- The document outlines an agenda for a business and policy dialogue hosted by SMART Infrastructure from August 1-3, 2014 in Sydney, Australia. The event will include presentations and discussions on global best practices in infrastructure. - A presentation by Ross Love of Boston Consulting Group will discuss leading practices across the infrastructure project lifecycle and how Australia can improve based on international examples. The presentation will cover topics such as project selection, financing models, and approvals processes. - Case studies will be provided from countries like France, South Korea, India, and the Netherlands on their approaches to issues like public consultation, cost-benefit analysis, revenue sources, and inter-agency coordination on approvals.

1. Monday, 30th September 2013: Business & policy Dialogue
Tuesday 1 October to Thursday, 3rd October: Academic and Policy Dialogue
www.isngi.org
ENDORSING PARTNERS
The following are confirmed contributors to the business and policy dialogue in Sydney:
• Rick Sawers (National Australia Bank)
• Nick Greiner (Chairman (Infrastructure NSW)
smart.uow.edu.au
Global Best Practice
Infrastructure – Who Does it Best
and What Can Australia Learn?
Presented by: Mr Ross Love, Senior Partner,
Boston Consulting Group, Australia and New Zealand

2. Leading practices in infrastructure
Presentation to SMART Infrastructure
Business and Policy Dialogue
August 2014

3. SMART BPD Presentation - Ross Love BCG.pptx 2Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Introduction
There is a pressing need to address the growing global infrastructure gap
• Under current conditions, up to $25t shortfall in global infrastructure capacity expected by 2030
• Over the long-term, this could be worth 3–5% of global GDP
Closing this gap requires improvements across the infrastructure life-cycle
• Credible infrastructure pipelines that prioritise the right investments
• Rigorous preparation and procurement to set them up for success
• Ongoing optimisation of operations and maintenance to maximise their value over time
• A supportive, predictable and transparent enabling environment
Australia has a strong foundation to build on, but there is clear room for improvement, e.g.
• Ensure IA reforms translate into real improvements in project selection
• Make more systemic use of user charging and alternative revenue sources
• Promote greater innovation in project delivery and execution
• Improve data capture and availability, and enable super funds to take greater responsibility for
long-term capital formation

4. SMART BPD Presentation - Ross Love BCG.pptx 3Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Under current conditions, up to $25t shortfall in global
infrastructure capacity expected by 2030
20
40
60
80
100
120
2025202020152013 2030
Cumulative infrastructure capacity required (2012 US$t)
92-103
13
Existing stock4
Potential public
investment (consistent
with stabilising
debt-to-GDP ratios)3
13-24
30
36
Remaining
capacity gap
Current private
investment levels2
$49t
expected
to be met
under
current
conditions
$62–73t
total need1
1. Consensus estimate based on BCG, McKinsey, and WEF forecasts to 2030. 2. BCG estimate of global private investment average for 2006-2010. 3. BCG estimate of reduction in public investment
required to meet IMF debt -to-GDP targets (typically 60% of GDP) by 2030 (IMF Fiscal Monitor, October 2013 estimates of adjustments required to the cyclically adjusted primary balance (CAPB) to
meet debt-to-GDP targets while funding expected additional health and pension costs; Heritage Foundation 2014 Index of Economic Freedom estimates of government expenditure as a % of GDP;
BCG analysis 4. Assumes existing infrastructure stock of ~70% of global GDP (McKinsey, 2013) depreciating at 2.5% p.a. (BCG analysis; McKinsey, 2013). Source: BCG analysis.
Over the longer term, this could be worth
3–5% of global GDP

