Remote accessEfficient strategies for rural transport infrastructure

Government & Public Sector Insights

Ru r al tr an sp or t i n f r astr u ctu r e i s of ten a l ow er p r i or i ty f or p u b l i c i n v estmen t. W i th p op u l ati on s an d p r od u cti v i ty cen ter ed i n u r b an ar eas, th e f ocu s f or econ omi c d ev el op men t p ol i ci es an d p u b l i c i n f r astr u ctu r e i n v estmen t i s con cen tr ated accor d i n g l y . H ow ev er , b r oad -b ased r u r al i n f r astr u ctu r e sp en d i n g i s i mp or tan t f or su stai n ab l e econ omi c g r ow th an d sh ou l d n ot b e n eg l ected .

1. “ I nnov ation and Moderniz ing th e R u ral E conomy , ” O E C D, 2014; “ T h e importance of s u s tainab le trans port inf ras tru ctu re to th e pos t- 2015 dev elopment agenda, ” T R L , trl co u e ia final transport infrastructure an t e s gs riefing report p f accesse a

2. “ I nv es tment priorities f or ru ral dev elopment, ” O E C D, 2006.3. “ Moderniz ing th e ru ral economy , ” O E C D, 2012.4. “ I nv es tment priorities f or ru ral dev elopment, ” O E C D, 2006.

artners ip on lo car on sustaina le e elop ent ural transport an sustaina le e elop ent facts eet accesse a ttp slocat net sites efault filesrural transport facts eet p f6. W orld B ank Grou p, “Implementing Agriculture for Development: World Bank Group Agriculture Action Plan 2013–2015, ” 2012.7. “ F inancing S mall- S cale I nf ras tru ctu re I nv es tments in Dev eloping C ou ntries , ” United Nations DESA, 2012.8. M. Porter et al. , “ C ompetitiv enes s in ru ral U S regions : learning and res earch agenda, ” H arv ard B u s ines s S ch ool, 2004.

Rural transport infrastructure is the “missing last mile”

Economic performance and well-being are often weaker in rural areas

M an y r u r al ar eas h av e i n ad eq u ate tr an sp or t i n f r astr u ctu r e, 1 w i th r oad s an d oth er p u b l i c i n f r astr u ctu r e significantly less developed than what can be found in u r b an ar eas. 2 Ru r al ar eas ty p i cal l y mak e mu ch smal l er con tr i b u ti on s to G D P th an u r b an ar eas, 3 so i t i s h ar d l y su r p r i si n g to see cap i tal al l ocated to d omi n an t u r b an ar eas. T h i s i ssu e i s al so mor e th an j u st a sh or tf al l of total

T h e econ omi c i mp act of ad d i ti on al i n v estmen t to improve rural transport infrastructure can be significant. M or e d ev el op ed tr an sp or t i n f r astr u ctu r e i n cr eases con n ecti v i ty an d mob i l i ty , l ow er s tr an sacti on costs, r ai ses n on - f ar m ear n i n g s an d h el p s r ed u ce d i str i b u ti on al i n eq u al i ti es b etw een u r b an an d r u r al ar eas. 6 A l ack of r u r al i n f r astr u ctu r e can of ten b e th e “ mi ssi n g l ast mi l e” 7 i n b r oad er i n f r astr u ctu r e sy stems, i mp ed i n g th e transfer of people and goods to their final destinations.

F or gov ernments , th e ch allenge is to b alance th es e competing initiati es as efficientl as possi le nce t e ecision as b een made to inv es t in ru ral proj ects , th e f ocu s s h ou ld b e on cos t-effecti e e ecution it in fiscal constraints inistrations can mak e ru ral proj ects ef f ectiv e and lev erage w h at pu b lic f u nds th ey do

a e a aila le for in est ent gro t t roug financial inno ation competition and appropriate priv ate s ector engagement.

transport capital available. Poor quality and inefficient ex i sti n g i n f r astr u ctu r e al so p l ay s a p ar t b ecau se n ot en ou g h f u n d s ar e d ev oted to mai n ten an ce, f u r th er l i mi ti n g p r od u cti v i ty . 4 T h e d i sp ar i ty i n i n v estmen t i s associ ated w i th b i g d i f f er en ces i n econ omi c p er f or man ce an d w el l -b ei n g b etw een u r b an an d r u r al ar eas.

I mp r ov emen ts i n r u r al ar eas can th er ef or e su p p or t mor e holistic and diversified growth.

