Supporting Better Decision‑Making in Transport Infrastructure in Spain

3. Evaluation of the decision-making process

Getting infrastructure decisions right is crucial to ensuring high-quality public infrastructure, which is essential to sustainable and inclusive economic growth as well as to improve overall societal well-being. However, infrastructure investment is complex. Given the limited resources, decision-making processes need to ensure that these are used efficiently, transparently and in a credible, predictable and productive manner.

Addressing governance challenges is key to provide governments with the capacities for successful infrastructure delivery and achieving the best possible outcomes under constrained economic environments. By strengthening public governance, there is more institutional capacity to channel resources for public investment towards projects that effectively address infrastructure service needs and that represent clear value for money.

This chapter examines Spain’s decision-making process for infrastructure investment. It contains an overview of practices in OECD countries relative to those in Spain. The chapter concludes with recommendations on strategic planning, project appraisal and prioritisation, capital budgeting, and monitoring and evaluation.

Long-term strategic planning

A necessary condition for a successful infrastructure programme is appropriate strategic planning. The key role of infrastructure planning is ensuring that decisions relating to infrastructure investments take into account needs, trade-offs, political priorities and long-term development goals, and do so in a transparent and consultative way. According to OECD best practices, the long-term strategic vision should be grounded upon shared ambitions for national and subnational development and enhance the economic, natural, social and human capital which underpins well-being, sustainable and inclusive growth, competiveness and public service delivery (OECD, 2020[21]). This section will assess the existing strategic planning practices in Spain and identify issues in the process of generating, monitoring and adjusting a national infrastructure vision in the country.

An established practice of infrastructure planning

Currently in Spain there is no whole-of-government long-term thinking across different infrastructure sectors (e.g. utilities, education, health services, transport and housing, among others). However, Spain has consistently adopted overall and sectoral transport infrastructure long-term plans over the past three decades, in line with most OECD countries (Figure 3.1). This long-established practice has been a key driver of large investments made by the Spanish government aiming to close the gap in the provision of transport infrastructure. The rapid development of infrastructure projects in recent years echoes the very ambitious long-term national infrastructure plans that have been adopted by the Spanish government since the late 1990s (Box 3.1).

Figure 3.1. Adoption of long-term strategic infrastructure plans in OECD Countries (2018)

Notes: Data for Belgium, Canada, Finland, Iceland, Korea, Latvia, Poland and the United States are not available; Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

Source: (OECD, 2018[31]), OECD Survey of Capital Budgeting and Infrastructure Governance, Questions 8 and 9, OECD, Paris.

Government ministries have changed their approach to strategic planning over time. Different approaches have been used to address salient political needs in national transport infrastructure plans. The Infrastructure Master Plan 1993-2007 (Plan Director de Infraestructuras 1993-2007, PDI) was the first plan to be prepared with a whole-of-government approach, taking into consideration cross-sector national, regional and urban development. The Infrastructure and Transport Strategic Plan 2005-2020 (Plan Estratégico de Infraestructuras y Transporte 2005-2020, PEIT), on the other hand, was the first transport infrastructure plan to be subject to an environmental assessment in accordance with the European Union Directive on the Environmental Assessment of Plans and Programs, an innovative approach for infrastructure planning in Spain.

Box 3.1. Long-term infrastructure plans in Spain

The choice of what to build should be framed within a vision for the future of the country that is articulated through an explicit statement of long-term development goals. Some centralised guidance relating to the objectives and priorities that infrastructure policies and investment prioritisation should pursue is essential to ensuring the overall coherence of investments across sectors. Thus, infrastructure strategies should not only take into account the specific needs of a sector, but also ensure that investment plans contribute to achieving broader long-term development goals.

Spain has adopted three long-term infrastructure plans in the last three decades:

• Infrastructure Master Plan 1993-2007 (PDI): The PDI is the first overarching infrastructure plan in Spain. The plan sets strategic objectives, priorities and a project pipeline in the sectors of transport, urban mobility, water and sanitation, waste management and environmental works. Besides from the cross-sector objectives that guided the PDI, particularly in terms of transport infrastructure the PDI sets as strategic goal the holistic development of transport infrastructure in a way that minimises negative externalities. This strategy is expanded into a set of nine objectives aimed to reinforce inter-modality and avoid the duplication of efforts in the supply of transport services and infrastructure.

• Strategic Infrastructures and Transport Plan 2005-2020 (PEIT): With an estimated expenditure close to EUR 250 billion, the PEIT was the largest infrastructure plan to be adopted by the Spanish government. The plan was grounded on four general objectives, namely enhance the system’s efficiency, enhance social and territorial cohesion, contribute to the system’s sustainability and promote economic development and competitiveness.

• Plan for Transport and Housing Infrastructure 2012-2024 (PITVI): The current plan spans road, railway, seaport, airport and urban infrastructure in Spain. The PITVI’s estimated investment is around EUR 138 billion. Building on the objectives set forth by the PEIT, the PITVI incorporates two additional objectives: promote sustainable mobility mindful of environmental considerations and facilitate the integration of the transport system by an inter-modality approach.

Source: (Congreso de los Diputados, 1994[32]) (Ministerio de Fomento, 2005[33]), (Ministerio de Fomento, 2012[34]).

The infrastructure strategic vision in Spain is heavily biased towards railway infrastructure. The prioritisation of railway has been consistently considered a strategic pillar of national infrastructure plans. The PDI first acknowledged the construction of high-speed railways as a priority for the Spanish government, in line with the plans adopted by the EU in terms of high-speed railway networks. Similarly, the PEIT included extensive lines of action for the development of a High-Performance Network, which accounted for more than 48% of the total investments foreseen in the plan (Ministerio de Fomento, 2005[33]). More recently, Law 2 of 2011 set seven prioritisation criteria for transport infrastructure planning to be observed for the PITVI’s preparation, six of which were directly related to strengthen the development of railway infrastructure in the country especially for freight transportation. In line with these guidelines, 44% of the total investments estimated in the PITVI were allocated to railway infrastructure (Ministerio de Fomento, 2012[34]). Inter-modal lines of action described in the PITVI are also mostly aimed to encourage synergies between railways and sea shipping through the execution of agreements between ADIF, Puertos del Estado and port authorities.

Moving towards sustainable mobility in transport infrastructure

Difficulties around designing a clear strategic vision stem from the potentially conflicting objectives and policy goals involved in infrastructure development, which often have to be aggregated into a single coherent view. A long-term strategic vision for infrastructure should address infrastructure needs as much as it should actively contribute to the achievement of national policy objectives and international commitments on environment, equality and sustainable development and growth.