5. SMART BPD Presentation - Ross Love BCG.pptx 4Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Closing this gap will require improvements across the
infrastructure lifecycle ...
20
40
60
80
100
120
20302025202020152013
Cumulative infrastructure capacity required (2012 US$t)
Increased availability of financing
Enhanced enabling environment
Improved project execution
Rigorous preparation and
procurement
Improved project selection and
prioritisation
~15%
10-15%
~30%
~30-35%
~10%
Maximum lever potential
Note: Based on estimates: of the benefits of improved project selection and prioritisation (BCG; McKinsey); the 'privatisable' share of current government non-financial assets (Infrastructure Australia;
The Economist; OECD; BCG analysis); increased revenue potential of user charges, land value capture, and ancillary revenue (African Infrastructure Country Diagnostic; IEA; WEF; BCG analysis);
cost efficiencies in construction and O&M (WEF; BCG; McKinsey); the impact of improving all countries' regulatory environment to current best practice (World Bank; BCG analysis); and the impact of
increasing depth of national financial markets towards world best practice (World Bank; BCG analysis). Source: BCG analysis.

6. SMART BPD Presentation - Ross Love BCG.pptx 5Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Origination
Preparation and
procurement
Execution
Source: BCG; World Economic Forum
... but this is primarily about getting 'the basics' right
Project
cycle
 Needs-based, long-term
infrastructure vision
 Bankable feasibility studies that
rigorously forecast demand,
revenue and cost
 Optimised asset value and
utilisation
 Integrated, evidence-based
selection and prioritisation
 Clear allocation of risks to parties
best able to manage them
 Lifecycle-focus in maintenance
and investment to increase
lifetime value
 Rigorous 'value for money'
analysis to determine delivery
model
 Rigorous, standardised project
preparation processes
 Lean organisation and processes
to minimise construction and
operating costs
 Transparent, competitive, and
efficient procurement processes
Enabling
environment
 Stable, transparent and effective
legal & regulatory framework
 High quality, widely accessible
data and benchmarks
 Efficient regulatory and
approvals processes
 High capability workforce
 Adequate access to long-term
finance

7. SMART BPD Presentation - Ross Love BCG.pptx 6Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Origination
Preparation and
procurement
Execution
Source: BCG; World Economic Forum
... but this is primarily about getting 'the basics' right
Project
cycle
 Needs-based, long-term
infrastructure vision
 Bankable feasibility studies that
rigorously forecast demand,
revenue and cost
 Optimised asset value and
utilisation
 Integrated, evidence-based
selection and prioritisation
 Clear allocation of risks to parties
best able to manage them
 Lifecycle-focus in maintenance
and investment to increase
lifetime value
 Rigorous 'value for money'
analysis to determine delivery
model
 Rigorous, standardised project
preparation processes
 Lean organisation and processes
to minimise construction and
operating costs
 Transparent, competitive, and
efficient procurement processes
Enabling
environment
 Stable, transparent and effective
legal & regulatory framework
 High quality, widely accessible
data and benchmarks
 Efficient regulatory and
approvals processes
 High capability workforce
 Adequate access to long-term
finance

8. SMART BPD Presentation - Ross Love BCG.pptx 7Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Origination
Preparation and
procurement
Execution
Source: BCG; World Economic Forum
... but this is primarily about getting 'the basics' right
Project
cycle
 Needs-based, long-term
infrastructure vision
 Bankable feasibility studies that
rigorously forecast demand,
revenue and cost
 Optimised asset value and
utilisation
 Integrated, evidence-based
selection and prioritisation
 Clear allocation of risks to parties
best able to manage them
 Lifecycle-focus in maintenance
and investment to increase
lifetime value
 Rigorous 'value for money'
analysis to determine delivery
model
 Rigorous, standardised project
preparation processes
 Lean organisation and processes
to minimise construction and
operating costs
 Transparent, competitive, and
efficient procurement processes
Enabling
environment
 Stable, transparent and effective
legal & regulatory framework
 High quality, widely accessible
data and benchmarks
 Efficient regulatory and
approvals processes
 High capability workforce
 Adequate access to long-term
finance