W h at’ s more, th e f ailu re of cu rrent policies arou nd ru ral trans port inf ras tru ctu re dev elopment h as a nu mb er of implications . F irs t, u tiliz ing limited gov ernment res ou rces f or an inef f ectiv e return is an inefficient use of pu lic finances econ national produ ctiv ity , b ey ond j u s t in u rb an centers , is important to s elf -s u s taining economic perf ormance — es pecially as grow th in th e w ork f orce s low s in adv anced economies and produ ctiv ity grow th decelerates in emerging mark ets . T h ird, w eak grow th in ru ral areas is as s ociated w ith poor competitiv enes s , w h ich is particu larly detrimental in an increas ingly glob al mark etplace and can ex acerb ate economic perf ormance ov er th e longer term. 8 n finall o er ti e an ineffecti e polic can result in ine uit an s u b s tantial remediation cos ts .

Rural road expenditure, per dollar spent, is one of the most effective ways of reducing rural poverty.5

2 | Remote access: efficient strategies for rural transport infrastructure

9. “ N ew U N grou p s eek s s olu tions f or h arnes s ing ris ing inv es tments in trans port w h ile redu cing h armf u l pollu tants f or a s u s tainab le f u tu re, ” U nited N ations , ttps sustaina le e elop ent un org content ocu ents isor roup irst eeting pi clean appro e p f accesse a

10. “ Decis ions b y topic: s u s tainab le trans port, ” U nited N ations , h ttps : / / s u s tainab ledev elopment. u n. org/ topics / trans port/ decis ions , acces s ed May 2015.

S ou rce: O E C D S tatis tics . Data s ou rced in J u ne 2015.

W ell- b eing indicators are als o of ten w eak er ou ts ide of cities

- 4 - 2 0 2 4 6 8

U K

S w eden

C anada

F rance

A cces s to s erv ices E du cation E mploy ment

Percentage point dif f erence, maj or metro area v s cou ntry

I n O E C D economies , real GDP per capita is low er in ru ral areas

20000

22000

24000

26000

28000

30000

32000

34000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Median metro GDP per capita Median regional GDP per capita

Real U S $

The sustainable development goals and sustainable transportT h e adv ent of th e s u s tainab le dev elopment goals ( S DGs ) mak es th is an important time to rev iew th e role of s u s tainab le trans port, particu larly ru ral trans port. T h e S DGs s et th e agenda f or economic grow th and dev elopment s trategies in th e coming decades , and th ey pu t s u s tainab le trans port in th e s potligh t.

ustaina le an efficient transport elps citi ens access ser ices an participate in econo ic opportunities ese are critical ele ents of sustaina le an inclusi e econo ic e elop ent s a result t e nite

ations secretar general as tas e a ig le el a isor group it fin ing ia le solutions to pro ote pu b lic s af ety , h ealth , env ironmental protection and economic grow th th rou gh s u s tainab le trans port. 9 I mprov ed trans port s y s tems in ru ral areas , u rb an- ru ral link ages and improv ed produ ctiv ity in ru ral areas are ex pected to b e a f ocu s 10 f or glob al policy recommendations . F or gov ernments , th is s u gges ts th at cos t-effecti e in est ent in rural assets is goo polic for t e future not onl fro an efficienc stan point ut als o f rom a s ocial and s u s tainab ility one.

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11. “ Policy impediments to inf ras tru ctu re inv es tment and th e w ay f orw ard, ” O E C D, 2013. lo al griculture nfor ation et or eport ra il o e er

G ov er n men ts can n ot ov er l ook th e i mp or tan ce of r u r al tr an sp or t i n f r astr u ctu r e, f or a n u mb er of econ omi c an d soci al r eason s. T h e f ocu s th en f or ad mi n i str ator s is to execute on these projects as efficiently as p ossi b l e, p r eser v e cap i tal f or h i g h - p r i or i ty p r oj ects and achieve the benefits of the selected rural projects q u i ck l y . T o d o so, g ov er n men ts n eed s to ad d r ess some k ey ch al l en g es.

Challenge #1: high capital costs for rural projectsig initial capital costs for p sical infrastructure an fiscal

cons traints f or s tate and local gov ernments comb ine to pres ent significant fun ing c allenges for rural transport pro ects un ing allocation to regional inf ras tru ctu re inv es tment can als o of ten b e inefficient 11 t t e sa e ti e rural pro ects co pete it ur an

Mobilizing transport investment in the “missing last mile” drives clear policy challenges

proj ects f or pu b lic f u nding and can b e des ignated as low er- priority ase on a tra itional cost enefit anal sis relati e to t ose in

h igh - dens ity areas .