Considerable investments have already been made over the last decades in order to satisfy basic needs in terms of access to key transport infrastructure in the country. As such, bridging infrastructure gaps in detriment of social and environmental values is no longer a policy option. The strategic vision guiding investment decisions in Spain is progressively shifting towards infrastructure investments that bring about socio-economic, environmental and efficiency gains. Consequently, planning instruments in Spain are gradually being adapted to attain sustainable mobility goals (Box 3.2). During the preparation of this report, the Spanish government was working towards the adoption of a Safe, Sustainable, and Connected Mobility Strategy (Estrategia de Movilidad Segura, Sostenible y Conectada) that spans all transport sectors, as well as passenger and freight transport.

The PITVI was subject to an environmental assessment by the former Ministry of Agriculture, Food and Environment (today Ministry for the Ecological Transition and the Demographic Challenge). Projects with a negative environmental evaluation were discarded by the MITMA during the preparation of the plan (Ministerio de Fomento, 2012[34]). The plan also provides examples of indicators to quantify the achievement of environmental objectives vis-à-vis waste management, efficient use of energy resources, emission reductions, impacts to wildlife corridors and noise and air pollution. Furthermore, it lists a number of environmental studies that should be performed throughout the implementation of the works included in the plan.

Sustainable mobility plans have also been consistently adopted by subnational governments, especially at the municipal and metropolitan level. These plans aim to provide innovative solutions to mobility issues while reducing environmental impacts in a cost-efficient manner. The strategic planning practice around sustainable mobility has been encouraged by legal provisions, which condition transfers from the central sector to the adoption of a sustainable mobility plan abiding to the national strategy on sustainable mobility.

Box 3.2. Spain adopted strategic goals for sustainable mobility

Governments should clearly identify policy goals and evaluate whether regulation is necessary and how it can be most effective and efficient in achieving those goals. Planning instruments in Spain are gradually being adapted to the strategic goals found in Law 2 of 2011, which translates a broad-base political consensus around issues such as environmental sustainability, inter-modality and social equity, as shown below:

• Contribute to the improvement of the urban environment, citizens’ health and safety and the economy’s efficiency as a result of a rational use of national resources;

• Integrate urban development, economic and mobility policies in order to reduce the commuting times and to facilitate an effective and efficient access to basic services with the least environmental impact;

• Promote the reduction in energy consumption and improve energetic efficiency, in a way that takes into account policies that manage demand of transport services;

• Encourage the use of transport modes with the least social, economic, environmental and energetic impact, for both passengers and freight, as well as the use of public and collective transportation services and other non-motorised transport;

• Endorse inter-modality across transport sectors, opting for networks and modes of transport that facilitate the use of alternatives different to private vehicles.

Source: (Jefatura de Estado, 2011[18])

Sector-based infrastructure plans

In addition to the preparation of an overall national infrastructure plan, Spain has also a sector-based strategic planning practice in place. It is not clear how sector-based plans in Spain translate long-term development goals (i.e. inter-modality or sustainable mobility) into investment decisions; the plans exclusively take into account the specific needs for each mode of transport instead of ensuring an overall coherence of investment across sectors.

Sector-based infrastructure planning is undertaken at different levels of government and tends to be formulated in silos, reflecting the current institutional setup in Spain (Box 3.3). Within the MITMA, divisions are focused on both road and railway infrastructure planning. Horizontal co-ordination should limit the possibilities for overlap between projects and ensure that investments are mutually reinforcing. Co-ordination of all institutional stakeholders is an essential pre-requisite for efficient and effective infrastructure planning and should be ensured early in the process. The co-ordination challenge is particularly acute in sectors where responsibilities are distributed across different levels of governments. This is the case for seaport and airport infrastructure plans, which are prepared by the corresponding SOEs.

Box 3.3. Guidelines for preparation of infrastructure plans are not uniform across sectors

There are no homogenous guidelines for the preparation of sector-based plans in Spain. As discussed in Chapter 2, this is a result of the fragmented legal framework that sets different requirements for each sector-based plan. Furthermore, there is no provision under which these plans must abide by the strategic goals and priorities established by the national infrastructure plan in place:

• Road Infrastructure Law (Law 37 of 2015): The plan must include clear strategic objectives based on an assessment of the current state of the road infrastructure network, although regulation fails to indicate whether it must be a short or a long-term plan. The plan must also provide a project pipeline based on prioritisation criteria that must be previously defined within the plan itself, observing inter-modality, environmental and financial sustainability considerations. The MITMA is the body in charge of preparing this document and the Council of Ministers is responsible for its approval, albeit a strategic road infrastructure plan has not been recently adopted (see p. 50 for more information)

• Railway Infrastructure Law (Law 38 of 2015): In terms of strategic planning and preparation of preliminary studies, Law 38 of 2015 sets more rigorous requirements than those found in the road infrastructure law. Indeed, the railway indicative strategy must be renewed every five years, must take into consideration the rail infrastructure needs of the EU as a whole and should be prepared observing economic and financial sustainability criteria (see p. 50 for more information). The regulation also encourages a stronger inter-modality approach in the design of the indicative strategy.

• Seaport Infrastructure Law (Decree 2 of 2011): Even though the port authorities and Puertos del Estado adopted an strategic infrastructure plan in 1998 that is still in force, the Decree 2 of 2011 includes guidelines on the formulation of strategic frameworks in the seaport infrastructure sector. The strategic framework for the seaport system should be formulated and proposed by Puertos del Estado and port authorities, and is subject to the MITMA’s approval. Additionally, each port authority has the autonomy to set its own infrastructure implementation programmes which should cover a 10-year horizon.

• Airport Infrastructure (Law 18 of 2014): The law that regulates the privatisation of AENA also includes a chapter on the formulation of the Airport Regulatory Document – DORA. The DORA determines the minimum standards of accessibility, sufficiency and efficiency of existing airport infrastructure and the quality of AENA’s services for periods of five years. This document must include an assessment of the current physical and financial status of existing airports, strategic guidelines for the next five years, forecast of future air traffic services demand per airport and future macroeconomic environment, and the annual amount of investments and operational costs. The DORA is initially drafted by AENA following a wide consultation process with public and private stakeholders. The proposal is submitted to the Directorate-General of Civil Aviation in the MITMA, which formulates the document and sends it to the Council of Ministers for approval, prior review of the CDGAE. The current DORA was adopted for the period of 2017-2021.

