Canada

Good data is key to federal funding for infrastructure projects

ARTICLE  | 

Municipal and regional governments across Canada hope to use the federal government’s $125 billion in extra funding to deliver benefits to residents. Primarily, this means helping to fill the ‘infrastructure gap’ – crumbling bridges, tired recreational centres, over-capacity public transit systems and the like.

But it’s not just an infrastructure gap. There can also be a gap between the requirements of the funding program, and the projects being proposed. In many cases, this is because federal authorities do not see a connection between the stated purpose of the infrastructure program, and the information in the proposal about a planned local project.

This means that the request for funding gets turned down, so that those who did the work on the proposal feel that they wasted their time, and are less likely to try again.

Having supported many government entities in getting funding for their infrastructure projects, RSM’s Projects and Economics group has found that success focuses on just one word: ‘numbers.’  As in, hard, verifiable numbers that demonstrate the expected benefits of the proposed project.

Helping your project meet federal priorities

Those numbers must show the proposed project’s ability to produce benefits. But what kind of benefits?

It’s different from the 2008-2009 recession, when there was much talk of ‘stimulus spending.’ In the United States, for example, the Obama government put a laser focus on funding projects that would generate jobs and economic activity. “How many hard hat crews can you get working next week?” seemed to be the most pressing concern. The ‘numbers’ involved how many people were put to work.

The ten-year program from Ottawa, announced in early 2016, also has a purpose, but it is not so narrowly focused on job creation. Rather, it’s around creating ‘social benefit’ – relieving traffic congestion, diverting commuters towards public transit rather than driving, improving housing for at-risk populations, and popularity of new facilities such as a public park’s playground.

All of these projects can be described with numbers. But for a municipal or regional government with projects to propose, there are several difficulties in finding the numerical data that the federal government is looking for. This is because:

  • Future benefits of a new or improved facility are often hard to predict
  • The benefits often aren’t expressed in dollars, but intangibles
  • A ‘credibility gap’ – federal authorities may believe that the data in the proposal cannot be defended if it is challenged

What kinds of professional help do you need?

Public entities such as municipalities looking to create improvements in their environment and infrastructure may need to seek help from a variety of external skill-sets.

Those skills include engineering and construction management. But before the backhoes and work crews arrive on site, time and effort must be invested in planning the work. This includes selecting projects that will benefit stakeholders, including the environment, and that meet the criteria set by the federal government.

Sometimes, external professional services can play a significant role in making this happen. Some points to consider when looking for external professional counsel:

Predicting the benefits of projects

You need individuals on your team who have experience in understanding the social benefit that can be expected from each potential project – such as improved housing for vulnerable people, reduced traffic congestion due to a bridge-widening, or increased use of a renovated recreation facility. This helps to determine which of the options is most likely to deliver significant benefits, as well as being able to meet the federal government’s criteria.

Expressing benefits in numerical form

As noted above, public entities will need to generate numerical data to back up their proposals – and those numbers must be based on accurate, verifiable information. While numbers in an accounting spreadsheet may be easy to verify, many government entities will struggle with the federal government’s requirements for data on environmental and social benefits. External professionals may be able to provide the support needed.

Credibility with decision-makers

Independent professional services firms live or die based on their neutrality and credibility. Added credibility can come from having done similar projects for other organizations, so that the federal authorities are more likely to trust the findings and recommendations in the funding applications.

Supporting large projects with effective tax strategy

While a project like a bridge or a new recreational centre might be small for the federal government, it might be a huge investment for a mid-size or small municipality. As a result, the municipality’s elected officials and staff may be unfamiliar with all the ways to manage the project in a way that reduces expenses such as sales tax.

This means it helps if the municipality can access expertise on the HST and other tax implications of a project, it may find that saving just a few percentage points on taxes can add up to large sums that can then be plowed into the project budget.

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