Challenge #2: project delivery can be challengingural transport infrastructure initiati es also face significant pro ect

deliv ery ch allenges . T h es e proj ects can inv olv e dis proportionately h igh trans action cos ts , lack economies of s cale and/ or ef f ectiv e contractor competition, lack proj ect dev elopment capacity , and ex perience cos t recov ery ch allenges . 12 T h e proj ect dev elopment cy cle can als o b e protracted, as proj ects are of ten ph as ed to match fun ing a aila ilit ccor ingl t e reali ation of econo ic enefits aris ing f rom inv es tment can b e def erred ev en f u rth er f or ru ral proj ects . F or ex ample, ph as ing to match b u dget av ailab ility can create partial “ roads to now h ere” w ith limited independent u tility .

4 | Remote access: efficient strategies for rural transport infrastructure

13. O E C D, “Policy impediments to infrastructure investment and the way forward,” 2013.

How EY approaches infrastructure advisory projectsI n adv is ing clients on th e optimal approach f or deliv ering k ey trans portation proj ects , w h eth er ru ral or u rb an, E Y applies cons is tent principles :

• Focus on the end goal — W e recogniz e th at it is important to u ndertak e analy s is to s u pport decis ion-a ing ut go ern ents also ust a ance e pro ects efficientl uses senior people an prioriti es

e areas of financial anal sis to uic l i entif an consi er ifferent financial structures an pro i e critical ins igh ts on driv ers f or s u cces s , av oiding “ ov er- s tu dy . ”

• Candor — is recogni e for its can or an re ar s t is et os in its people i entif ing financial an oth er deliv ery ch allenges early and directly , gov ernments of ten h av e time to av oid later emb arras s ment, cos t ov erru ns , f allou ts b etw een s tak eh olders or trans action f ailu re, and ins tead can identif y new and alternati e strategies s a result pro ects a ises on a e t picall attracte significant co petiti e interest ecause pri ate sector parties e elop a ig er le el of confi ence t at t e pro ect ill e s tru ctu red appropriately and b e deliv ered in a timely manner.

• Independence and balance — O u r repu tation and approach is to prov ide independent adv ice b as ed on client goals or e a ple ile an a isors a e percei e as a ocates of specific financial structures e g pu lic pri ate partners ips or tra itional pu lic finance our onl ias is to ar s u cces s f u l deliv ery in a manner th at max imiz es v alu e to ou r clients .

• Letting the project dictate the transaction structure — F or each maj or as s ignment, ou r analy s is ty pically s tarts b y lis tening to clients and u nders tanding th e end u s ers of th e proj ect. W e f ocu s in on th e dis tinct ch aracteris tics of th e proj ect ( inclu ding glob al and local les s ons learned, s tak eh olders ’ cons traints and legal f ramew ork ) and an u nders tanding of ou r client’ s b roader policy goals and cons traints . F rom th es e perspecti es t e pro ect s oul efine t e pat for ar t ere is not a one si e fits all solution for complex inf ras tru ctu re proj ects .

Appropriate private sector participation in rural infrastructure will be crucialT h e b ottom l i n e f or r u r al tr an sp or t i n f r astr u ctu r e projects is that it can be difficult for the public sector to g o i t al on e. P r i v ate sector p ar ti ci p ati on can p r esen t op p or tu n i ti es to ex p an d access to av ai l ab l e f u n d i n g sou r ces an d f r ee u p p u b l i c cap i tal an d b or r ow i n g cap aci ty

to f ocu s on oth er p r oj ects, i n cl u d i n g th ose i n u r b an ar eas. P r i v ate sector p ar ti ci p ati on can al so r ed u ce p r oj ect management inefficiencies, provided that incentives, r i sk s an d r esp on si b i l i ti es ar e al l ocated u n d er a sou n d l eg al an d i n sti tu ti on al f r amew or k . 1 3

5Remote access: efficient strategies for rural transport infrastructure |

Southern Ohio Veterans Memorial Highway

Case

stu

dy

S ou th ern O h io V eterans Memorial H igh w ay ( f ormerly k now n as Ports mou th B y pas s ) is an ex ample of h ow priv ate capital can e use to a ance a rural pro ect in a cost effecti e an efficient anner e pro ect is for a ne 16- mile, f ou r- lane limited acces s h igh w ay , located in S cioto C ou nty , an economically u nders erv ed region. I t f orms t e final io lin in t e ppalac ian e elop ent ig a ste a ile ig a net or stretc ing fro e or tate to ississippi e istoricall recei e e icate fun ing allocate t roug t e ppalac ian egional o ission esigne to generate econo ic e elop ent in pre iousl isolate areas connect ppalac ia to t e interstate s ste an pro i e access it in t e region an t e rest of t e nation

O h io Department of T rans port ( O DO T ) h ad originally planned to dev elop th e proj ect in th ree dis tinct ph as es o er ears as t e annual e icate fun ing eca e a aila le ile t e p ase approac as ri en

u getar necessit it also eferre t e a orit of t e enefits fro t e pro ect until all t ree p ases of t e h igh w ay w ere operational.

