It’s worth noting some other details from the KPMG survey. The greatest public sector impediments to more investment in infrastructure identified by respondents, in declining order, are a politicization of infrastructure project priorities, followed by frequent changes in public policy, pursuit of the wrong public policies, lack of a sense of urgency, corruption or misuse of funds for infrastructure (seen most notably in developing countries), and lack of skills and public sector institutional capacity.

The best way to improve the public sector’s current approach to infrastructure is to base transport funding, investment, management, and operating decisions and policies on how they will improve overall system performance. It is also necessary to ensure consideration of a wide array of alternatives in transportation planning, programming, and operations that might improve performance. This means considering system management and demand management and pricing strategies, not just investment in capacity expansion; considering externality costs and benefits more fully in decision-making; and viewing transportation systems as shapers of land development, travel demand, and economic development. It means considering how the private sector can provide innovative solutions, with performance-based contracting tying rewards to achievement of project and system goals. All of these strategies should contribute to smarter administration of environmental laws that protect important resources and community values, with better coordination and less duplication between planning and project reviews. It means developing direct funding partnerships between the federal government and cities, ports, and other transportation infrastructure owners and operators, focused on competitive funding initiatives that support national goals.

The next transportation authorization should articulate clearer national goals for the federal transportation program, adapting from the statutory planning objectives in SAFETEA-LU: to improve mobility while supporting economic development and minimizing fuel use and emissions. US DOT should issue near-term guidance on how these current SAFETEA-LU objectives might be better considered in transportation plan and program approvals, as a prelude to new legislation. SAFETEA-LU requires that these objectives be achieved as part of the planning process, but this provision has not been implemented or interpreted through DOT guidance or regulations.

Current planning and performance monitoring systems fall short of what’s needed to evaluate impacts on important indicators, such as vehicle miles traveled and transportation greenhouse gas emissions per person. Any extension of federal transportation legislation should boost support for data collection and institutional capacity to measure and forecast system performance impacts of alternative transportation plans, programs, and major project options.

Competitive funding programs, such as the Congestion Pricing Program, should be retained and expanded, perhaps as part of a larger Metropolitan Mobility Program. Such programs, like the Urban Partnerships Program, should focus on system, not just project level performance. Modal funding silos need to be dismantled over time, recognizing that fundamental change will take more than one authorization cycle.

The KPMG survey respondents believe their greatest sustainability-related competitive advantage comes from the ability to retrofit existing infrastructure to make it more efficient. This needs to be the focus for both the public and private sector in transportation. Government will do a more effective job in delivering infrastructure projects when it delivers the right kinds of investments that meet broad societal, environmental, and economic development goals, rather than narrow mobility or political objectives. That will require a smarter, leaner transportation bureaucracy focused on effective planning, public engagement, performance monitoring, and contracting, working in partnership with environmental resource agencies, economic development and housing agencies, civil society, and the private sector. That will deliver more green jobs, a cleaner, lower-carbon environment, and more livable communities, within the resource base available to the transportation sector. Indeed, with such reforms that deliver value and achieve broad goals, public support for transportation user fees and taxes that support transportation will grow, ensuring more robust funding for needed investment in the sector.

Frank Rapoport, Chair of the Global Infrastructure and Public-Private Partnerships practice at McKenna Long & Aldridge LLP, sent us the following:

Earlier this year, the ASCE adjusted their analysis of America’s crumbling infrastructure to the tune of $2.2 trillion. As the 2010 US election cycle approaches, we’re hearing an increasing number of public officials join the timely debate on public-private partnerships (P3). Between now and Fall 2010, over 460 US Congressional, 37 gubernatorial and hundreds of municipal (including New York City, Houston, Detroit, Atlanta and Seattle) elections will occur, ushering in a new class of politicians. According to a national survey by Halcrow/McGraw Hill released earlier this year, 61% of public officials have no experience with P3s!

