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Blog, March 2015: How Public-Private Partnerships Create Solutions to Infrastructure Issues

3/12/2015 4:00:00 AM

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How a combination of private sector resources and government involvement can help our country improve our crumbling infrastructure.

Public-private partnerships (PPPs) combine the best of both worlds to provide public value by delivering large infrastructure projects. They merge strict government oversight with untapped private sector resources.

Infrastructure plays a fundamental role in maintaining national growth and economic health. The nonprofit public policy organization, The Brooking Institution, said recently that the infrastructure in the United States just hasn’t received an adequate level of investment in years.

The state and local governments' tight budgets create a lack of resources for infrastructure improvement across a range of public capital investments from highway infrastructure to waste water treatment to schools – thus hampering future growth.

There’s a paramount need for significant infrastructure spending. According to a Boston Consulting Group analysis (which is partly based on an assessment by the Organisation for Economic Co-operation and Development), “the demand for investment in areas such as energy, transportation, water, waste, and social infrastructure (such as hospitals and schools) is expected to hit an average of $4 trillion annually until 2030.”

Government leaders are exploring new ways to finance investments and operations that will create future growth. Various contributing factors that are forcing them to do this include the challenging fiscal environment, greater project complexity and political dysfunction.

In 2011, the Hamilton Project set out to argue the philosophy that PPPs will revamp U.S. infrastructure. According to the paper’s writers, which included Yale University’s Eduardo Engel, governments across the globe are now turning to PPPs as a way to leverage private sector resources to augment or even replace scarce public investment resources. This means they are bundling construction with operations and maintenance.

Without the partnership, the tactics governments use to allocate new funding for infrastructure projects and their method of building, operating and maintaining the projects has contributed to infrastructure challenges.

“New spending often flows to less valuable new construction at the expense of funding maintenance on existing infrastructure,” said Engel and contributing writers Ronald Fischer and Alexander Galetovic.

Decreasing efficiency even more, the traditional process for building infrastructure separates the initial investment, such as building a highway. Often, there is little incentive for the contractor who builds the highway to take action to decrease future maintenance costs and operations. Thus, these inefficiencies contribute to plummeting rates of return on public capital investments.

To counter this, Geospatial Corporation combines a Public-Private Partnership business model with innovative technologies and data management while providing a program to improve efficiencies and service levels in the management of the world's critical underground pipeline infrastructure.

Under the proposed PPP model, Geospatial Corporation will collaborate with a strong financial partner or partners to map all utilities within a municipality or facility and provide that data to various clients under a long term Data Subscription Model.

Mark Smith, Geospatial’s CEO stated, “This approach to facilities management offers risk reduction, broad efficiencies, a long-term revenue stream back to the municipal, state, or federal agency and much more. It also offers value to all stages of the utility lifecycle, by making detailed subsurface 3-D information on all pipelines and conduits available in a secure web-based GIS format to utilities, engineers, contractors and planners.”

Mr. Smith went on to say, “GeoUnderground, our cloud-based, 3-D mobile mapping application, provides clients with the location of their underground infrastructure. This information provides tremendous value as they seek to make the best management decisions regarding the maintenance and expansion of their underground assets.”

The combination of innovative technology, data management, and Public-Private Partnership for underground infrastructure assets provides an economical, long-term solution to the problem of budget shortfalls and capital improvement requirements