F ollow ing th e pas s ing of O h io’ s enab ling legis lation, O DO T decided to pu rs u e a pu b lic- priv ate partners h ip ( P3) approac for all t ree p ases of t e ig a as a single esign uil finance operate aintain pro ect see ing pri ate capital fro a e eloper an a loan fro s ransportation nfrastructure inance an nno ation ct

progra

using a eli er rat er t an a ore tra itional approac reali e a nu er of enefits

• B y u s ing priv ate capital to initially cons tru ct th e road, th e P3 approach allow ed th e proj ect to b e accelerated and a oi an interi roa to no ere e enefits to users an t e region an econo of acceleration ere not for all uantifie ut t e ere clear in a region it ig une plo ent

• T h e P3 model allow ed O DO T to pay ov er time f or a long- lif e as s et ( s u b j ect to perf ormance) , w ith ou t impacting ex is ting deb t.

• O DO T w as ab le to trans f er a s u b s tantial amou nt of ris k and gain perf ormance gu arantees and a long- term arrant it out a significant price pre iu e pro ect as ulti atel a le to access a ear

fe eral loan at an interest rate alf of t e reasur rate an significantl c eaper t an coul b orrow its elf .

• T h e approach prov ided opportu nities f or economies of s cale and s cope f rom comb ined proj ect ph as es .

• C ontractor competition w as promoted in a region w h ere pav ing contracts of ten receiv ed only one b id.

E Y adv is ed O DO T on th e planning and procu rement of th e proj ect, w h ich res u lted in th e Ports mou th Gatew ay roup nfra e an tar nfrastructure eing selecte as e eloper for t e ear ter eli ering t e

proj ect as a s ingle- ph as e P3 proj ect attracted intens e competition, in a region w h ere it h as h is torically b een limited. ree orl class consortia su itte co pliant co petiti e proposals significantl elo esti ates an

f as ter th an anticipated, driv ing v alu e f or O h io tax pay ers in s ev eral w ay s :

tre el co petiti e pricing t ere as onl separating t e prices of t e t ree proposals e inning construction cost as appro i atel elo fe eral cost esti ate an t is i accelerate

deliv ery of th e complete proj ect b y s ev en y ears . • I ncreas ed potential to create j ob s in S cioto C ou nty , tak ing adv antage of h is torically low interes t rates and

competitiv e cons tru ction prices .

itionall t e structure as eneficial to in t e conte t of its i er capital constraine or progra e approac ena le io to access t e fe eral financing progra t roug t e e eloper it out using

state e t capacit an t e long ter loan at a rural interest rate of co pare fa ora l to t e cost of a ear state e t using pri ate capital to finance construction t e o el frees up su stantial u get capacity in th e near to mediu m term f or O DO T ’ s oth er w ork program priorities , w h ile redu cing th e ris k to th e s tate t roug a co petiti e fi e price fi e ate construction contract an a e facto ear arrant

6 | Remote access: efficient strategies for rural transport infrastructure

T h is ex ample is als o important as it h igh ligh ts th at ru ral inf ras tru ctu re inv es tment can b e timed to addres s s ocial need, if a inistrations a e t e tools to uic l respon to c anging economic conditions .

F or ex ample, th e S ou th ern O h io V eterans Memorial H igh w ay pro ect is in an econo icall un erser e region classifie as econo icall at ris an in t e otto of cou nties . T h e ab ility to addres s th is need th rou gh capital inv es tment is critical f or promoting s u s tained economic dev elopment.

T h e s ocioeconomic impact of immediate j ob creation is pow erf u l, as is th e potential impact on acces s ib ility , inclu s ion and th e env ironment in an accelerated time f rame. S o w h ile s ome ru ral inf ras tru ctu re proj ects may not b e h igh impact in th e conv entional s ens e, th e opportu nity to adopt and s peed u p pro ects it a social pa off e e plifies effecti e pu lic polic

1. Use financing to accelerate project delivery

B es t- practice proj ects accelerate th e economic impact of ru ral inf ras tru ctu re inv es tment, inclu ding th e activ ity b oos t f rom cons tru ction and j ob creation in th e s h ort term and w ider economic dev elopment impact ov er th e longer term. F as ter deliv ery of th es e proj ects als o accelerates th e v alu e of th eir s ocial impact.