Coupled with the concern for “government effectiveness” highlighted in the KPMG-EIU survey, I believe now is the time to form a P3 center of excellence. As a result, I have joined the Council of Project Finance Advisors (CPFA) Working Group launched by former Governor Howard Dean and former Mayor Stephen Goldsmith. The CPFA Working Group is grass roots campaign that would reach out to public and private sector leaders who have influence over P3 opportunities in the US. The goal is to advocate for a P3 center of excellence and best practices and would raise the awareness for various P3 business models. The working group would determine if the CPFA would be most effective under a federal agency or as a non-governmental organization (NGO).

The CPFA Working Group has invited leaders from companies seeking to leverage and maximize P3 opportunities in the US covering the following industries: transportation, finance, energy, water/wastewater, education, environment, utilities, real estate, information technology and health care. Members will develop, manage and drive a public policy strategy that that seeks to improve trust in the P3 sector. P3s are an essential component in addressing our national infrastructure needs, and transparency and education for both the public and private sectors are critical in facilitating a solution.

Not since the inception of the interstate system have the country’s growing transportation needs outweighed the available funding across the states. This challenge has created change among many entities in terms of their increasing reliance on consultants to deliver programs; consolidating and prioritizing programs; bringing in private dollars through P3s and using innovative techniques, such as design-build to deliver projects.

Essentially, given the revenue and staff available, departments of transportation and transportation owners across the country cannot afford to maintain their existing transportation system let alone build new capacity within current funding levels. New and innovative ways to finance, design, build, operate and maintain transportation facilities must be part of the solution. But as we turn toward P3s and design-build, we need to proceed in a very deliberate, systematic way with an overall vision of the future transportation system. The focus of P3s should be to reduce congestion and manage traffic demand not just to lease existing facilities for quick cash. And design-build should be considered for those complex projects where time and money can be saved with minimal disruption to quality of life.

Although both are innovative methods, it is important to keep in mind that some of these techniques are not new, but they can be effective. The United Sates was built by P3s.

Given funding shortages, states are finding their own solutions and seeking flexibility in how they contract so they can deliver projects. One size does not fit all. For some states, changing their project delivery methods through design-build has proved to be a way to move projects forward. For other states, P3s have provided the funds needed to upgrade facilities and in some cases created new, more technologically advanced ones. The fact remains – we need to find ways to increase our resources in order to maximize the way we deliver transportation projects now and in the future.

The stimulus confronted state and local decision-makers with both the opportunity and challenge to deliver critical "shovel ready" infrastructure projects without the benefit of reform or flexibility in meeting federal requirements and regulations. We were challenged with a sense of urgency to rebuild the economy and create new jobs, but constrained by a "business-as-usual" regulatory framework. Somehow, we have managed to succeed in accelerating things so far, and our experience suggests several answers to this week’s question. The Port of Los Angeles, with support from our Mayor and City Council, along with our regional and state partners forged an unprecedented collaborative process and secured approval of an important road project and obligated the ARRA funding prior to the hyper-expedited deadline. The Mayor's office convened weekly meetings with all relevant departments to get approvals going. When such meetings to expedite approvals were originally proposed, the comment was, “You are starting to sound like the private sector.” We also had staff-to-staff engagement daily, as well as executive-executive engagement, including outreach to relevant private entities. This happened at the same time most agencies involved were having to cut back on staff time, implementing lay-offs and furloughs. l’d say there are three major lessons learned from this experience: 1) With funding as the carrot and deadlines as the stick, things can happen. 2) Nevertheless, we came close to being tripped up several times by the burdensome, multi-agency regulatory framework from the federal to local levels of governments, which is still in need of reform. 3) Finally, we could have moved even quicker if we could have received funding directly, and would have moved a lot slower if the funding had first been granted to the state and required subsequent regional and local disbursement processes. All three of these lessons should be incorporated into the development of the surface transportation reauthorization, as well as any National Infrastructure Bank, etc.

In market economies infrastructure projects are delivered and maintained by private suppliers, not by governments. The private sector has provided road, rail and port infrastructure projects in the US since its establishment, and can do so now if allowed to.

