Germany's infrastructure policy needs new instruments and processes to counteract the lack of efficiency in planning and execution.
Berlin, 8 September 2016 – The results of the Hertie School study Governance of Infrastructure: International Best Practices and Innovations show that infrastructure policy in Germany needs new instruments and processes to counteract the lack of efficiency in the planning and execution of infrastructure projects. New financing opportunities are needed to cover the growing need for investment in this sector. The study found possible solutions by examining best practice cases from other countries such as special systems or long-term national infrastructural plans were successfully implemented. Another example, the Early Contractor Involvement (ECI) tool could improve the tendering process in Germany and the implementation of structured dialogue instruments could boost civic participation. Furthermore, the study found that promising financing options include establishing a ‘citizens’ fund’ (Bürgerfonds) and infrastructure platforms for potential investors.
“There have been far too few concrete steps taken to improve the governance and financing of infrastructure, even though there is an urgent need for action. International best practices could provide us with a valuable thrust forward,” said authors of the study Helmut Anheier, President of the Hertie School, Marcel Fratzscher, President of DIW Berlin and Bernhard Lorentz, a partner at Ernst & Young.
From the authors’ point of view, the following instruments and methods are particularly promising:
- National strategies or policy frameworks that are intersectoral and have long-term influence – and thus extend beyond the limits of short-term political cycles – have resulted in the prioritisation of reliable and individually tailored projects in countries like Great Britain, New Zealand and the Netherlands.
- In many other countries, independent institutions provide support during the execution of these plans, either by serving an advisory function or assisting coordination, or even by having authority to implement plans. Best Practice examples can be found in Australia and Austria. The report recommended a two-tiered approach for Germany. This includes an advisory institution at the national level to cater to technical and analytical matters, as well as implementation-oriented institutions which improve the efficiency of the infrastructure development process within individual infrastructure sectors or at the federal-state level.
- Many problems that emerge later on during the development phase already began, in fact, in the tendering process. Many countries use systematic ECI systems to improve the communication between contracting authorities and potential contractors. Others write due diligence reviews before awarding the contract, to assess the economic feasibility of individual tenders. The mandatory implementation of both instruments should be evaluated.
- Infrastructure projects are becoming increasingly attractive to institutional investors, although it is often extremely difficult for them to acquire the necessary information. An infrastructure platform which identifies potential projects and provides relevant expertise could serve as an intermediary body. These instruments have been successfully employed in Great Britain and Australia.
- ‘Citizen’s funds’ (Bürgerfonds) could enable private investors to invest in infrastructure. A fund that has shares in construction or in operating companies would, given its risk-sharing function and its long-term nature, provide attractive investment opportunities in Germany.
A summary of the report Governance of Infrastructure: International Best Practices and Innovations can be downloaded here: http://bit.ly/Governance_Infrastructure. You can also access the full version in German here: http://bit.ly/Governance_Infrastrukturprojekten. The report was made possible by the friendly support of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft.
A presentation and discussion between the authors and the Chairman of the Verkehrsministerkonferenz, Christian Pegel (Mecklenburg-Western Pomerania), and State Secretary Matthias Machnig (BMWi) takes place on 8 September 2016, 12:30-1:30pm in the EY offices in Berlin, Friedrichstraße 140. Representatives of the press are invited to register for the event at pressoffice(at)hertie-school.org.