9. SMART BPD Presentation - Ross Love BCG.pptx 8Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Origination
Preparation and
procurement
Execution
Source: BCG; World Economic Forum
... but this is primarily about getting 'the basics' right
Project
cycle
 Needs-based, long-term
infrastructure vision
 Bankable feasibility studies that
rigorously forecast demand,
revenue and cost
 Optimised asset value and
utilisation
 Integrated, evidence-based
selection and prioritisation
 Clear allocation of risks to parties
best able to manage them
 Lifecycle-focus in maintenance
and investment to increase
lifetime value
 Rigorous 'value for money'
analysis to determine delivery
model
 Rigorous, standardised project
preparation processes
 Lean organisation and processes
to minimise construction and
operating costs
 Transparent, competitive, and
efficient procurement processes
Enabling
environment
 Stable, transparent and effective
legal & regulatory framework
 High quality, widely accessible
data and benchmarks
 Efficient regulatory and
approvals processes
 High capability workforce
 Adequate access to long-term
finance

10. SMART BPD Presentation - Ross Love BCG.pptx 9Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Origination
Preparation and
procurement
Execution
Source: BCG; World Economic Forum
... but this is primarily about getting 'the basics' right
Project
cycle
 Needs-based, long-term
infrastructure vision
 Bankable feasibility studies that
rigorously forecast demand,
revenue and cost
 Optimised asset value and
utilisation
 Integrated, evidence-based
selection and prioritisation
 Clear allocation of risks to parties
best able to manage them
 Lifecycle-focus in maintenance
and investment to increase
lifetime value
 Rigorous 'value for money'
analysis to determine delivery
model
 Rigorous, standardised project
preparation processes
 Lean organisation and processes
to minimise construction and
operating costs
 Transparent, competitive, and
efficient procurement processes
Enabling
environment
 Stable, transparent and effective
legal & regulatory framework
 High quality, widely accessible
data and benchmarks
 Efficient regulatory and
approvals processes
 High capability workforce
 Adequate access to long-term
finance
Selected examples

11. SMART BPD Presentation - Ross Love BCG.pptx 10Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Institutional set-up is critical to establishing a credible
infrastructure pipeline that prioritises the right investments
Needs-based
long-term
infrastructure vision
Integrated,
evidence-based selection
and prioritisation
Rigorous 'value for
money' analysis
Preparation and
procurement
Early and effective public involvement
E.g. France's National Commission for Public Debate (CNDP) is charged with organising public consultation
as early as possible in the project lifecycle
Formal requirement for independent, expert review (incl. ex-post evaluation) and advice
E.g. South Korea's PIMAC is required to verify CBA and value-for-money analyses before a project can proceed
Transparency of assessments and decision-making
E.g. Infrastructure Ontario ensures value-for-money methodology and assessments are publicly disclosed
Clearly defined stage gates
E.g. UK Major Projects Authority is responsible for formal stage gate reviews, including explicit option to halt projects
based on updated information
Project selection clearly separated
from choice of delivery model
Unfettered choice to review
projects, incl. unsolicited proposals
Source: BCG.

12. SMART BPD Presentation - Ross Love BCG.pptx 11Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Sustainable revenue models leverage a broad range of
funding sources: not just taxes or user charges
Source: BCG; World Economic Forum.
50% of RDE PPPs rely on
user fees vs. few in
developed countries
Potential can range from
010% of revenue utilities
to 50% in airports
Metro lines have
recovered 50-85% of
required funding
India limits viability gap
funding to 20% of total
project cost
User
charges
Ensure public buy-in
• Clearly link to quality
improvements (e.g.
Stockholm congestion
charge)
Optimise pricing
• Minimise 'pain' of
payment (e.g. e-
tolling)
• Diversify service
levels to balance cost
and revenue (e.g.
Manila Water's 'Water
for the Poor')
Ancillary
revenue
Address user needs
holistically
• Satisfy advanced
needs in core
business (e.g. energy-
saving solutions)
• Pursue adjacent
services (e.g. sell
warehousing at ports)
• Consider unrelated
revenue sources (e.g.
cabling under roads)
Partner effectively to up
the odds of success
Land value
capture
Choose an appropriate
level of risk
• Tradable development
rights (e.g. CEPACs
in Brazil)
• Joint-develop land
with concessionaire
(e.g. MTR in HK)
• Buy and re-sell land
before announcement
(e.g. Copenhagen
metro)
Act quickly to exploit
window of opportunity
Government
payments
Use to bridge 'viability-
gap' where necessary
• Based on rigorous
analysis, not by default
Ensure risk allocation
incentivises outcomes
• Availability payments
reflect service-levels
(e.g. UK A1 payments
inversely proportional
to congestion levels)
• Shadow tolling (e.g.
Belras road in
Portugal)
KeysuccessfactorsPotential