The United Kingdom’s 1994 “Private Finance Initiative” (PFI) illustrates how private providers, under government guidance, can bid to supply, maintain and operate infrastructure.

The government specified its requirements in detail and invited private consortia to bid for contracts to design, finance, build and operate new roads or road improvements. The bids were for the payment, in pennies per vehicle-mile, to be made to the winning consortium over a long period, typically thirty years. These payments were known as “shadow tolls” because they were paid not by the actual road users but, on the basis of traffic counts, by the government, which became a buyer of road services on behalf of road users.

Eight “shadow toll” projects were successfully delivered in the 1990s. Such contracts seem eminently suitable for the US, even under the present systems of paying for road use. Contracts can be of any size and duration, for different kinds of roads, with the private providers bearing all the construction and traffic risks.

Our nation’s highway system is in great need of expansion and repair. Implementing a national approach that addresses the nation’s worst traffic bottlenecks and improves the flow of freight will have the greatest benefit for taxpayers. As proposed in the House Surface Transportation Authorization Act (STAA), a national strategic plan that defines the federal role in meeting transportation needs will improve delivery of infrastructure projects by primarily investing in those of national importance.

The federal government should start with National Highway System’s worst traffic bottlenecks. The Texas Transportation Institute's 2009 Urban Mobility Report indicates that congestion creates a $78 billion annual drain on the U.S. economy in the form of 4.2 billion lost hours and 2.9 billion gallons of wasted fuel. The Federal Highway Administration fears that these problems will worsen as the economy grows and generates more demand for freight shipments.

Also, federal government should tie infrastructure investment to system performance by requiring recipients of federal funds to meet performance standards related to safety, infrastructure condition, congestion reduction and emissions. Moreover, infrastructure projects must recognize the critical role of freight transportation in meeting the nation's economic needs. Specific proposals that establish a new core Freight Improvement Program will dedicate money to the National Highway System (NHS) -- which carries 75 percent of truck traffic -- and other highways designated by states as important to meeting freight mobility needs.

In addition, the current highway project approval process is too cumbersome, and must be streamlined. Federal requirements which increase bureaucratic burdens should be avoided. The current Congress is considering adding another layer of bureaucracy to transportation planning requirements by requiring EPA approval of transportation plans. This will slow the process down considerably, and is unlikely to produce significant environmental benefits.

Regarding the appropriate role for the private sector, without complete transparency, taxpayers do not know what to expect within Public-Private Partnership deals. The United States cannot maintain a national highway network if key segments are leased to the highest bidder. Leasing existing roadways allows states to only postpone, not solve, their budget problems. The Indiana toll road’s 75-year lease finances the state’s transportation plans for only the first 10 years. After that the state will have to deal with the same budget problems, but without revenue from the toll road.

Private financing or operational control of transportation infrastructure does not guarantee greater efficiencies or cost-effectiveness. In fact, private financing of infrastructure is normally more expensive than public financing. Furthermore, the private sector has to meet the same environmental, planning and other bureaucratic requirements as a public agency.

I agree with the 47% of respondents who indicated that excessive bureaucracy is a major problem for efficient project delivery.

SAFETEA-LU's Title VI was the first in-depth legislative effort to reduce the bureaucratic delay associated with project planning for highways and transit. Without reducing substantive environmental protections and public participation requirements, the bill required more streamlined procedures, schedules, and deadlines and gave States greater responsibilities for project approval in certain cases.

Nevertheless, the planning and project approval processes for federally-funded projects remains extremely comprehensive -- as well as onerous and time-consuming. Congress should review the many regulatory hurdles that impede project delivery and eliminate or streamline those that are inefficient, ineffective, or innappropriate. As a pilot, Congress might want to consider lifting some regulatory requirements that slow their designated High-Priority Projects from receiving federal approvals.

And most importantly, Congress should avoid imposing any new planning regulations that delays future projects.

