CG/LA Infrastructure’s CEO & Chairman Norman Anderson talks to Icons of Infrastructure about the critical need for infrastructure leadership in the U.S., the role of the public sector, and technological advances increasingly impacting the market.
Norman Anderson’s POV
- Politicians must learn how to think about infrastructure, since its a cross-generational issue
- Stakeholders must radically rethink the public sector’s role in supporting innovation
- Technology can be used to demonstrate infrastructure’s benefits instead of just driving down costs
The nation’s infrastructure is no worse for the Trump administration’s stalled $200 billion infrastructure development plan, but it’s no better either. As the most recent presidency to see its infrastructure plans sidetracked by other political issues, questions around leadership, particularly as AI and other new technologies promise to change our daily lives.
Icons of Infrastructure reporter Carl Winfield spoke with CG/LA Infrastructure CEO & Chairman Norman Anderson in advance of the group’s North American Leadership Forum, held in Dallas, Texas on October 23 – 25 on the current state of infrastructure development in the US and the challenges ahead.
IOI: The administration’s big infrastructure push has clearly been subsumed by other issues. What does this do to the idea of trust since this was a bipartisan issue?
NA: The Trump administration is not the only one to have focused on infrastructure. This started with Clinton, then Bush, Obama and now Trump. They’ve all talked about it, and to a large extent they’ve all been elected based on this promise.
New governments focusing on infrastructure fail to understand that infrastructure will happen not if it’s a top priority, but if it’s the only priority. They also require very high-level strategic leadership. The Trump Administration failed in both of these areas.
One obvious point is that the political class doesn’t know how to think about infrastructure. It’s not a natural issue for them, and it’s not an easy issue, because infrastructure is not about what you get – it’s about what you give over 30-40 years. Like national security, it’s a bipartisan issue; but it’s also a cross-generational issue as well.
You have to have a long-term vision. That means you have to have confidence in the future.
Nobody knows what the US will look like 40 years from now. We need to have a conversation – about what we want our country to look like, and how we’re going to take it there.
IOI: There has been a lot of conversation in terms of city and municipal governments not knowing what infrastructure they want to procure, and struggling to engage with communities that may be hostile towards a project for one reason or another. What can be done in this kind of environment and how?
NA: The public sector enables virtually all the innovation in an economy and takes all of the risk. The role of the government is to seed the kind of innovations the private sector will look to finance. States and municipalities should have departments of innovation – like the Los Angeles County Metropolitan Transportation Authority (LA Metro) – that are focused on engaging users in the selection and design of projects, as well as driving real creativity through a focus on the user experience.
We must also revitalize the public sector’s role. Every modern country recognizes not just the importance of infrastructure to competitiveness, but the importance of infrastructure to strategy. But we’ve effectively created a zero-sum view of public versus private sector financing.
You have to ask yourself whether PPP is a viable solution here. If so, why have there not been more in the last 25 years? If you talk to a lot of PPP proponents including lawyers, consultants and builders, it begins to dawn on you why they are supportive of the model – they benefit from it. But my point is that they would benefit much more if we had 10 times the amount of private investment in infrastructure as we do now, and we are only going to get their by transforming the paradigm and developing a US private/public infrastructure model, one focused on public goods creation, with a vital U.S. public sector, and U.S. firms with deep balance sheets guiding pension and insurance fund investments.
“You have to have a long-term vision. That means you have to have confidence in the future.”
IOI: Where do new technologies such as AI, analytics and 3D printing fit in terms of creating a national vision for infrastructure. Will technology be the selling point, or will it be safety or cost?
NA: Technology will be driver of the future – the issue is, what kind of future do we want to have? Our vision is that we want to maximize opportunity creation for our citizens. Infrastructure generates health, mobility and wealth, but infrastructure investment is profoundly democratic.
The cost is in the crazy amount of regulation that’s required to get a project through the permitting and approval process. It can takes as many as 9.5 years to construct an average transport project.
Technology shouldn’t necessarily be seen as a way to drive down costs, since the most interesting thing about technology is how it can enhance the user experience – and show people the benefits of their investments in infrastructure.
If you look at transport, water or energy projects – across the board – and what they cost you’ll find that the regulatory piece adds 30-100% on average – something that we have no business not attacking. Although, remember, for every issue like this there are real beneficiaries.
Don’t forget that the younger generation needs to have a seat at the table for this discussion. Many people say that the approval process effectively doubles the cost of a project. Materials costs are also going up. These liabilities – unknown in terms of magnitude, and hence magnified in terms of risk – are a big problem for the industry.
But this is nothing compared to what might be called the “unknown unknowns.” We’re in the Amazon and Uber generation where you can order things quickly, and just as quickly send them back. If infrastructure on average takes nine years for permitting, and you are stuck with the result – of a decision you made nearly 10 years ago – for nearly 40 years, well that has nothing to do with the speed, and iterative decision-making; indeed, that style of decision-making is about as inimical to the standard infrastructure decision-making as you can possibly get.
How does infrastructure adjust? One obvious fact, given that 32 billion sensors – for example – will be deployed on urban structures by 2030, is that you will be able to change out sensors and chips each year, so transforming what that infrastructure can and will do… Transforming performance, and optimizing performance, for users, is going to create whole new types of infrastructure, whole new types of consulting, and entirely new professions.
P3’s are just one arrow in a seven-arrow quiver. There are powerful, quick and versatile ways to think about injecting capital into infrastructure, including outright acquisitions, performance contracts, asset recycling and simple strategic partnerships with public sector entities. We’re all after the same thing – better mobility, better health, growth, business creation, and opportunities, for ourselves, and especially for our children.