Many agencies are unable to navigate the risks associated with implementation of infrastructure projects. The result is that the project takes longer and costs taxpayers more.

This is according to a new report from Deloitte titled Infrastructure asset lifecycle: Operational risk mitigation from project inception. According to the report, a number of risks that crop up in the operational phase could often have been avoided if they had been considered during the development phase.

“Causes of operational risk are often rooted in decisions taken in earlier stages and most often identified in later stages after which it is too late to remedy fundamental failures in planning design. This is the long-term cost of design decisions made in a vacuum,” says the report.

Improving infrastructure to reduce costs

The report further argues that developing new infrastructure in Africa is needed to reduce the additional costs of between 30% and 40% that poor road, rail and harbour infrastructure adds to goods being traded among African countries.

“A strong infrastructure reduces the costs and improves the ease of doing business and is also the key to long-term industrial competitiveness in global markets,” says lead author of the report Irina Unkovski.

It is a lack of infrastructure and poorly maintained and obsolete assets that cause low levels of intra-African trade and trade with other regions. “The world is eager to do business with Africa, but finds its markets difficult to access due to poor infrastructure. The demand for modern, well-maintained, key infrastructure is therefore a continent wide priority,” the report says.

US$90 billion (R977 billion) is required annually for infrastructure. Of this, US$60 billion (R651 billion) needs to be spent on new infrastructure and US$ 30 billion (R326 billion) should be spent on the maintenance and rehabilitation of existing infrastructure. However, only about half of the required amount is being spent on new infrastructure projects and maintenance.

The report argues that all facets of a development need to be considered during the early phase of planning to improve the continent’s situation. These include planning, financing and execution as well as the additional facets such as business strategy, identifying business objectives, doing market analysis and a feasibility analysis.