T h is can b e ach iev ed th rou gh th e u s e of priv ate and pu b lic financing particularl ere a s ort ter lac of pu lic fun s w ou ld oth erw is e res u lt in a proj ect b eing def erred. T h e S ou th ern O h io V eterans Memorial H igh w ay proj ect ( ou tlined ab ov e) is one s u ch ex ample. L ev eraging priv ate capital, a f ederal gov ernment loan ppalac ian e elop ent ig a ste grants an s tate f u nding contrib u tions in a pu b lic- priv ate partners h ip ( P3) accelerated deliv ery of th e proj ect b y approx imately s ev en y ears compared to traditional, pu b lic- f u nded cons tru ction. 14 I nitially planned as a th ree- ph as e des ign- b id- b u ild proj ect, it w as cons olidated into a s ingle f ou r- y ear cons tru ction ph as e u nder a

esign uil finance operate aintain o el is ena le t e deliv ery of a complete proj ect, rath er th an s ingle ph as es w ith limited independent u tility .

Best practice for rural transport infrastructure developmentT h e u s e of priv ate capital to accelerate pu b lic proj ects can b e e uall eneficial to non rural pro ects pre iousl a ise F lorida DO T on its I - 595 E x pres s L ane Proj ect, w h ich u s ed a s imilar P3 deliv ery model to accelerate a program of w ork s th at w ou ld h av e b een deliv ered ov er decades into a s ingle- ph as e proj ect. n oing so user an tra el enefits ere reali e ore uic l it out re uiring significant i ersion of pu lic fun s fro ot er

w ork program priorities in th e s h ort term.

2. Bundle projects to increase cost and efficiency gains

ost re uction an greater efficiencies are also e i ent in b es t- practice ru ral trans port inf ras tru ctu re proj ects . T h es e can b e ach iev ed b y b u ndling mu ltiple proj ects or ph as es , driv ing s cale and efficienc gains an attracting co petition or e a ple in t e cas e of th e S ou th ern O h io V eterans Memorial H igh w ay , E Y as s is ted t e in i entif ing t e potential enefits t at coul e reali e b y grou ping togeth er th ree s egments of th e h igh w ay into a s ingle pro ect lone t ese seg ents ere unli el to attract pri ate inv es tment and w ou ld b e les s cos t ef f ectiv e.

R u ral mark et acces s programs als o of f er b es t- practice ex amples of ru ral trans port initiativ es th at ach iev e s cale adv antages . F or e a ple t e nite tates epart ent of griculture F ood H u b s Program f ocu s es on driv ing economies of s cale and ex panded mark et acces s f or s mall- s cale produ cers . 15

T h is b u s ines s model of f ers aggregation and dis trib u tion s erv ices f or s mall and mids iz e produ cers acros s th e U S and particu larly f ocu s es on rev italiz ing critical inf ras tru ctu re. Mu lti- s tak eh older partners h ips are anoth er ex ample of th e u s e of f ederal res ou rces to s u pport economies of s cale in ru ral proj ects . T h e I nv es ting in Manu f actu ring C ommu nities Partners h ip program in th e U S inv olv es mu lti-s tak eh older partners h ips , inclu ding commu nities and mu nicipal and f ederal organiz ations , w ork ing to dev elop and coordinate pu b lic s erv ices , s u ch as trans port netw ork s , to s u pport s mall- s cale pro ucers s part of t e progra t e also a ar s planning grants to as s is t s tak eh olders in produ cing compreh ens iv e economic dev elopment plans , w h ich cov er trans port inv es tment. 16

orts out pass ro ect eli er lternati es nal sis io epart ent of ransportation ot state o us i isions nno ati e eli erorts out en rocure ent orts out eli er nal sis p f accesse a

i entifies infrastructure an econo ic opportunities for regional pro ucers us a go ps portal us a us a o e contenti l acces s ed May 2015.

e i portance of regional strategies in rural econo ic e elop ent nite tates enate o ittee on griculture utrition an orestr ag senate go earingst e i portance of regional strategies in rural econo ic e elop ent accesse pril

Accelerate investment to drive social gains

7Remote access: efficient strategies for rural transport infrastructure |

To drive efficient investment in rural transport i n f r astr u ctu r e p r oj ects, g ov er n men ts can f ol l ow sev er al step s. T h e ap p r oach sh ou l d b e tai l or ed to the specific circumstances of a certain rural area, w i th l ocal comp eten ci es, r esou r ces an d oth er assets p l ay i n g an i mp or tan t r ol e. H ow ev er , th er e ar e f ou r f u n d amen tal states to an ef f ecti v e r u r al tr an sp or t i n v estmen t str ateg y . 2 0