Source: (Jefatura del Estado, 2011[35]), (Jefatura del Estado, 2015[36]), (Jefatura del Estado, 2015[37]) (Jefatura del Estado, 2014[38])

Inter-modality strategic goals could benefit from a stronger horizontal co-ordination

Good infrastructure planning requires identification of necessary complementarities across sectors. With many of the large infrastructure investments complete, Spain could benefit from investments that involve inter-modality rather than stand-alone projects. However, inter-modal strategies require better co-ordination at the planning stage, a wider lens to assess the benefits at the assessment stage and more complex interactions at the implementation stage. Given the highly fragmented Spanish institutional setup, a greater level of horizontal co-ordination will provide more cross-sectoral coherence to ensure that infrastructure investments contribute to a common set of long-term goals and reduce the potential for overlap and duplication.

Future benefits from transport infrastructure investment in Spain may increasingly accrue from the existence of cross-sector complementarities. In order to address this level of complexity, infrastructure planning needs to become more inclusive and take into account cross-cutting needs. Nonetheless, weak horizontal co-ordination in Spain has hindered the institutional capacity for the identification of inter-modality opportunities. The PITVI is limited to a description of broad objectives and a list of potential projects, without explicit identification of such complementarities. Although the PITVI states the need for an inter-modality approach that facilitates the movement of both goods and people, there is no in-depth analysis of the different synergies that can be exploited nor linkages across existing infrastructure.

The adoption of a Logistics Strategy (Estrategia Logística) for freight transportation in 2013 was a well-aligned effort of the MITMA to support horizontal co-ordination in the railway transport sector. The Logistics Strategy thoroughly develops a strategy to exploit synergies across modes of transport to increase the industry’s competitiveness and to address the rapidly evolving needs that pose a more globalised economy. The Logistics Strategy was prepared with the input from key public and private stakeholders from the freight transportation industry, which were gathered by the MITMA in a strategic logistics forum (foro de estrategia logístico) in early 2013. Aside from establishing some general objectives, the Logistics Strategy sets defined lines of action including a component on the development inter-modal infrastructure projects spanning railway, seaport and road infrastructure.

Unfortunately, this was the only time the MITMA held a Logistics Forum. As discussed in Chapter 2, Spain could greatly benefit from the regular use and extrapolation of co-ordination mechanisms such as the Logistics Forum to other strategic pillars (i.e. passenger transport) for the development of more comprehensive strategy frameworks and the adoption of medium-term plans. The Large-Scale Logistics Network (Red Logistica de Gran Escala) in Chile is an example of the use of co-ordination mechanisms to foster inter-modality, competitiveness and productivity in logistics infrastructure in OECD countries (Box 3.4).

Box 3.4. The Large-Scale Logistics Network (Red Logística de Gran Escala) in Chile

Port infrastructure is essential to the success of Chile’s exports–95% of external trade is handled through ports. Given the expected growth in trade-related flows of goods and changes in average vessel size, capacity for growth is needed. This is particularly important in the central part of Chile, where the existing ports of Valparaiso and San Antonio operate almost at full capacity.

Both ports are marginally increasing their capacity, but the real bottlenecks require deep dredging works to allow for mega-ships and an increase in hinterland connectivity by road and rail to relieve the ports from congestion. In the absence of co-ordination mechanisms, however, the two ports would end up competing for both public and private resources, duplicate infrastructure and potentially crowd out private investment.

In this context, the Ministry of Transport and Telecommunications decided to adopt a new institutional approach and led the creation of the Large-Scale Logistics Network (Red Logistica de Gran Escala - RLGE). The integrated approach to capacity expansion recognises the need to co-ordinate across geographies and modes in order to give the country the most competitive logistics infrastructure. It brings together port concessionaires, the railway company EFE, Ministries of Transport, Public Works, Finance and the Economy and comprises seven priorities, from establishing a governance framework to including sustainable solutions.

A co-ordinated approach may not be a panacea for Chile’s infrastructure governance issues. At a minimum, it provides consistent objectives for decision-makers involved in logistics and is likely to reduce duplication risks. However, recent announcements by the government that both passenger and freight rail connectivity projects will go ahead to both San Antonio and Valparaiso seem to indicate that effective prioritisation mechanisms may not be achieved until a national infrastructure plan is agreed.

Source: Section 2: OECD benchmarking exercise

Evolving political circumstances in Spain have implications for infrastructure planning

Infrastructure has long-term impacts that require analysis and predictability, but infrastructure is sensitive to political and economic/business cycles that vary markedly over time. The contribution of infrastructure to economic development and wellbeing goes beyond the construction of the asset; what ultimately generates an economic or societal return is the service provided through said infrastructure. If the incentives are skewed towards displaying tangible results to a certain constituency, then some infrastructure needs as well as the operation and maintenance of existing assets might end up being neglected, resulting in inefficient investments that fail to respond adequately to the needs of the population.

In spite of the awkward relationship between politics and infrastructure investment, infrastructure cannot be de-politicised. Politics has a critical role to play in infrastructure decisions, granted that limited resources inevitably call for trade-offs between different priorities, and the interests of social groups and values (e.g. current versus future generations; urban versus rural; growth versus environment) are weighted in order to make difficult choices. The question is how to ensure that politics plays a constructive role given the misalignment between political cycles and infrastructure life cycles. The Canadian province of Quebec has adopted the creation of an independent committee to de-politicise and ensure objectivity in the infrastructure investment decision-making process (Box 3.5).

Box 3.5. De-politicising transport infrastructure investment planning in Quebec

In response to a recommendation from the Charbonneau Commission, a committee of independent experts (CEI) was created by the Quebecois Ministry of Transport on 31 March 2016 to advise on the programming of public procurement for which it is responsible. The CEI is made up of three external and independent experts in the fields of engineering, finance and governance. The objective behind the creation of the CEI is to ensure objectivity in the choice of infrastructure projects and to depoliticise the approval of projects for the conservation and improvement of the road network at the Ministry of Transport.

The specific structure of the CEI goes beyond the practices generally implemented in other OECD countries to depoliticise the planning of infrastructure projects, and to our knowledge does not appear to have any equivalent. Good practice in OECD countries to increase government accountability in defining needs and planning infrastructure projects is more focused on specific projects rather than on processes for overall programming of road infrastructure.

Since its creation, the CEI has submitted two reports, namely for the 2017-2019 road programming and the 2018-2020 road programming. An important aspect of the 2018-2020 report is that it reports on progress in implementing the recommendations of the 2017-2019 report. Both reports are available on the website of the Quebecois Ministry of Transport, which promotes transparency and government accountability for the implementation of the CEI recommendations. The Department has developed an action plan to ensure the implementation of the CEI recommendations, and according to the information shared, its implementation is underway. It noted that the CEI ensures rigorous internal monitoring of the progress of the implementation of the CEI recommendations and has defined reasonable deadlines for all of the recommendations.

