There is often a large emphasis on project delivery costs (capital costs) when making investment decisions about an infrastructure asset. Yet capital costs often only account for between 1% to 20% of the total spend over an infrastructure asset's life.59
Governments can improve infrastructure decision-making if they better understand operational costs over the full life of the asset.
Incorporating this understanding can also address unintended trade-offs that arise in pursuit of lower capital costs. The largest, often unintended, consequences come from making decisions about equipment, design or functions that cost less in the short-term, but more over a longer period due to factors such as higher operational or maintenance costs, or increased services support, among others.
There are other trade-offs too. For example, selecting the lowest-cost bid can result in unforeseen reductions in quality, on reliability and safety. Making this decision, intended or otherwise, can result in sub-optimal infrastructure assets that may be in place for decades.
Whole-of-life considerations will ensure governments are better placed to consider the detrimental effects on future users and taxpayers if a lowest-cost bid changes the quality of the asset.60 A new, nationally consistent best practice approach for governments assets and validation of ongoing operational costs is needed to improve decision-making.
This approach will empower project teams to assess project scope, project options and tender bids on a whole-of-life basis. This will enable them to consider if higher upfront costs will yield lower operating costs that provide a better overall return.
" Governments can improve infrastructure decision-making if they better understand operational costs over the full life of the asset. "
Conversations about whole-of-life best practice approaches are inseparable from calls to increase the use of common information structures, systems and processes across the project and asset lifecycle. Examples include work breakdown structures, cost breakdown structures, asset classification schemas and maintaining critical project meta-data (such as risk). This information, once structured and consistently followed, is valuable to a range of stakeholders.
For example, given the magnitude of current and planned investment forecast in the transport infrastructure sector, it is critical that asset planning is informed by quality whole-of-life data. For more information about the need for nationally consistent modelling tools in the transport sector, refer to the Transport chapter.