1 . P r ep ar e

inistrations s oul consi er t e polic gui elines for a ancing ru ral proj ects and ens u re th ere is a clear and trans parent f ramew ork . F or ex ample, w h eth er th e mu nicipality or s tate is legally permitted to u s e P3 ( or ev en des ign- b u ild in les s matu re mark ets ) is a critical first consi eration econ t e financial capacit of th e adminis tration needs to b e as s es s ed, inclu ding th e lev el of deb t capacity and pu b lic f u nding av ailab le, any limitations w ith in a s tate cons titu tion, or oth er policy gu idance th at may apply . T h ird, at a programmatic lev el, policy mak ers need to dev elop

specific gui ance on atters suc as t e relati e priorit of an pay ment ob ligations and oth er commitments , as w ell as dev eloping gov ernment capab ility to s u pport deliv ery .

inistrations also nee to ensure t e are creating an ena ling en iron ent sufficient for in est ent at a roa er le el is coul v ary greatly depending on th e matu rity of th e mark et. H ow ev er, a clear commitment to dev elop es s ential inf ras tru ctu re, a s tab le regu latory and legal f ramew ork , and clarity regarding f u nding s ou rces are critical preparatory s teps .

2 . I d en ti f y

T h e nex t s tage is to ev alu ate trans port inf ras tru ctu re proj ects . T h is inclu des cons idering w h eth er b u ndling or ph as ing may b e appropriate to create economies of s cale or adv ance proj ects . K ey factors coul inclu e t e scale of capital in est ent re uire t e profile of a aila le pu lic fun s t e enefits generate t e le el of en iron ental per itting o taine an re uire an t e i pact on oth er capital proj ects .

Four steps to cost-effective rural transport infrastructure investment

nfra e tar nfrastructure intra lenar als arsons ransportation u lic ri ate artners ips for ural nfrastructure re uentl as e uestions ite ouse go accesse a

3 . P r omote mar k et comp eti ti on

E f f ectiv e ru ral trans port inv es tment initiativ es attract capab le tea s an ri e ig ualit co petition a e ri er of alue for tax pay ers . L ook ing again to th e S ou th ern O h io V eterans Memorial H igh w ay , th ree leading glob al b idders 17 w ere inv olv ed in th e proj ect, in a region w h ere competition w as h is torically limited. I n th is cas e, ef f ectiv e planning and s tru ctu ring w as important in order to attract priv ate s ector dev elopers . T h e proj ect s pons or, O h io DO T , u ndertook f ormal mark et cons u ltation to ens u re th at it u nders tood th e appetite and concerns of potential dev elopers , and it s ou gh t to encou rage participation and teaming f rom local, national and international contractors to max imiz e th e competitiv e res pons es .

I n O h io, policy mak ers als o s tru ctu red th e competitiv e proces s and fun ing an financing tools a aila le to create efficient proposals T h e P3 deliv ery model incorporated a low - cos t ru ral f ederal loan fro t e progra ta e e pt ri ate cti it on s

an pri ate e uit fro t e e eloper to create a cost effecti e

comb ination of pu b lic and priv ate capital. T h e “ av ailab ility pay ment” s tru ctu re of th e proj ect allow ed O DO T to of f er regu larly s ch edu led pay ments to th e dev eloper, enab ling th e proj ect to b e pai for o er a longer perio an ac ie ing significant ris transfer w ith ou t a cos t premiu m. T h is als o enab led policy mak ers to ex pand th e s ou rces of av ailab le priv ate capital and max imiz e th e impact of av ailab le pu b lic f u nds .

T h e U nited S tates R u ral I nf ras tru ctu re O pportu nity F u nd is anoth er ex ample of a b es t- practice initiativ e to mak e ru ral proj ects attractiv e to pri ate capital e fun pro otes financing for infrastructure pro ects in rural erica an is supporte co pletel pri ate s ector dollars . I t prov ides a platf orm f or inv es tors th at do not traditionally h av e acces s to ru ral inf ras tru ctu re proj ects to inv es t at s cale in a w ide range of initiativ es . T h e f u nd mak es deb t inv es tments in ru ral inf ras tru ctu re proj ects , recru its priv ate capital and promotes priv ate lending. 18

8 | Remote access: efficient strategies for rural transport infrastructure

inistrators can t en consi er t e relati e costs an enefits of each proj ect and prioritiz e potential proj ects . Giv en th e importance of th e s ocial pay of f of th es e proj ects , th is priority as s es s ment s h ou ld als o cons ider timing. W ith th is in mind, proj ects th at can b e deliv ered s ooner may b e more attractiv e.

3 . A n al y z e

I t is important f or program leaders to ev alu ate dif f erent deliv ery approach es f or priority proj ects . B es t practice inv olv es dev eloping a clear and trans parent b u s ines s cas e f or th e proj ect, inclu ding identif y ing th e pos s ib le alternativ e options f or proj ect deliv ery , w h ich may inclu de pu b licly f u nded des ign- b u ild, des ign- b u ild-finance or pri atel finance esign uil finance operate aintain models . T h orou gh analy s is als o means u ndertak ing detailed co parati e anal sis of t e uantitati e an ualitati e erits of dif f erent deliv ery options , identif y ing k ey proj ect ris k s and meth ods to mitigate th es e ris k s , and es tab lis h ing an implementation plan f or th e pref erred deliv ery model.