13. SMART BPD Presentation - Ross Love BCG.pptx 12Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Operations
control
Maintenance
User
self-regulation
Time-based
charging
3
2
1
Data-driven technology can drive significant improvements
in asset utilisation and maintenance
ImpactLeading practice
OperatorsUsers
Increasinginterventionwithuserbehaviour
Provide users
with data they
need to change
behavior
Impose usage
limitations only
when/where
necessary
Use social
mitigation
measures to
ensure public
buy-in
Monitor data to
predict
deterioration in
asset condition
Example
• SF Smart Parking program uses a
smart phone app to broadcast the
location of available parking spaces in
real-time (including their demand-
adjusted parking prices)
• Average time
searching for parking
has decreased 43%;
target occupancy
met 31% more often
• NYC system, Midtown in Motion
monitors real-time microwave sensors,
cameras and e-tolling readers to
identify choke points, adjust signals
and clear traffic
• Travel speeds
improved by 10%
• Proportion of
potholes closed
within 2 days
increased from 48 to
92%
• Boston's pothole-finding app, Street
Bump crowdsources asset condition
data to locate patches of road that
need or will need repair
• Washington State Route 167
dynamically prices HOT (High
Occupancy Toll) lanes based on real-
time traffic levels updated every 5
minutes
• Vehicle numbers
reduced by 5%;
collisions down 2%
and speeds have
increased by 20%
4
Source: BCG; World Economic Forum; San Francisco Municipal Transportation Agency; City of Boston Public Works Department.

14. SMART BPD Presentation - Ross Love BCG.pptx 13Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Dramatic efficiency improvements in approvals possible
without compromising the integrity of the process
Source: BCG; European Commission (2011) Permitting procedures for energy infrastructure projects in the EU: evaluation and legal recommendations; Canada MPMO (Major Projects Management
Office; OECD (2010) Better regulation in Europe: France; Memorandum of Understanding (2009) Transmission Siting on Federal Lands.
Standardised
approval
pathways
with a single
point of
accountability
Early and
effective
public
participation
Clear
allocation of
responsibility
between
agencies
Rationalised
regulatory
objectives
• Legislation enforces strict
timeframes for overall approvals
• Responsible agency can take
decision in lieu of local authorities if
input not provided
Netherlands
• 9 Federal agencies signed an MoU
to speed up approval of transmission
lines, reduce duplication and ensure
seamless processes
United StatesCanada
• Created single point of entry for
resource projects
• Reduced number of agencies
involved from 40 to 3
• Legislation requires public
involvement as early as possible in
the approval process to improve
buy-in and identify areas of tension
France
Clear time limits
for overall approvals

15. SMART BPD Presentation - Ross Love BCG.pptx 14Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Origination
Preparation and
procurement
Execution
Source: BCG; World Economic Forum
Australia has a strong foundation to build from, but
there is clear room for improvement
Project
cycle
 Needs-based, long-term
infrastructure vision
 Bankable feasibility studies that
rigorously forecast demand,
revenue and cost
 Optimised asset value and
utilisation
 Integrated, evidence-based
selection and prioritisation
 Clear allocation of risks to parties
best able to manage them
 Lifecycle-focus in maintenance
and investment to increase
lifetime value
 Rigorous 'value for money'
analysis to determine delivery
model
 Rigorous, standardised project
preparation processes
 Lean organisation and processes
to minimise construction and
operating costs
 Transparent, competitive, and
efficient procurement processes
Enabling
environment
 Stable, transparent and effective
legal & regulatory framework
 High quality, widely accessible
data and benchmarks
 Efficient regulatory and
approvals processes
 High capability workforce
 Adequate access to long-term
finance
Ensure Infrastructure
Australia reforms
translate into real
improvements in
practice
Make more systemic
use of user charging
and alternative revenue
sources
Promote greater
innovation in execution
Improve data capture and availability
Enable super funds to take greater responsibility for long-term capital formation

