Project & Infrastructure Finance Jobs Heating Up
When it comes to infrastructure, states are putting off today what they can do tomorrow. That’s according to an AP review of repairs on each state’s 20 most-traveled bridges with structural deficiencies. The study found that just 12% of those structurally deficient bridges (which are not in imminent danger of collapse) have actually been fixed. The study also reveals that in most states, the most common approach to infrastructure was to plan for repairs later rather than fix problems now.
The evidence is everywhere of the large and growing gap between infrastructure needs and historical rates of investment, according to Deloitte. The firm adds that private investment in public infrastructure - or public-private partnerships (PPPs) - has emerged as one of the most important models employed by many governments to rebuild the nation’s infrastructure. More infrastructure deals could enter the market as infrastructure matures as an asset class and as governments become more comfortable with privatizing, reports Pensions & Investments.
Amid the growing trend, executive search firm, A.E. Feldman, says infrastructure finance jobs are opening up for candidates with backgrounds in investment banking as well as experience in analyzing and executing structured financings. The most sought after candidates are those with experience in infrastructure transactions and civic engineering. Additionally, legal jobs are opening up for attorneys with expertise in global project development and complex financial transactions.
Crumbling U.S. Infrastructure
Soaring construction costs, budget shortages, election-year politics, a backlog of bridge projects, competing highway repairs, and bureaucracy often slow bridge work to merely incremental progress, reports the AP.
Included in the AP’s findings on repair status from 48 states and Washington, D.C.:
- 64% of the bridges received no work beyond regular maintenance, though most were targeted for some kind of future work.
- 12% had their structural defects fixed — usually through a major rehabilitation or outright replacement.
- An additional 24% have seen a partial improvement, either through a short-term repair to temporarily address the defect or an ongoing project that is not yet complete.
Among the worst offenders: Indiana, Oklahoma, New Hampshire, and South Carolina. In these states, the AP says work was conducted on only one of each state’s 20 most heavily traveled structurally deficient bridges. But the infrastructure needs of the U.S. don’t end with structurally deficient bridges…
- The American Society of Civil Engineers says the current condition of our nation’s major infrastructure systems earns a grade point average of D.
- The Federal Transit Administration says $21.8 billion is needed annually over the next 20 years to maintain and improve the operational capacity of transit systems. Billions more is needed to repair the nation’s deficient roads, bridges and public housing.
- According to the Texas Transportation Institute, worsening traffic congestion in American cities of all sizes is creating a $78 billion annual drain on the U.S. economy in the form of 4.2 billion lost hours and 2.9 billion gallons of wasted fuel
- The Environmental Protection Agency (EPA) reports that our nation’s wastewater treatment facilities and systems will require as much as $390 billion in capital investment by 2025 to keep them in service.
Infrastructure to Boost a Slowing Economy
Many experts contend that investment in America’s infrastructure is one way to boost the slowing economy. Felix Rohatyn, Senior Adviser to Lehman Brothers, and Warren Rudman, former U.S. Senator from New Hampshire are proponents of the National Infrastructure Bank. The FT published a report by the two which concludes that infrastructure is America’s best investment.
The report contends that facing a troubled economy, a program to improve the country’s decaying infrastructure could not only add jobs, but restore a general sense of confidence in the economy. Rohatyn and Rudman suggest treating the renewal of roads, bridges, schools, water pipelines, ports, air control systems, dams and railroads as investments - not just budget expenditure.
P3s to Help Fund Infrastructure Gap
Data from the Organization for Economic Cooperation and Development suggests that more than $20 trillion in infrastructure projects will be required over the next 25 years. The group contends that demand for infrastructure will expand significantly in the decades ahead, driven by major factors of change such as global economic growth, technological progress, climate change, urbanization and growing congestion.
The OECD also says, however, public finances are becoming increasingly tight, and infrastructure financing is becoming much more complex. As a result, a gap is opening up between the infrastructure investments required for the future, and the capacity of the public sector to meet those requirements from traditional sources. The group says bridging the looming “infrastructure gap” will demand innovative approaches, both to finding additional finance and to using infrastructures more efficiently and more intelligently through new technologies. Public-private partnerships or PPPs (P3s) are emerging in the U.S. as a viable solution to the infrastructure gap.
The idea of private investment in public infrastructure has garnered increasing attention with the privatization of U.S. highways, such as the Chicago Skyway, a 7.8-mile toll bridge connecting the city with Indiana. The Chicago Skyway involves a 99-year concession the city of Chicago granted to a private consortium led by Macquarie for $1.8 billion.
Governments traditionally realize cost savings of 20-50% when the private-sector is involved in providing services, according to the National Council of Public-Private Partnerships (NCPPP). The NCPPP also contends that during periods of economic slowdown, government revenues are frequently not sufficient to meet spending demands. By developing partnerships with private-sector entities, governments can maintain quality services despite budget limitations. The group states that the average American city currently works with private partners to perform 23 out of 65 basic municipal services.
The NCPP quotes Eugene A. Schiller, Deputy Executive Director, Southwest Florida Water Management District as saying, “Municipalities need to understand that outsourcing and privatization are attractive choices for many city officials seeking economic growth and community development in the competitive world we live in. It can be a smart source of revenues to fund these improvements.”
A.E. Feldman has a specialized team of recruiters dedicated to Project & Infrastructure Finance. To learn more about these relevant issues or inquire about existing and future opportunities in project & infrastructure finance, contact A.E. Feldman’s President, Mitch Feldman and the firm’s specialized recruiting team here.