Source: (CEIC, 2015[39]) (CEI, 2017[40]) (CEI, 2018[41])

Politicians have a strong incentive to prioritise infrastructure investments with high visibility. This is particularly the case where political cycles are short and political priorities are often driven by the urgent short-term needs of the population. Before Spain cut back on expenditure in 2012, infrastructure plans supported high amounts of investment. Throughout the 1990s and the early 2000s the need to close the infrastructure gap in Spain with respect to other European countries was obvious, and agreeing on a long-term infrastructure vision was mostly a straightforward task.

Part of the role of infrastructure planning is to align investment decisions with the country’s needs and long-term development goals. It should also serve to frame and guide political choices so that infrastructure investments respond to important needs while ensuring value for money over the lifetime of an asset. However, political instability in Spain has led to the replacement of more recent infrastructure plans before their planning horizon has even come to an end. The documents prepared have been attached to the views of each particular government in charge of its preparation, and thus changes in elected governments have resulted in changes in infrastructure plans, which was the case of the PDI and the PEIT. In the case of the PITVI, the plan was built on similar strategic objectives to those found in the former plan as per required by Law 2 of 2011, but the political views informing its content greatly differ.

The PITVI adopted a more flexible approach than previous infrastructure plans, which in turn has made room for incumbent governments to push forward projects that might not necessarily represent the best value for money. The plan includes rather general objectives and very broad strategic lines of action that can be easily adapted to the changing political priorities (Ministerio de Fomento, 2012[34]). Spain could benefit from a plan that demands concrete action in terms of infrastructure services over the long-run while providing better guidance on how infrastructure needs should be met and prioritised, as a way to shield the long-term vision from political comings and goings.

The incapability to secure a stable government over the last four years has also had an impact on the implementation and adjustment of the long-term infrastructure vision in the country. Low political stability around the Spanish government has hindered, for instance, the adoption of a road infrastructure sector plan and the execution of an agreement between the MITMA, ADIF and ADIF-AV including a strategic framework for railway infrastructure management and development. Furthermore, the unsettling political environment has also hampered the development of any cross-sector or multi-level platforms for the monitoring and adjustment of the national strategic vision. The Spanish government has identified this challenge and is aiming to develop a new set of plans. During the preparation of this report, the Road Infrastructure Strategic Plan (Plan Estratégico de Carreteras del Estado) and the Indicative strategic framework for the railways network (Estrategia Indicativa) were under preparation. Spain does not have a clear process for plan formulation and updating.

The design of a strategic vision requires a process that distils complex and multi-faceted infrastructure issues, cutting across a multiplicity of actors, sectors and interests, into a coherent set of decisions with long-term impact, including projects and processes. The process for setting these goals will depend on a country’s political system, culture and institutions. Governments will differ in terms of how they attempt to work towards these goals, but, if the vision is sufficiently robust, they will be aiming in a similar direction. However, irrespective of the mechanism, it should be inclusive and serve to aggregate the views and expectations of the different parts of society and regions.

Spain has not defined a process for adopting a strategic vision and formulating a national infrastructure plan. Existing legislation sets broad principles and objectives vis-à-vis a long-term strategic vision for transport infrastructure, which were already adopted by the PITVI. However, the definition of legally binding strategic goals will involve a legal modification each time a new plan will be adopted. Instead, the regulation should define parameters for the development of an infrastructure plan, for instance the different stages for the plan’s formulation, time horizon, needs assessment, co-ordination with institutional stakeholders, public consultation and approval. Similarly, existing regulation should provide procedures for CCAA and other subnational governments to submit infrastructure proposals to be considered for the preparation of the national infrastructure plan.

There are no clear lines of accountability for the preparation and approval of the long-term infrastructure plan in Spain. Regulation does not identify which public entities participate in the development of long-term strategies, and thus the MITMA has overly ample powers to formulate, evaluate and approve the infrastructure plan. The former Ministry of Agriculture, Food and Environment was the only other public entity that participated in the formulation of the PITVI. The participation of other key stakeholders in the plan’s preparation should be clearly stated, particularly the MOF and sub-national governments.

Neither the body of the PITVI itself nor any provision in the existing regulation provides a methodology for updating the infrastructure plan. It is not clear if the PITVI has been updated since it was first published in 2012. Updates of long-term infrastructure plans should occur at fixed time intervals. Since infrastructure is not meant to solely address current needs but must also anticipate how needs are likely to evolve in the future, strategic plans must be flexible enough to adapt to these changing contexts. Strategic planning in Spain could benefit from methodologies for systematic monitoring and evaluation of infrastructure performance, and a whole-of-life approach to asset management, in order to be regularly updated to account for future trends and uncertainties.

Weak link between budgeting and planning

Since infrastructure projects can be large and have a long-term budget, strategic plans need to be attuned to the risk of over-investing generally or to a specific project. Governments should align their strategic plans with budgets by organising and structuring budget allocations in a way that corresponds readily with national objectives. Planning and budgeting are key tools for economic development, albeit integrating them can be a challenging task. While planning provides an overall vision for a long-term horizon, budgeting is more present-focused and tackles short-term needs. However, neither planning nor budgeting alone are sufficient. Without budgeting, strategic plans are unrealistic about resource allocation and lack adequate means of implementation. When budgeting is not aligned with the planning process, budgets focus exclusively on short-issues and are driven by fiscal pressures instead of addressing social needs.

Spanish infrastructure plans have historically been over-ambitious and detached from the budgeting process. In spite of the economic crisis that the country was facing in the early 1990s, the PDI included large investments in infrastructure that were in line with the adoption of expansionary fiscal policies. Even after the most recent austerity policy adopted by the country in 2008, the PEIT included the largest estimated investments amongst the three overall long-term plans adopted by Spain. Projects that were not implemented before during the PEIT’s short lifespan were carried over into the PITVI, in addition to the long compilation of project proposals formulated by the CCAA.

Incorporated in the PITVI there is only an overall estimation of budget envelopes per sector (i.e. road, railway, seaport and airport infrastructure) with no specific resource allocation per project or function (i.e. construction, rehabilitation or maintenance). Fiscally sustainable long-term plans are linked with budget allocations and are aligned with medium-term expenditures, like the case of transport infrastructure planning in Germany (Box 3.6). Typically, medium or short-term plans translate a strategic vision into timeframes that align to operational settings across government, for example medium-term expenditure frameworks (MTEF). Aligning these medium-term strategic plans and priorities provides decision-makers with more certainty on the available resources for upcoming years.

