over an infrastructure project’s lifetime (OECD, 2019). OECD countries have made significant progress in assessing value for money in recent years. In 2020, 21 of 30 OECD countries surveyed (70%) reported conducting assessments to ensure value for money from infrastructure projects delivered via public-private partnerships (PPPs) and 18 of 30 (or 60%) for other types of infrastructure projects, compared to only 14 out of 26 of OECD countries (54%) for PPPs and for others each in 2018 (Table 11.3).
In 2020, 23 out of 30 OECD countries (77%) reported that their ministries of finance played a gatekeeping role – meaning that if approval from the ministry is not obtained, the project cannot proceed – compared to 17 out of 26 (65%) in 2018 (Table 11.3). The criteria used by finance ministries for the approval of infrastructure projects generally focus on projects’ affordability for both the national budget and users, as well as their value for money.
When ensuring value for money and quality assurance of large infrastructure projects, it is key for the decision-making process to be impartial and avoid political capture. Independent experts can monitor the selection and prioritisation of projects, ensuring a clear and transparent decision-making process that is done in line with a straightforward set of criteria. Currently, only 20 out of 30 (67%) of OECD countries reported conducting regular independent and impartial expert assessments (Table 11.3).
Around 90% of OECD countries estimate construction (28 out of 30) and operation costs (27 out of 30) when assessing the affordability of new infrastructure projects. However, the assessment of maintenance (25 countries, or 83%), adaptation (17, or 57%) and decommissioning (13, or 43%) costs are less frequently included (Figure 11.4). Especially in a COVID-19 context, more efforts are needed to adopt mechanisms that effectively consider the affordability of new projects at all stages of the asset’s life cycle.
