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December 23, 2013

What will it take to improve infrastructure?

Procurement Perspectives | Stephen Bauld

Conversations today revolve around the need to improve infrastructure in every municipality.

Every construction conference, including the most recent Construct Canada event in Toronto, points to the same conclusion, improving the demand and need to continue to promote re-building infrastructure in Canada. As important as government procurement activity has been in the past, it is likely to become far more important in the future.

Some of the reasons are partly demographic, and partly the result of a huge infrastructure deficit that results from years of deferred maintenance and replacement. Looking first at the demographic pressure: Canada’s population more than doubled in the 50 years that followed the end of the Second World War, and is continuing to grow at a brisk pace today. This continued rise in the population will create a great demand for additional government and private sector infrastructure.

Stephen Bauld

Procurement Perspectives

Stephen Bauld

Over the next 30 years, Canada will add the equivalent of a city the size of the Greater Toronto Area to its population base.

In addition to the pressure resulting from population increase, there is a growing need for infrastructure due to the fact that many government capital facilities that were built in the 1950s, 60s and 70s, are now beginning to come to the end of their useful life.

They and will either need major refurbishment or replacement in the near future. Also, the fact that so much of Canada’s industrial infrastructure requires substantial upgrading not only to bring it up to a modern level of technical competitiveness, but to make it suitable to the kind of high technology industry that Canada requires, if it is to continue to have a large industrial sector as part of its economic base.

It would then stand to reason that much of the infrastructure that will be required over the coming years will either be built at the municipal level, or will have a substantial municipal component.

Key projects in most of the major cities in the country are likely to include waste disposal facilities, water pump and treatment works, sewage treatment plants, road and airport upgrades, installation, upgrades and expansion of rapid transit systems of various kinds, new buses, enhancements to communication technology, new parks, recreation facilities, and sport complexes.

Moreover, much of the public expenditure that will be undertaken in other parts of the broader public sector (including schools, universities and hospitals) will have important municipal implications — such as the building of new school buildings and hospitals.

Therefore, if the municipal tax burden is to be considered within the levels acceptable to the public, then in order to meet the rising demands for expenditures, municipal procurement in the future will need to be conducted more efficiently then it has in the past.

Unfortunately, there are few, if any, role models to which municipalities can refer to for guidance on how to optimize procurement. International comparisons of government productivity, show remarkably little variance among advanced industrial economies.

The difference in productivity between those countries that have small public sectors and those with large can no doubt be easily explained. In countries with small public sectors, government activity is likely to be more narrowly focused. With a more clearly defined role for government, there is less likely to be division of purpose and for duplication of expenditure. Also, it is generally easier to maintain and administer proper expenditure and procurement control measures in smaller organizations than in large ones.

However, whether a government is large or small, the importance of involving government efficiency is also generally accepted. Over the past several years the idea of “Value for Money” has been one of the main issues at hand. The ability to measure and monitor what we build has become the burning question.

Stephen Bauld, Canada's leading expert on government procurement. He can be reached at stephenbauld@bell.blackberry.net.

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