What if there is a different infrastructure game to be played, one that would allow us to quickly build a new national infrastructure strategy, create jobs and generate long-term competitiveness? What if focusing on dollars spent is the equivalent in the infrastructure world of focusing on batting average in the pre-Billy Beane baseball world?
It is, and we need to fix that, and find the leadership to change how we think about the most important business opportunity that our country now faces. Here is how President Obama, and our country, can build a successful infrastructure initiative:
First, focus on yield. This is an emergency, so focus on the one statistic that matters, creating jobs. An infrastructure project lasts for 30 to 40 years, so when selecting projects we should score three kinds of job yields: direct jobs, those workers directly employed by the project; indirect jobs, those involved in creating the materials for the work, such as manufacturing steel; and induced jobs, those that the project will eventually produce (such as when a D.C. Metro stop sparks new development nearby or a port project brings new commerce). Infrastructure projects need to be scored — and are scored in other countries — on both jobs created initially, and all the jobs created (and the quality of those jobs) over the lifetime of a project.
A focus on job yield will help the nation prioritize those infrastructure sectors that are most productive in job creation, channeling marginally more resources in that direction. Think about it — project investment would have less to do with congressional districts and political favors and more to do with systematically building our future. Here you could easily argue that the Silver Line extension to Dulles Airport would be a better investment than adding a lane to a parallel highway.
A focus on yield begs the addition of a second critical concept: velocity. Projects around the country are ready to go now, large and critically important projects; there are easily a million jobs in tipping-point projects. My firm recently identified 10 ready-to-go projects worth $90 billion, which would create nearly 1.5 million direct jobs.
The problem is that today in our country it takes an average of 10 years to go from concept to the point at which heavy equipment gets its “notice to proceed.” The Netherlands, not an environmental bandit, faced a similar problem a decade ago, took action and reduced that period to three years. The current process is not deliberate and systematic; it is ponderous, inefficient and deeply dysfunctional. We need to change that.
Think about it. If our leadership — public, private, federal, state and local — would refocus attention to job yield, investment yield and project velocity, then we would be creating a roadmap to build a new jobs and competitiveness model, now and for the next generation. All sorts of transformations would take place, and the public would be much more engaged in the process: Which firms have the best on-time and on-budget records? Which state agencies are most efficient with approvals, or efficient in the use of funds — by miles built or water pipes laid? Which types of projects actually create the most jobs, and/or contribute most to long-term competitiveness? And so on. This new paradigm in infrastructure would mean the creation of a whole language, and the release of enormous human energy in a new direction.
One way to bring about this change would be to task a new institution to oversee the process — a National Infrastructure Bank. Such an institution would have a clear imperative: modernize the U.S. infrastructure industry to create large numbers of jobs and to build real competitiveness into the U.S. economy. There is a unique window of opportunity. A bank that could borrow long-term money at today’s low rates could easily double our infrastructure investment over a 10-year period, and create well over 1 million jobs a year for 10 years. And this would be, if we aimed low, at European yield levels.
Bringing a “Moneyball” approach to the infrastructure business would produce a picture worth watching, with public and private sector managers all over America in starring roles, creating jobs expeditiously and economically, much like Billy Beane created runs for the out-performing Oakland A’s.
Norman F. Anderson is president and chief executive of CG/LA Infrastructure, a District-based advisory firm focused on large-scale development projects around the world.