Key takeaways

Infrastructure helps us meet our most basic needs.

It delivers our drinking water, provides places to learn and receive healthcare, gets us to and from our destinations, and keeps us connected digitally.

Meeting these fundamental community needs requires major public investment.

Currently, public backlash and associated project delay are common. This indicates that public infrastructure investments don’t necessarily meet community needs.

New research from the ANU Institute for Infrastructure in Society (I2S) focuses on these social considerations in infrastructure planning. Its findings can help reduce social risk.

It reveals how procurement professionals pick the appropriate approach to deliver major projects – specifically the contractual models that determine the roles and responsibilities of private sector partners.

Decisions about these models greatly influence project cost, efficiency, and whether communities reap their social benefits.

To do this, the authors:

• interviewed procurement professionals, and
• analysed the government auditing guidelines used to assess major infrastructure projects.

In interviews, researchers heard that procurement professionals rarely consider social risks and benefits when making decisions about contractual arrangements.

Instead, they aim to reduce legal, technical and financial risks. Governments do this by sharing risk with contractor companies.

When officials do identify social risks such as public backlash, they’re considered less important and not rigorously assessed.

As one interviewee said,

“Unless it’s blindingly obvious that stakeholder and community engagement has to be a central piece to delivery, it would often be relegated into some kind of secondary consideration.”

The evidence showed social risks and benefits get sidelined for four main reasons:

1. Project planning is defined in terms of risk not opportunity.

Increasingly, public administrators evaluate the risk, not opportunity from major infrastructure.

Public-private arrangements are prioritised with reference to value for public money, not the best possible outcome for communities.

The research also highlighted that there’s no regulatory incentive for considering social benefit or risk. At least, not in Gateway Reviews (the auditing process applied to all major infrastructure projects).

2. Social risks can’t be passed on to the private sector

Typically, when projects do not meet expectations, backlash is aimed at governments, even when corporations were responsible.

If governments need to bear social risks, is it any wonder they aren’t rigorously analysed during contracting?

3. Social expertise isn’t informing decision-making

One reason for this is an under-developed understanding of social risk and benefit.

This means there are fewer management options available to decision-makers than there are for technical and financial risks. In addition, people with social expertise are rarely invited to the decision-making table to make the case for considering social risk:

“So, we don’t have the engagement lead sitting at the procurement table, but we have some very, very experienced project delivery folk in that procurement team.”

The exclusion of social experts is because:

• Evidence privileging, where technical evidence is seen as more valuable than social evidence, is prevalent.
• The ‘senior’ people who make the most important decisions are rarely social experts.
• Gender bias is entrenched. Barriers to promotion and gender discrimination contribute to the lack of social experts in senior roles.
• Social experts, who sit in engagement teams, are often appointed at a project’s construction phase. That is, after central contracting decisions are made. If this situation changed, it would reduce social risk and increase social benefit.