Unfortunately, the Waxman-Markey energy bill inappropriately includes new planning regulations that are opposed by the American Highway Users Alliance and others. These new regulations were not vetted in committee hearings and were an unwelcome surprise to most transportation advocates. We hope that the final language in energy and/or surface transportation bills avoids the imposition of new regulations that slow highway and transit projects from being approved.

First, most private sector people have a low but undeserved view of public sector competence. I spent 15 years in public sector, 35 in private and found that competence and dedication comparable, the only difference being that public sector operates in a fishbowl while private companies can more easily hide their mistakes.

For more effective delivery of public investment dollars, we need adequate and predictable funding and willingness to raise taxes for essential public functions.We need to establish deadlines for actions by public agencies and opposing parties, we need better measures to predict project effectiveness and we need a federal capital budget or infastructure bank to reflect the multi-year payback of capital investment.

For airports, there is one simple answer to the question “How can government do a more effective job of delivering infrastructure projects”? Increase the Passenger Facility Charge (PFC) as proposed in the House FAA Reauthorization Bill (HR 915). This user fee, originally authorized by Congress in 1990, is tied directly to local airport-related projects that 1) preserve or enhance safety, security and capacity of the national air transportation system, 2) reduce noise, or 3) attract new service.

The PFC program is a good example of government setting the rules and then getting out of the way to let local leaders do what is necessary to meet the needs of the traveling public. The process requires an airport to demonstrate to the FAA that the project is needed, complete a thorough cost-benefit analysis, and consult with the public and the airlines. But the system works- with 95% of the applications submitted to FAA for approval without opposition.

Upgrading and maintaining our nation’s infrastructure is critical to the economy of the United States. Airports are an important part of that infrastructure and play a vital role in providing efficient movement of passengers and cargo both domestically and internationally. Plus airports serve as economic engines for local communities, with a large multiplier affect on job creation.

The ACI-NA 2009 Capital Needs study indicates that airports have a total of $94.4 in essential projects that need to be completed between now and 2013. With federal funding at less than $4 billion a year, the PFC provides an efficient and effective way to ensure airports have the capital necessary to devote to much-needed infrastructure improvements.

As the backlog of unfunded infrastructure projects grows, there is a greater need for both the public and private sectors to consider ways to improve the infrastructure delivery process. Given limited sources of funding, coupled with enormous infrastructure needs for both maintenance and new capacity projects, the effectiveness of the delivery process will potentially have a significant impact on America’s infrastructure.

Some of the ways to begin improving the infrastructure delivery process at all levels of government might include:

• Broadening the range of alternatives available for the delivery of infrastructure assets by exploring different financing models, including Public-Private Partnerships (PPPs), which have been used successfully by governments around the globe for many years. This may help to reduce the reliance on government grants and municipal bonds by bringing in new sources of funding from the private sector.

• Applying performance-based decision-making more consistently to help prioritize project delivery and funding, using criteria such as total lifecycle costs, congestion relief, economic benefits and environmental considerations. Utilizing such criteria can help ensure that a long-term planning horizon is considered alongside short-term maintenance needs.

• Enhancing transparency and accountability, which can benefit the public who rely on the government to protect their interests and demonstrate results, as well as the private sector participants who require a better understanding of the governmental decision-making process.

I am optimistic that we may begin to see some of these changes implemented in the near future. For instance, some states have begun to create government oversight bodies to establish standard procedures for evaluating, selecting and funding infrastructure projects.

The establishment of New York State’s State Asset Maximization Commission, which has identified infrastructure projects that could be developed with private partners, is an example of government attempting to implement such changes. The Commission has made efforts to involve stakeholders from the public and private sectors in the process, and the private sector has shown a tremendous level of interest in potential partnerships.

Delivering infrastructure projects is a time consuming process that requires careful consideration from the government in order to protect the public interest. Nevertheless, there are ways to enhance the effectiveness of the process. Now more than ever, governments need to embrace new approaches to these long-term challenges, recognizing that infrastructure investments will yield benefits for generations to come.