Box 3.6. Budget allocations and clear prioritisation: Germany’s 2030 Federal Transport Infrastructure Plan (FTIP)

The Federal Transport infrastructure Plan (FTIP) is an overall strategy for the development of the Federal Government’s transport infrastructure with investment totalling EUR 269.6 billion for the implementation of all first priority projects within the timeframe set for the FTIP 2030.

One of the main objective of the FTIP is to achieve a realistic and fundable overall strategy for the structural maintenance and construction of German infrastructure. The record level of funding are available from the investment ramp-up, and the German Authorities put an emphasis on synchronising the funds to be invested and the projects in a way to allow for the implementation of all first priority projects within the timeframe set for the FTIP 2030.

Of the funds from the new FTIP, EUR 141.6 billion will be invested in structural maintenance and replacement. This is around EUR 60 billion (EUR 58.9 billion) and thus approx. 71% more than the funds which were available under the FTIP 2003 (EUR 82.7 billion for structural maintenance and replacement). The overall picture shows a record share of 69% for structural maintenance/replacement. (For comparison: 56% in the FTIP 2003).

Germany is strengthening the major transport arteries and hubs – thereby enhancing the capacity of the entire network. At the same time, Germany is investing in important projects for the development of the regions. For this reason, in the road sector, 75% of the investment in upgrading and new construction go into projects with significant impacts on a large area and 25% go into regional development measures. Across all modes of transport, Germany is investing 87% in projects with significant impacts on large areas.

Source: Section 2: OECD benchmarking exercise

The MOF does not take part on the preparation of the national infrastructure plan. A stronger link to the budgetary process and a better horizontal co-ordination with the MOF would ensure that the strategic lines of action and project pipelines are consistent with Spain’s economic and fiscal conditions. Similarly, a more active participation from the MOF during the planning stage would facilitate that annual budgets and investment ceilings show correspondence with investment objectives and deliverables from national plans.

Planning in Spain lacks a robust needs assessment

Infrastructure creates value when it contributes to addressing social needs or facilitates economic activity. Choices regarding infrastructure development must be focused on user needs. If strategies are focused on outcomes and user needs and guided by long-term development goals, they are more likely to yield investment options that contribute to improvements in wellbeing and productivity growth. Needs assessments also reduce the potential for overlap and duplication, and thus providing a more efficient use of scarce resources.

Almost all OECD countries have a public consultation regarding the long-term strategic plan (OECD, 2017[42]) (Box 3.7). The PITVI was subject to a 45 day public consultation in compliance with environmental regulations (Boletín Oficial del Estado, 2014[43]) Strategic planning processes in Spain could be enhanced however though the adoption of participatory forms of engagement at the local levels of government. Needs are often best captured at the local level, for welfare-enhancing infrastructure, or at the sectoral level for productivity-enhancing infrastructure. There is a role for sectoral and regional planners to develop strategies for address those needs. Undertaking consultation is of particular importance for the Spanish government given the current political context and the strong expressions of regionalism in the country. The formulation of a long-term strategic vision should have substantial input from CCAA and other subnational governments throughout the different phases of its definition and incorporation in a strategic infrastructure plan to ensure inclusiveness and a broad-base political consensus.

Box 3.7. Large public consultation in transport infrastructure planning in Germany

The FTIP 2030 is the first Federal Transport Infrastructure Plan which was drawn up and developed with active public participation. During a period of six weeks (from 21 March until 2 May 2016), the people in Germany were given the opportunity to submit written comments on the Draft FTIP 2030 in a participation procedure involving the authorities and the public.

Approximately 39 000 opinions were provided to the draft FTIP 2030 to the Ministry of Transport and Digital. Around 18 400 opinions were provided electronically via an online form. The other input came via mail. The federal states, members of parliament, the Federal Government itself, railway infrastructure companies, members of the public, trade associations and other stakeholders submitted over 2 000 concrete project ideas for appraisal in the FTIP 2030. Of these, around 400 entries concerned federal railways.

In the setup the public was, for the first time, able to provide comments on the draft basic approach of the new FTIP during a much widened public participation exercise prior to publication of the revised basic approach. Over a period of six weeks, all interested parties were able to provide comments on the Draft FTIP electronically and in writing. After the participation of the authorities and the public was concluded, the Federal Ministry of Transport and Digital Infrastructure revised the FTIP draft on the basis of the evaluated comments. The report on the participation of the authorities and the public in the Draft FTIP 2030 includes a consolidated documentation of how the submitted comments were handled.

Source: (Ministry of Transport and Digital, 2016[44]), Section 2: OECD benchmarking exercise

Some OECD countries have also adopted a “bottom-up” perspective in order to provide guidance to decision-makers in the design of place-based strategies for infrastructure investment (Box 3.8).

Box 3.8. Place-based analysis for infrastructure investment in Australia

The Australian Infrastructure (IA) Audit creates an evidence base to analyse the challenges pertaining to Australian infrastructure. Extensive amounts of data are collected on major capital cities, corridors, population, and a lot of modelling of congestion is done. IA went on a national road show to raise the issues regarding the Audit, and seek submissions on solving the problems identified. It also consulted widely on policy and reform component of the Australian Infrastructure Plan and received submissions from a diverse group of stakeholders, while working closely with the independent Board. The collected evidence base as well as the inputs from stakeholders provided a “bottom-up” planning perspective.

The Australian Infrastructure Plan and the Infrastructure Priority List are further underpinned by a detailed “place-based” analysis to provide a “top-down” planning perspective. The analysis projected current and future demographic and economic characteristics for 73 regions of the country. IA also estimates the direct economic contribution (DEC) and gross value added measures for each of the regions. The regions with greatest increases in DEC over time are identified as “hot spots”, and efforts are put into assessing what kind of investment will help drive the greatest economic impact in these regions. The “hot spots” are located in Sydney, Melbourne, Brisbane and Perth where three-fourths of Australia’s population growth is expected to occur between 2011 and 2031. IA’s Infrastructure Priority List aims to provide structured guidance to decision makers and was created using both top-down and bottom-up approaches.

Source: Section 2: OECD benchmarking exercise

Unlike previous plans, the most recent plan is not informed by a sound data analysis. Even though data on infrastructure investment is collected, there is no system in place to ensure the systematic collection of relevant data and institutional responsibility for analysis, dissemination and learning from this data. A necessary condition for successful infrastructure governance is an evidence-based strategic planning. This requires identifying what investments should be undertaken, determining the essential components, needs and trade-offs based on data. A more systematic use of data will ensure that Spain makes use of its experience to further improve and refine its approach to infrastructure planning. Spain could improve its institutional framework to promote evidence-based policy making in transport infrastructure. This will require an assessment of needs at the sectoral level and a co-ordinated strategy to exploit synergies and co-ordinate investment across sectors and between levels of government.