16. SMART BPD Presentation - Ross Love BCG.pptx 15Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Direct user charges are a small proportion of Australian
road-related revenue
50
100
0
11%
25%
9%
50%
75%
91%
FranceSwitzerland
8%
81%
44%
41%
Australia
41%
Germany UK
19%
2%
98%
US
5%
75%
Norway
% of annual road-related revenue
25%
Note: Direct usage charges comprise tolls; indirect usage charges include fuel and motor vehicle taxes; one-off fees include vehicle registration and licensing fees; unrelated income includes e.g.
investment income; for Australia, Fringe Benefits Tax was treated as a one-off fee; for the US, motor-vehicle and other taxes and fees were split among one-off fees and indirect usage charges.
Source: Australian Department of Infrastructure and Transport 2011; Comité des Constructeurs Français d'Automobiles 2009; Eidgenössische Finanzverwaltung 2009; Bundesministerium der
Finanzen 2009; HM Revenue and Customs 2009; Bråthen & Odeck, 'Funding of Road Construction in Norway' 2006; US Federal Highway Administration 2011.
Unrelated income
One-off fees
Indirect usage charges
Direct user charges
Backup

17. SMART BPD Presentation - Ross Love BCG.pptx 16Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Australian construction firms and infrastructure operators
amongst the least innovative sectors of the economy
31 31 30
28
25 25
22 22
19 18
14
12 11 11 11 11 10
20
24
30
19 18
14
17
15 16
20 18
15
25
12
16 16
10
0
10
20
30
40
Agriculture
Electricity,Gas&
Waterservices
% of Australian businesses introducing innovation, 2012-13
Transport&
Warehousing
Construction
RealEstate
services
Administrative
services
Financiall
services
Hospitality
Healthcare
Recreation
services
Otherservices
Professional
services
Media&
Teleco
Wholesale
Manufacturing
Retail
Mining
Operational processesGoods or services
Source: ABS, Summary of IT Use and Innovation in Australian Business, 2012-13
Operational processes
(Average=18%)
Goods or services
(Average=19%)
Backup

18. SMART BPD Presentation - Ross Love BCG.pptx 17Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Australian super funds have relatively high allocations to
infrastructure, particularly in unlisted equity
0
5
10
15
20
25
Endesa
AustralianSuper
SustainabilityFund
OMERS
GEPF
CalPERS
Previ
AFPProvida
PFZW
ABP
Ø 0.9
Ø 3.3
CGDPensões
AP3
BancoBPI
AFPHorizontePeru
OYAK
PensionFund
FAPES
FUNCEF
CanadaPPIBoard
PFAPension
Immarinen
AforeXXIBanorte
Fonditel
PMT
Pension fund infrastructure investments (% of total assets)
Menora-Mivtachim
NZSuperFund
QuebecPensionPlan
AP4
USS
BTPensionScheme
OTPP
FutureFund
Sunsuper
33 selected funds
69 surveyed funds
Debt
Unlisted Equity
Listed Equity
Note: Average infrastructure investments shown include debt and unlisted equity as a % of total assets under management for the 69 funds reflects the average of all funds in the OECD Annual
Survey of Large Pension Funds (0.9%). The higher 3.3% figure reflects the weighted average of the 33 funds with any infrastructure allocation.
Source: OECD, Annual Survey of Large Pension Funds and Public Pension Reserve Funds, October 2013, BCG analysis.
Backup

19. Thank you
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