Aligning infrastructure development strategy to meet current public needs

Since 1933, American public construction has supposedly been "locked" into the sequential design, then build procurement model for infrastructure development. This approach, which is entirely dependent on declining cash appropriations by government, has become increasingly ineffective in meeting public infrastructure needs.(DIAGRAM, TABLE OR GRAPHIC OMITTED...PLEASE SEE DAI)

Procurement methods used in modern Hong Kong and in the United States between 1780 and 1933 are analyzed systematically using two axes to describe Government's two fundamental strategies in the development of infrastructure. The first strategy is either to "push" projects "directly" through federally funded contracts, or to "pull" projects in the private sector through "indirect" means such as incentives, subsidies, and mandates. The second strategy is either to "segment" each step in the procurement process--planning, design, construction, operation and maintenance--from one another or to combine all these steps into a single "system" procurement. Arrayed on two axes, these strategies fall in one of four quadrants.

In the broad historical context of American infrastructure development, the current sequential design-then-build process in Quadrant IV is the aberrant procurement method, not the Build-Operate-Transfer and Design-Build-Operate methods which are described by Quadrants II and I, respectively. Advantages of infrastructure development in Quadrants I and II include independent, multiple verifications of project feasibility, and the opportunity for governments to select best value from different combinations of quality, price, and time of delivery. Other significant advantages include the use and application of state of the art technology to complex infrastructure projects, substantial savings in time, typical savings in capital costs, reduced need for large temporary additions to public engineering staffs, private financing of capital costs, significant leveraging of public financial contributions to projects, predictable future public expenditures for maintenance and operation, improved public fiscal management of infrastructure development, reduced concern over conflicts of interest, and improved management of project risk.

The United States should join the rest of the world in moving to capture the advantages of Quadrants I and II by adopting a mixture of procurement strategies which include, rather than exclude these methods. Recommendations are made for doing so. (Copies available exclusively from MIT Libraries, Rm. 14-0551. Cambridge, MA 02139-4307. Ph. 617-253-5668; Fax 617-253-1690.)