However, it is not sufficient to focus solely on current needs. Needs must be projected into the future. In doing so, planners must take into account the country’s long-term development goals along with the impact of future trends, major future risks and uncertainties (Box 3.9). Strong scientific capabilities are a key part of ensuring that long-term thinking regarding future trends and uncertainties is integrated into decision making. However, it isn’t sufficient to simply produce research. Research also needs to be integrated into policymaking and used to inform long-term public investment decisions. Despite of the existing technical institutional capacities in the MITMA (i.e. CEDEX and INECO), it is unclear how these units participated in the needs assessment for the current national infrastructure plan. Spain could benefit from platforms for translating research outputs into policy-relevant insights for the policymaking and strategic planning processes.

The ability to stock and learn from past experiences is particularly important now that a number of infrastructure projects have already been finished in Spain and will need to be maintained. Even though the strategic goals emphasise on the priority of maintenance over the development of new infrastructure, the PITVI does not contemplate a chapter on the analysis of the existing assets and their maintenance and rehabilitation requirements. Future strategic plans should include a technical assessment of the stocks and quality of existing infrastructure. This will contribute to future-proofing investment plans and improving the resilience of the nation’s infrastructure. The concepts of vulnerability and resilience for both the infrastructure project itself and the services that it will provide need to be addressed from the early planning stages. In the context of infrastructure, asset management includes not only the planning and acquisition of new infrastructure, but also effective operation and maintenance of the most appropriate assets to meet current and likely future demands, and disposal of assets that are no longer required (OECD, 2020[21]).

Box 3.9. OECD best practices to assess future infrastructure needs

“Strategic foresight” is a process of creative evaluation that applies available knowledge and forecasting analysis to potential futures. It uses available knowledge and forecasting tools to understand plausible future events and, based on a balanced view of the different futures that may occur, enable robust decision making and investment. OECD countries are increasingly adopting "strategic foresight" planning methods that move beyond simply identifying current gaps and extrapolating past trends to forecast future needs.

Applications of strategic foresight techniques to infrastructure planning include the following:

• The Australian Infrastructure Audit 2019 applied a three-stage methodology, informed by strategic foresight methods, to understand Australia’s infrastructure needs in the next 15 years. Stage 1 consisted of horizon scanning to understand the national and global forces that are likely shape Australia over the coming years and decades. These trends focus on shifts that are likely to transform how Australians live, and consequently what they will need from infrastructure. Stage 2 applied these trends to the sectors of transport, water, energy, telecommunications and social infrastructure, to understand the likely future impacts and needs of these sectors. Based on this analysis, Stage 3 of the Audit identified a set of sector-based and cross-sectoral challenges and opportunities, which are issues, gaps, problems and untapped potential where infrastructure can play a role in improving Australians’ lives and growing Australia’s economy.

• To address infrastructure needs for the next 20 years, the Colombian Ministry of Transport adopted in 2015 an Intermodal Transport Master Plan (PMTI), which was the product of a joint effort across different national level entities and agencies. The PMTI was based on data on density and quality of existing transport infrastructure, cities’ and regions’ growth trends and current traffic flows. Using these data, the Colombian Government forecasted local and regional economic growth that will drive the future demand for transport infrastructure in the country over the period of 20 years. Results from the strategic foresight analysis undertaken informed the pipelines included in the PMTI and served as input for the design of transport policies such as the 4G toll-road concessions programme.

• The United Kingdom government’s Intelligent Infrastructure Futures project explored how, over a 50 year period, science and technology can be applied to the design and implementation of intelligent infrastructure for robust, sustainable and safe transport, and its alternatives. The project engaged nearly 300 people at national, regional and local level and commissioned leading researchers to examine the United Kingdom’s transport challenges.

Source: (Infrastructure Australia, 2019[45]) (Ministerio de Fomento and SEITT S.A., 2015[10])

Project appraisal and prioritisation

Given the limited resources available for infrastructure investment, prioritisation is an essential tool to ensure these resources are invested in the right projects (OECD, 2017[46]). Having a clear and transparent prioritisation process aligned to the fiscal planning framework is essential to ensure that investment in infrastructure delivers the expected social and economic benefits, while contributing to long-term policy objectives. OECD best practices suggest that countries should have rigorous project appraisal and selection processes that privileges socioeconomic efficiency (taking into account economic, social, environmental, and climate costs and benefits) and takes into account the full cycle of the project (OECD, 2020[21]). Furthermore, for projects that exceed a high investment threshold, it is especially important to provide for an independent function to test project costing, risk management and projects governance (OECD, 2020[21]).

Unclear criteria for project selection and prioritisation

The Secretary of State of Infrastructure, Transport and Urban Agenda is the main responsible for transport project planning and prioritisation in Spain. The process to approve an infrastructure investment project varies between transport modes and depends on the delivery agency. In general, the preparation of any transport infrastructure project starts with the request to undertake a preliminary study. The main objective of this study is to define the technical characteristics and the layout of the infrastructure project.

There is no standardised procedure or criteria to decide which projects will be subject to these preliminary studies. The decision is made at a high political level based on the strategic plan and other considerations that are not previously stated or defined. Decisions as to which projects to prioritise and pursue from within a list of projects listed in the PITVI becomes a result of political bargaining and budgetary negotiations between the MITMA, the infrastructure administrators and the CCAA. In practice, the criteria for project prioritisation is a mix of political and socio-economic factors that not always respond to financial considerations or the benefits from competing proposals. This approach obscures the underlying preferences of decision makers and privileges projects that have the support of the stakeholders that are most adept at influencing the process.

Unlike the majority of OECD countries, in Spain there is no process to identify a short-list of priority projects, either in an overall short list or in multiple shortlists prepared by each sector (Figure 3.2). Some OECD countries like Australia have a clearly defined process for project prioritisation and preparation of shortlists (Box 3.10). In Spain, the link between the large list of projects included in the long-term strategic plan and the projects that are actually implemented is weak and the criteria used is not standardised. Some sectors have developed guidelines for the preparation of infrastructure programs. In particular, Law 37 of 2015 sets guidelines for road infrastructure programmes. Programs should include a needs assessment, the indication of the strategic objectives addressed by each project¸ the detail of the resources to be used for funding each project, and the corresponding cost-benefit, financial feasibility, multi-criteria, alternatives and environmental impact assessments. These analyses should inform the prioritisation of different projects included in the same programme. However, in practice, this is not monitored or enforced.

