Norman Anderson, President & CEO of CG/LA Infrastructure, a Washington DC-based think tank specializing in infrastructure projects, believes investment in projects both in developed and developing economies is a key to growth. In an interview with the AJOT, that comes on the heels of the release of the CG/CL’s 2013 Top 100 North American Infrastructure Projects, Anderson talks about the critical need for infrastructure investment in North America and beyond.
While the CG/LA is not a household name, when it comes to the business of infrastructure, the Washington DC-based, think tank is a real “go to” organization for private companies, countries, public entities and NGOs (Non-governmental Organizations) investigating potential projects.
As Norman Anderson, President & CEO of the CG/LA Infrastructure explained, the organization has two principal activities, one is in a direct consultancy role on infrastructure projects, while the other is as an organizer of three annual “Forums” [North American Leadership Forum, 7th Global Infrastructure Leadership Forum and 12th Latin American Leadership Forum].
Anderson has a unique perspective on project development as he began his career as a Peace Corps volunteer in Paraguay, serving for a total of five years - including the last two as a grantee of the Inter-American Foundation. He told theAJOTthat he became “fascinated” with projects but wanted to be more on the “strategic,” big picture side of the industry rather than at the grass roots level. This led him to founding CG/LA.
Anderson says the Forums are highly focused and aimed at providing a meeting ground for leaders to discuss a plethora of problems ranging from project creation itself to the impact of projects on the economy both from macro and micro perspectives. For that reason, Anderson says they’ve kept the Forum meetings small.
“Years ago we were approached by a group that wanted us to expand our Forum meetings. We turned them down. We [CG/LA] are about a strategic approach [to projects,] and a larger meeting wouldn’t have done that,” Anderson said. He continued, “You have to consider many of the people [attending] may spend their whole careers on one or two projects,” and the meetings are really high-level exchanges between professionals.
What the CG/LA brings to the table is a proprietary analytic model for assessing infrastructure projects and the project market. “We have a systematic and disciplined approach,” Anderson says of the system. The CG/LA in analyzing a project for inclusion does so through the lens of six “Competiveness Visions.”
In the case of the North American Top 100 Infrastructure Projects, CG/LA defined six Competitiveness Visions through which the 100 projects were identified, and then ranked them according to the proprietary scoring system. The Competitiveness Visions, ranked within the “vision” categories are: Gateway Hubs, ($35-billion); Champion Cities, ($45-billion); Connecting the Region, ($141-billion); Energy Independence, ($135-billion); Heartland Waterways, ($52-billion); Building Partners, ($27-billion). According to the CG/LA the cumulative estimated value of these projects is $435.7-billion with a potential to create 3.3 million direct jobs over the next two years, and add 1% to the US GDP each year from 2015 through 2020.
Many of the projects on the list are big-ticket items in the multi-billion dollar range. The Sacramento-San Joaquin Delta Water Tunnel has a nifty price tag of $14-billion. The FAA’s Next Generation Air Transportation System is tagged at $19 -billion. The Sepulveda Pass Corridor for the Los Angeles County Metropolitan Transportation Authority, now in the design phase, is estimated at $6-billion. Energy makes up a large segment of the project market. Some like the $4.5-billion Rhode Island-Offshore Wind Farm will be ground breaking. The Cameron LNG Export Terminal in Louisiana is in the permitting phase for Sempra Energy and is estimated to be a $10-billion facility (see Peter Buxbaum’s article on page 3). But all these projects are dwarfed by Alaska South Central LNG project, a TransCanada, ExxonMobil, BP and ConocoPhillips undertaking, estimated at $65-billion.
The North American Project Market
Is it enough? Even with the $435.7-billion earmarked for projects in the CG/LA’s top 100 in North America, Anderson is quick to point out that the investment in infrastructure in the US is lagging way behind and could have dire consequences for the economy.
The 2008 recession put the brakes on infrastructure investment in the US. “There wasn’t much activity in 2008, 2009, 2010… in 2011 we started to see some activity,” Anderson said. Adding “Really except for the Middle East and Turkey, everything dried up.” He noted that there was also a shift away from the private sector into the development banks and other international financial mechanisms: A condition that persists even today.
When asked by theAJOTabout the North American infrastructure market post-recession, Anderson observed, “there is pent up demand [from the recession period] but we are, globally, and in the US, are under investing.”
“The US invests only 1.3% of GDP in infrastructure, lower than any other OECD country [OECD 3-5% investment]…it was over 5% of GDP during Eisenhower years,” added Anderson. However, another way of looking at the annual .05% decrease in spending versus GDP is that .04% of the decrease is in Capital Spending – new projects – with most of the spending going to O&M (Operations & Maintenance). Appraising the situation on a per capita basis also is troublesome as from 2003-07 a decline of 3% per/capita investment.
Another reason for the US failure to bring on new infrastructure projects is that it simply is too time consuming. “In the US it takes on an average 9 ½-years to get a project permitted… the Dutch do it in 3-years.” Private industry can’t afford to have capital tied up for nearly a decade before the on switch is ready to be pushed. Projects like the Olmstead Locks & Dam (Kentucky & Illinois) are for now suspended while others have simply disappeared.
Anderson believes that the US needs to double the investment in infrastructure and rescript the approval process to get things moving for the economy to really recover. “We need to think differently,” Anderson says.
As the Top 100 list proves, there is a lot of project business in the US and North America as a whole. The question is whether a sustained effort in bringing infrastructure projects from concept to fruition is in the minds of policy makers.