The importance of infrastructure as a key driver of growth, competitiveness and social well-being is well established. Yet, a significant number of economically viable infrastructure investments are not moving forward. Short political cycles, short-term investment horizons, a lack of viable financing structures, inappropriate risk assessment frameworks and a lack of long-term vision mean that much needed investment does not flow to infrastructure and development – causing a $1 trillion annual shortfall towards a $4 trillion demand in infrastructure alone. This problem will only get worse, as infrastructure ages in developed economies, and new pipelines of projects are needed in the world's fastest growing emerging economies. Unless the private and public sectors can develop new models and approaches to collaboration, progress will not be achieved.
The System Initiative on Shaping the Future of Long Term Investing, Infrastructure and Development has been created to serve as a thought leadership incubator for a multi-stakeholder dialogue that can catalyze action and will attempt to solve this investment gap. This project is under the System Initiative on "Shaping the Long-Term Investing, Infrastructure, and Development".
Infrastructure megaprojects are extremely large scale, typically complex, investment projects by the public or private sector aimed at developing and managing public utility infrastructures. Megaprojects are a completely different breed of project in terms of aspiration, lead times, complexity and stakeholder engagement. Megaprojects have increased in size and number despite the costs, time overruns, and the fact that 2/3 of megaprojects continue to fail.Historical data shows very poor performance for megaprojects. In particular they are often over-budget and/or behind schedule and, once finished, they deliver less benefits than planned.
• Evidence suggests that even though infrastructure megaprojects generally have great potential to generate wealth and benefit society, projects often fail to materialize or, when completed, are unable to meet expected performance targets.
• Megaprojects are renowned for failing to respond to the original societal or commercial need that instigated them and for providing functionality that does not meet their stakeholders’ requirements.
• Costs and time are often underestimated, while benefits are usually overestimated due to optimism bias.
• The social and economic costs of megaprojects can be so high that they may seriously challenge societal, environmental, business, and financial sustainability. Mega projects can either “make or break a place”.
The CEO Council on Transformational megaprojects will be the catalyst for a high-level strategic dialogue for impact between policy makers, multilateral agencies and the private sector. The Forum’s unique advantage lies in a neutral platform where the private sector can lead problem solving without the discussion degenerating into lobbying. The Stewards who will guide the agenda will seek to find innovative solutions through the Council on how megaprojects can positively transform economies and societies and provide tangible proposals to maximize the Forum's influence in shaping the global agendas around infrastructure.
To capture the full positive transformational potential of megaprojects, trustees of the Global Challenge on Long-term Investing, Infrastructure & Development mandated at Annual Meeting 2016 in Davos to kick-start the CEO Council on Transformational megaprojects:
— The initiative will serve and guide the infrastructure investment stakeholders towards more positive, transformational megaprojects.
— First-year focus is to prioritize enablers and transformation metrics—and to highlight answers from multiple stakeholders.
— A broad involvement of stakeholders is planned, including related industries (e.g., infrastructure developers, private & institutional investors, construction, real estate, multilateral development banks, operators).
The project addresses the fact that economic development and growth (both in developed and emerging markets) are often held back by lack of a sufficiently long-term pipelines. Accordingly, the core focus of the Council will be to scrutinise the conditions under which large infrastructure projects could gain finance from the international community of investors while being transformational in terms of positive economic impact. The goal is to coordinate the public and private sector activity where desirable, as well as provide strategic direction and guidance to the various work streams under the System Initiative.