4 . E x ecu te

W ith a priority proj ect pipeline es tab lis h ed, deliv ery options i entifie an anal e an a ro ust usiness case esta lis e f or th e proj ect, adminis trations can proceed w ith a s tru ctu red

procu rement. F or ru ral proj ects in particu lar, a w ell- ex ecu ted procu rement w ill inclu de:

Industry engagement — C ompetition u ltimately driv es v alu e f or gov ernment, and it is important to ens u re th at indu s try is aw are of th e proj ect and is mob iliz ed to pu rs u e it. T h is may b e particu larly k ey in ru ral areas , w h ich b y th eir v ery natu re are les s lik ely to h av e significant in ustr presence a aila le an instea nee to attract non- local contractors .

Clear procurement documents, with effective allocation of risks — an contract ocu entation s oul e as clear an

concise as possi le regar less of t e specific eli er o el use E x ces s iv ely complex procu rement docu ments increas e th e time and effort re uire to i a ersel i pact upon in ustr appetite to pu rs u e th e proj ect, and u ltimately limit th e competition and v alu e realiz ab le b y th e procu ring au th ority .

Realistic schedule — T h ere can b e a temptation to s eek to accelerate procu rement b y s h ortening th e procu rement s ch edu le as f ar as pos s ib le. Maintaining a realis tic procu rement s ch edu le,

it sufficient perio s for ongoing in ustr ialogue an a e uate time f or dev elopment of detailed propos als , is important in allow ing propos ers to dev elop innov ativ e and b es t- v alu e propos als .

S ol i d r u r al econ omi c p er f or man ce i s cr i ti cal f or su stai n ab l e econ omi c g r ow th , i n d ev el op ed an d emer g i n g econ omi es al i k e. W i th i ts i mp or tan ce to soci oecon omi c objectives well-accepted, and fiscal constraints an on g oi n g r eal i ty , th e k ey i ssu e f or ad mi n i str ati on s i s to ach i ev e cost- ef f ecti v e i n v estmen t i n r u r al tr an sp or t i n f r astr u ctu r e assets.

I mportantly , adminis trations do not h av e to go it alone and can tap into priv ate s ector res ou rces and s k ill s ets to b ridge f u nding gaps an accelerate enefits it careful structuring an anage ent access to financial inno ation an a i i ing co petition can s u cces s f u lly lay th e “ mis s ing las t mile” in ru ral trans port inf ras tru ctu re netw ork s .

Competitive and efficient rural infrastructure investments can provide remote access to prosperity

9Remote access: efficient strategies for rural transport infrastructure |

10 | Remote access: efficient strategies for rural transport infrastructure

Transportation infrastructure at EYT r an sp or tati on i n f r astr u ctu r e i s a cr i ti cal en ab l er f or econ omi c g r ow th an d comp eti ti v en ess. A t E Y , w e h av e w or k ed w i th some of th e l ar g est an d most comp l ex p r oj ects ar ou n d th e g l ob e, f or th e p u b l i c an d p r i v ate sector , w i th ex p er i en ce th r ou g h ou t th e w h ol e p r oj ect l i f e cy cl e, f r om p l an n i n g an d p r ocu r emen t to d el i v er y , op er ati on s an d ex i t.

ur e perience is re ecte in our in ustr ran ings on t e ar s ol a ar est inancial isor ericas for t e

s econd cons ecu tiv e y ear in 2015. W e w ere als o recogniz ed f or th e J oh n H art Generating S tation R eplacement proj ect in C anada w h ich

Planning Economic feasibility studies Financial advisory

F or gov ernment clients cons idering maj or e pansions significant rene al or an or initiati es s nfrastructure isor usiness can h elp dev elop long- term inv es tment plans , as w ell as agency - w ide programs and policy f ramew ork s , inclu ding proj ect management. T h is s u pports a clear and trans parent pipeline of proj ects .

