As more and more cities take action to implement a range of initiatives and projects in their Resilience Strategies, it makes sense to consider how major disruptive trends are shaping infrastructure delivery and impacting resilience investment choices. Technology is reshaping the infrastructure landscape in multiple ways, changing both asset class attractiveness and the way things are built.
However, all of this technology disruption is taking place against the backdrop of a persistent, massive infrastructure investment gap exacerbated by increasingly stressed public balance sheets. The good news is that the $120 trillion in assets under management by private investors could help plug this gap—but right now this isn’t happening. Currently, there is a lack of bankable projects that are attractive enough to private investors.
So what can be done and what does this mean for cities? Public funding alone clearly will not suffice for their infrastructure investment needs, and cities are considering new approaches to attracting private capital. One compelling way forward is to foster well-structured project development processes and internal capabilities designed to improve project bankability and attract the investment dollars they need. Bridging the funding gap requires action from both the private and public sectors: the regulatory environment and public sector capabilities to monitor and manage infrastructure delivery are often keys to success.
There are several levers for improvement that cities can consider in order to make projects more bankable. Proven actions include:
- Market creation: for example, by adopting P3 legislation and pursuing a regulatory environment that helps attract private capital, building a track record through small pilot projects, benchmarking against peers and addressing shortcomings, and fostering a vibrant secondary market for infrastructure assets.
- Enabling business planning, for example, by providing a transparent roadmap of key regulatory and permitting requirements, adopting widely used revenue model components and addressing financial risks, and assembling a complementary advisory team.
- Addressing technical and project delivery by implementing standardized frameworks for contracting, adopting performance-based procurement rather than forcing design and technology choices, and adopting flexible local requirements.
- Enhancing stakeholder engagement through implementing a plan for targeting, sequencing, and delivering outreach to key stakeholders (investors, development partners, community representatives) so as to reduce overall political risk.
To this end cities can consider a number of factors to make projects more bankable, across six dimensions: the PPP environment, technology risks, commercial viability, the regulatory environment, construction risks, and political and currency risk.
Examples of best practices can help highlight what can work when cities innovate and invest in building transparent pipelines of bankable projects, as some of the projects featured at The 2019 Urban Resilience Summit underscored. Two such projects showcased during the Urban Infrastructure Marketplace. The High Capacity Metro Transport Route in Pune, India and Resilient Kindergartens projects in Tbilisi, Georgia demonstrate the power of early stage support in advancing infrastructure projects along the project cycle.
Sustainable projects will add trillions to the world’s infrastructure costs as cities seek to ensure that transport and energy networks, waste and water facilities will be climate resilient, socially inclusive, and contribute to reducing carbon emissions. Success is reliant on attracting private-sector investors to find new ways to bridge the investment gap, which in turn will depend on concerted action from the public, private sector, and multilateral development agencies. We were excited to be a part of this dialogue as the 2019 Summit’s Innovator Partner, and are optimistic about the ideas exchanged that could shape the future of sustainable, resilient infrastructure in cities.
To learn more, check out Bridging infrastructure gaps: Has the world made progress?
 63 percent of the infrastructure need will be in emerging economies: Jonathan Woetzel, Nicklas Garemo, Jan Mischke, Priyanka Kamra, and Robert Palter, Bridging infrastructure gaps: Has the world made progress? MGI, October 2017, McKinsey.com.
 Dominic Barton, Bridging the infrastructure gap, Project Syndicate/MGI, June 14, 2016, McKinsey.com.