Like a domino effect, a cost overrun in a project inevitably cuts off the municipality’s ability to carry out other projects planned to improve and provide quality services to the public. Everyone loses when the bill is too high.
Municipal infrastructures ensure the mobility of passengers and freight, supply quality drinking water, treat our waste, and offer spaces for sports, cultural and recreational activities. They are an integral part of public life and allow our communities and businesses to grow while guaranteeing a quality of life from which millions of Québec and Canadian citizens benefit. They ensure the development, competitiveness and attractiveness of dynamic, high-performance cities.
To maintain and improve the attractiveness of municipalities, new projects, often requiring major investments, are necessary. This represents a real challenge for Québec municipalities. While 60% of public infrastructure is under their responsibility, they pay 70% of the bill!
While the importance of funding sources for municipal investment projects is often addressed, people often neglect to confront the real scourge of any major infrastructure project: the risks of cost overruns. Cost and deadline overruns have significant impacts on the population, and on the municipality’s capacity to fulfill its overall investment plan.
The key to avoiding cost overruns
Before performance begins, upstream planning allows the analyses required to define and understand the needs properly, identify the possible solutions, and select the best long-term option that accounts for the infrastructure’s life cycle. This is also the stage when a complete analysis of the risks of the project envisioned becomes an input, allowing the adoption of the development mode with the potential to generate the best value added for the public funds invested by the municipality.
In the performance stage, it is imperative to deploy a robust governance structure adapted to the municipality. This means implementing mechanisms that ensure control of an infrastructure project’s parameters, namely the costs, the schedule, the scope of work, the risks and the expected quality. Unpleasant surprises are avoided by maintaining control of the project from beginning to end.
New avenues to optimize infrastructure projects
Over the past few years, some municipalities and municipal bodies have resorted successfully to alternative performance modes in order to optimize project risk management. The people responsible for projects have chosen to assign certain risks to the party most fit to manage them. These performance modes allow optimization of risk sharing between the public and private sectors.
The integration of design and construction, as well as innovation potential, are also factors to consider. A project can benefit from the participation and synergy of designers, builders and key subcontractors. For example, some alternative modes integrate design, construction and maintenance into a single contract. This is the case for public-private partnership. This allows the municipality’s partner to increase the efficiency of design and construction in order to reduce the costs. The partner has an interest in designing and building a quality infrastructure to minimize the operating and maintenance costs. The infrastructure’s total life cycle costs are thus produced.
The municipalities must find innovative ways to develop and renew their infrastructure, while meeting the public’s needs and generating maximum value for the public funds invested. The renewal of methods for the performance of public infrastructure projects offers many interesting avenues to explore.
Strategia Conseil offers you solutions
Strategia Conseil is a totally independent firm of expert advisors in infrastructure and capital projects. The firm offers companies and public bodies integrated services for analysis, governance and management of their infrastructure projects. We guide clients in the analysis, development and management of their projects. We work with them to define the projects that represent the best investment and the lowest risk to meet their business needs and their strategic and organizational objectives.
We help clients move “from strategy to action” by guiding them in the management of their projects to ensure that the projects achieve their objectives and deliver the expected benefits. By maximizing the value of their investments and facilitating the transition from strategy to action, we contribute to the projects’ success and to building tomorrow’s society sustainably.
Let’s Build the Future. Today. Together.