E Y can dev elop economic f eas ib ility as s es s ments f or trans port inf ras tru ctu re, inclu ding

eli er o el anal sis an pri atepu b lic comparator models . S u ch analy s es giv e policy mak ers a clear pictu re on th e net econo ic enefits of propose pro ects

E Y can adv is e gov ernments and priv ate s pons ors on financing pro ects inclu ing t e financial structure an sources of financing pri ate finance pu lic fun s or s e can elp in th e procu rement and deliv ery ph as e, inclu ding mark et s ou nding, f u nding option analy s is , ris k allocation co ercial an financial structuring pay ment mech anis m s tru ctu ring, contract negotiations an financial close

Policymaking and regulatory advisory Capital project management and assurance

Transaction Advisory Services for infrastructure

E Y can as s is t gov ernments acros s a range of s u b - s ectors in prov iding regu latory and policy adv ice. I n particu lar, s olu tions cou ld range f rom regu latory analy s is and f ramew ork dev elopment, pricing modeling and rev iew , regu latory impact s tatements , regu latory du e diligence, b u s ines s impact as s es s ments , competition policy rev iew s , b u s ines s and s trategic planning, mark et analy s is , and gov ernance adv ice.

C apital proj ect management and as s u rance on proj ect progres s are critical to a proj ect’ s s u cces s . E Y s erv ices inclu de regu lar monitoring and ev alu ation th rou gh ou t th e proj ect, driv ing accou ntab ility and trans parency f or inv es tors and citiz ens . Des igning a proj ect integrity plan is part of th is ef f ort.

ransaction isor er ices prov ides adv is ory s erv ices arou nd th e client’ s capital agenda, w h eth er th is means pres erv ing, optimiz ing, rais ing or inv es ting capital. I n particular can assist go ern ents an priv ate s pons ors w ith s econdary mark et operations inclu ing i esting or ac uiring as s ets , res tru ctu ring proj ect companies , and perf orming du e diligence and w ork ing capital analy s is .

Tax services IT transformation services Climate Change and Sustainability Services for legacy programs

E Y ’ s glob al tax teams h av e th e b road capab ilities to match th e s pectru m of tax is s u es . T h e teams can s u pport trans port inf ras tru ctu re proj ects on tax ch allenges , inclu ding h u man capital management and tax regu latory ch anges .

e isor erfor ance ec nolog S erv ices teams h elp clients reth ink h ow to arch itect, deploy and manage tech nology . T h e teams can w ork w ith gov ernments to accelerate b u s ines s perf ormance th rou gh tech nology trans f ormation, enterpris e intelligence, enab ling tech nology , and tech nology ris k and s ecu rity .

C limate C h ange and S u s tainab ility ( C C aS S ) teams at E Y can monitor th e deliv ery of th e proj ect and s u pport th e trans ition to s u s tainab le legacy . C C aS S can of f er deep s k ills in s ocial impact as s es s ments and reporting.

w as aw arded th e Grand Prix as B es t O v erall Proj ect of 2015, w h ere w e w ere lead adv is or. I n 2014, Proj ect F inance I nternational rank ed

as first in t e inancial isor categor in ter s of glo al infrastructure a isor an ates close an first in ter s of glo al mandates w on.

E Y is th e mos t glob ally integrated prof es s ional s erv ices organiz ation — in ou r mind- s et, actions and s tru ctu re. W e are

uil ing a practice t at ill support t e efficient effecti e an economic deliv ery of trans port inf ras tru ctu re arou nd th e w orld.

11Remote access: efficient strategies for rural transport infrastructure |

EY ssurance a ransactions isor

About EYE Y is a glob al leader in as s u rance, tax , trans action and adv is ory ser ices e insig ts an ualit ser ices e eli er elp uil trust and conf idence in th e capital mark ets and in economies th e w orld ov er. W e dev elop ou ts tanding leaders w h o team to deliv er on ou r promis es to all of ou r s tak eh olders . I n s o doing, w e play a critical role in b u ilding a b etter w ork ing w orld f or ou r people, f or ou r clients and f or ou r commu nities .

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How EY’s Global Government & Public Sector can help your organization

roun t e orl go ern ents an not for profit organi ations are continu ally s eek ing innov ativ e ans w ers to complex ch allenges . T h ey are s triv ing to prov ide b etter s erv ices at low er cos ts and to create s u s tainab le economic dev elopment, a s af e env ironment, more trans parency and increas ed accou ntab ility . E Y comb ines priv ate s ector leading practices w ith an u nders tanding of th e pu b lic s ector’ s div ers e needs , f ocu s ing on b u ilding organiz ations ’ capab ilities to deliv er improv ed pu b lic s erv ices . Draw ing on many y ears of ex perience, w e can w ork w ith y ou to h elp s trength en y ou r organiz ation and ach iev e las ting improv ements . O u r Glob al Gov ernment & Pu b lic S ector b rings togeth er teams of h igh ly s k illed prof es s ionals f rom ou r as s u rance, tax , trans action and adv is ory s erv ices . W e are ins pired b y a deep commitment to h elp y ou meet y ou r goals and enh ance pu b lic v alu e, f or today and tomorrow .

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