Figure 3.2. Prioritisation process for infrastructure projects (2018)

Note: Data for Belgium, Canada, Finland, Iceland, Korea, Latvia, Poland and the United States are not available; Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

Source: (OECD, 2018[31]), OECD Survey of Capital Budgeting and Infrastructure Governance, Question 11.

Box 3.10. Assessment Framework for initiatives and projects to be included in the Infrastructure Priority List in Australia

The Assessment Framework sets out the assessment framework that Infrastructure Australia uses to consider initiatives and projects for inclusion on the Infrastructure Priority List. It facilitates evidence-based development of infrastructure projects. The Assessment Framework sets out a five-stage assessment process as follows:

• Problem Identification and Prioritisation: A collaborative process between proponents and Infrastructure Australia to identify and prioritise evidence-based problems and opportunities of national significance.

• Initiative Identification and Options Development: Proponents develop options that address the problems and opportunities identified in Stage 1, and assess these options to select those most likely to be of benefit to the Australian community. Infrastructure Australia assesses whether the range of options is appropriate and the options assessment is robust.

• Business Case Development: Proponents develop a full business case that objectively considers the short-list of options available to address the problems and opportunities identified in Stage 1.

• Business Case Assessment: Infrastructure Australia undertakes an assessment of the business case and works with the proponent to clarify content in the business case and seek supplementary information where required.

• Post Completion Review: This phase occurs after a project has been delivered and is operational. In collaboration with the proponent and other stakeholders, Infrastructure Australia will seek to understand the outcomes from the project, as well as project delivery, whether benefits have been realised as expected, whether costs estimations were accurate, and what lessons can be learnt.

Source: (Australia, 2018, p. 201[47])

In most OECD countries the most important element for projects that get on the short list are strong results of the cost-benefit analysis, followed by the project’s part of the long term strategic plan and strong political backing (Figure 3.3). Other important criteria include the project’s functional fit with other infrastructure assets and its importance for the development of a particular sector. As previously mentioned, there is no clear criteria underling the project prioritisation process in Spain. While cost-benefit analysis are performed in some sectors, these analyses are only used to study alternative versions of the same project, but not to rank alternative projects or inform project selection and prioritisation.

Figure 3.3. Criteria for project prioritisation and approval (2018)

Note: The graph reflects average ranking points; Data for Belgium, Canada, Finland, Iceland, Korea, Latvia, Poland and the United States are not available; Data for France, Hungary, Israel, Portugal, Slovenia and Spain are not available for this question and hence not taken into account for the average ranking points; Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

Source: (OECD, 2018[31]), OECD Survey of Capital Budgeting and Infrastructure Governance, Question 12.

Spain would greatly benefit from having a more clear and transparent process for project selection and prioritisation. Some OECD countries apply a multi-criteria analysis (MCA) framework as a way to broaden their inputs to include factors that elude monetisation. An MCA framework can serve as a complement to CBA analysis and be used to accommodate more long-term goals and strategic issues, as well as to improve alignment with broader policy priorities. It can also help to make policy makers´ preferences transparent and ensure they are reflected in the project prioritisation process (Box 3.11). Finally, an MCA methodology can be used to rank projects on a more transparent basis, thereby reducing the scope for subjectivity and discretion in the decision-making process.

Box 3.11. Combining Cost-Benefit Analysis (CBA) and Multi-criteria Analysis (MCA)

Most infrastructure project appraisal processes typically apply some form of CBA. CBA privileges monetary values or factors that can be easily converted into monetary values. Its strength lies in its logical simplicity and the fact that it generates a single number that can be used to compare and rank projects, even across sectors. CBA is thus an effective tool for filtering out bad projects and ensuring that a portfolio of infrastructure projects generates value for money.

The principal weakness of CBA is that it doesn’t accommodate values that are not easily expressed in monetary terms. However, choices regarding what infrastructure to build can seldom be reduced to purely monetary values. Factors such as a project’s contribution to strategic policy goals, impacts that can only be assessed in qualitative terms (e.g. biodiversity) or values that are difficult to quantify (e.g. resilience) will therefore be neglected in a standard CBA. This does not mean that such factors are completely excluded from the decision-making process. If preferences are excluded from formal analysis they are often incorporated upstream or downstream of a CBA in a non-transparent manner.

MCA offers a complementary approach that accommodates both monetary and non-monetary variables (quantitative as well as qualitative). It involves assigning impact scores to various factors, weighting the importance of those factors, and aggregating the weighted impacts of each factor to generate a single value and produce a ranking among projects.

Source: (OECD, 2017[48])

Spain does not have special requirements for high level projects

Given the importance of large infrastructure projects in public service provision and the potential impact they can have on the public accounts, many OECD countries have special quality assurance process for large infrastructure projects. Best practices suggest that for projects that exceed a high investment threshold, it is especially important to provide for an independent function to test project costing, risk management and projects governance (Box 3.12).

Box 3.12. The two-stage quality assurance process for large projects in Norway

In Norway, projects with estimated costs in excess of NOK 750 million are subject to additional scrutiny via a two-stage quality assurance process. The process includes input from independent reviews and was initially implemented to combat cost overruns.

• QA1 focuses on quality assurance of choice of concept. It is conducted prior to the government cabinet’s selection of projects for inclusion in the National Transport Plan. The central purpose of this analysis is to check, at a relatively early stage, that the project has undergone a process of “fair and rational” choice. It is conducted by the responsible ministry or government agency and includes investigation of alternative solutions, socio-economic impacts and relevance of the project to transport needs. There is emphasis on environmental and social impacts, land-use implications and regional development. This evaluation, inter alia, must include a “do-nothing” option (“zero option”) and at least two alternative and conceptually different options. The external reviewers’ role includes analysis as well as review of documents.

• QA2 focuses on quality assurance of the management base and cost. It applies to projects that are included in the National Transport Plan but have yet to be submitted to parliament for approval and funding. The purpose of QA2 is to check the quality of the inputs to decisions, including the cost estimates and uncertainties associated with the project, before it is submitted to parliament to decide on funding allocation. It includes assessment of cost estimates derived from basic engineering work and assessment of at least two alternative contracting strategies. Notably, however, QA2 does not include revisiting and updating the cost-benefit analysis performed in QA1, unless the project seems to have been significantly altered from the option chosen at QA1. In addition, QA2 focuses on project management in the implementation phase.

The Norwegian project appraisal and selection process includes considerable early-stage consultation and discussion between the agencies and lower levels of government, as well as with other interested parties. Likewise, the requirements for CBA in the project appraisal and selection process and other objective analyses are comprehensive.

