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Part 4

Conclusions and Recommendations

T he use of private-sector elements in the delivery of infrastructure is a vital component of development. In order to keep up with growing demand and changing environments, public-works agencies must employ additional cost effective resources to ensure delivery of all necessary services, and outsourcing is one method to achieve best value for each dollar invested. The importance of the issue continues to grow, and steps must be taken to create a more receptive set of circumstances for private-sector involvement.

Further study of the cost benefits of private-sector involvement needs to be done. Improvements in the cost accounting of state agencies through implementation of new accrual accounting standards—and further moves toward full-cost accounting—will help decision makers obtain a clearer picture of overhead costs.

Enabling legislation should be passed to lift barriers to infrastructure outsourcing. In those states in which state restrictions limit the use of private-sector elements, legislators must consider the vast need for infrastructure projects and develop definitive guidelines that will help establish a competitive environment.

Establishing this competitive environment will ensure the optimal level of efficiency and quality for public- works projects by allowing market forces to determine the delivery time, quality, and costs of projects. In choosing whether to use outsourcing for delivery of projects, decision makers should:

1. Recognize the rich and varied potential benefits of infrastructure outsourcing. From design through construction and into long-term operation and maintenance, outsourcing can offer cost savings, time savings, project delivery guarantees, access to new skills, increased innovation, or many combinations of these and other benefits. Like any policy tool, outsourcing delivers benefits if it is properly conceived and structured. Cost alone cannot be used to determine whether work should be outsourced. Factors such as quality and the ability to accommodate peak demand and meet deadlines are often key reasons for outsourcing, even if the cost is higher. Furthermore, the private sector has the ability to specialize in different design and engineering fields, and access to those specialized skills often motivates outsourcing—again, even if the cost is higher.

It is not uncommon for outsourced design and construction of, say, a new water treatment plant to cost more than original in-house estimates but be completed in substantially less time and use newer treatment technologies, or for outsourced operation and maintenance of facilities to lower the life-cycle cost of the facility. Government decision makers, as the customers, can choose goals of outsourcing, be they quick project completion or lower costs.


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