Source: (OECD, 2017[49])

Spain does not have particular special requirements for large infrastructure projects. In compliance with the Recommendation from the European Council to establish an independent to help assess future major infrastructure projects (European Union Council, 2014[50]), Spain created the Transport, Mobility and Urban Agenda Council (Consejo Asesor de Transportes, Movilidad y Agenda Urbana, former Consejo Asesor de Fomento) in 2015 as an advisory body to the MITMA. The Council is made up by external experts of recognised prestige that advices the Minister of Transport, Mobility and Urban Agenda in matters related with infrastructure planning and selection. Current sectorial regulation requires the Transport, Mobility and Urban Agenda Council to assess PPP investment proposals in road infrastructure. Likewise, the Transport, Mobility and Urban Agenda Council should participate in the road and railway infrastructure planning system and advice on high level projects. There has not been any new infrastructure plans issued since the council was created, but the Transport, Mobility and Urban Agenda Council has been consulted for high-level infrastructure projects in previous years as per instructed by the corresponding sectoral laws.

The creation of this advisory body is a great step towards improving quality assurance of high level infrastructure projects and it is aligned with practices adopted by OECD countries. However, the scope of work of this council is limited for various reasons. The council works upon request of the Minister and there is only a formal requirement to give advice during the strategic planning process. The Council is supposed to work as an independent body in charge of evaluating high-profile investment projects and collaborate on the selection of infrastructure projects. However, the definition of high level projects remains in the domain of the Minister of Transport, Mobility and Urban Agenda. Furthermore, the decisions reached by the Council are not binding for the MITMA and there are not requirements to explain or justify the decisions against its advice. In addition, meetings and deliberations are not publicly available, limiting the role of the council and the impact of its decisions.

Equity concerns and territorialisation influence infrastructure investments

A marked territorial component has historically influenced infrastructure investment decisions at the national level. As mentioned in Chapters 1 and 2, the national government is responsible for all seaport and airport infrastructure development in the country and for all road and rail infrastructure assets that cover more than one CCAA. In the past decades there has been a general belief that investment in transport infrastructure has a direct impact on economic growth and regional development. In particular, access to the AVE network (high-speed trains) has been considered as a priority for regional development. There has been, for example, initiatives that state that all provincial capitals should be at a certain rage in time to a high speed station, regardless of need or efficiency considerations.

The demand for equal distribution of large transport infrastructure projects across the Spanish autonomous regions (CCAA) seems to have a large effect on project prioritisation in the country (Bosch, N., & Espasa, 2010[51]). Available evidence suggest that efficiency criteria play only a limited role in the geographical distribution of government infrastructure investment. In the period spanning from 2000 to 2015, multiple CCAA did not yield efficiency gains in terms of productivity despite of large infrastructure investments (IVIE, Forthcoming[52]). Regional allocation of infrastructure investment is mostly driven by specific regional infrastructure demands and political factors (Castells and Solé-Ollé, 2005[53]).Therefore, national investment with impact in a particular region has become a powerful political tool under the Spanish context. This has led to the prioritisation of investments that do not necessarily respond to efficiency and value for money criteria. Evidence suggests that current regional policies have exceeded the optimal degree of redistribution and welfare, which could be increased by raising the weight given to efficiency considerations in the regional allocation of infrastructure investment (de la Fuente, 2004[54]).

An additional component that has supported infrastructure investments at the regional level refers to the structural funds provided by the EU to support the development of under-served regions in European countries. Historically, the EU structural funds supported high levels of investments in road and transport seaport infrastructure in Spain. For the period of 2014-2020, investments funded by EU structural funds are mostly oriented towards railway infrastructure. Since there is no specific ministry or central government body entrusted with the development of regional policies, the CCAA are responsible for the preparation of their own investment programmes. The programmes are submitted to the General-Directorate of European Funds under the MOF, in charge of deciding which projects will be ultimately partially funded by the EU structural funds. The distribution of the structural funds has aimed to support the least developed regions in the country, which has ultimately resulted in the development of projects that favour a few CCAAs more than the others. The availability of the structural funds has encouraged the co-ordination between the national and sub-national levels of government in order to submit projects that are in line with the investment priorities and criteria previously set up by the EU, for instance agreements between entities like ADIF or ADIF-AV, CCAA and municipalities for the development of railway infrastructure.

According to the consultation process carried by AIReF under the transport spending review process, co-ordination with subnational governments is one of the most challenging issues for transport infrastructure governance in Spain (AIReF, 2019[55]). There are no formal or informal mechanisms to ensure discussion on the territorial impact of transport infrastructure investment in the country. Negotiations between the central government and the regional administrations are performed on a bilateral bases and depend on the political affinities and context. This type of dynamic does not allow for discussion on the trade-offs and complementarities of transport infrastructure investment in the country.

Even though there are some multi-level co-ordination mechanisms available in the Spanish legal framework, these are underutilised. The National Transport Conference (Conferencia Nacional de transporte) works as a multilateral co-operation body to ensure that there is a co-ordinated transportation system in the country and it is mainly in charge of high-level, strategic guidelines in terms of transport infrastructure. It is made up by the Minister of Transport, Infrastructure and Urban Agenda and the advisors of the CCAA. This co-ordination body could have a positive impact to channel regional needs in a productive and transparent way and inform infrastructure planning, selection and prioritisation. Even though regulation states that this body should meet twice a year, it has only met two times over the past ten years (Ministerio de Política Territorial y Función Pública, 2020[56]) and once in May 2020. The regularity of the National Transport Conference ultimately depends on the political will of the MITMA. The Transport Directors-General Commission (Comisión de Directores Generales de Transporte), which is a supporting body of the National Transport Conference, meets more regularly. However, it plays an operational role as opposed to the National Transport Conference, which deals with more strategic issues. The National Transport Conference could be of better use. As mentioned in Chapter 2, regulation could improve to ensure that the competences and responsibilities are well defined, providing better support for the decision-making process.

A robust project appraisal process that not always inform decision making

Good governance of infrastructure entails mechanisms to guard the fiscal sustainability, affordability and value for money of infrastructure investments. In terms of value for money, each government judges what the optimal combination of quantity, quality, features and price should be throughout an infrastructure project’s lifetime (OECD, 2019[57]). However, rigorous project appraisal processes should privilege socioeconomic efficiency and take into account the full cycle of the project (OECD, 2020[21]). This requires the use of dedicated processes, capable organisations and the availability of relevant skills.

Most OECD countries conduct assessments to ensure both absolute and relative value for money from infrastructure projects, either delivered via PPPs or for traditional infrastructure projects (Figure 3.4). Spain undertakes quantitative and qualitative value for money assessments only in an ad-hoc basis. Value for money assessments are not mandatory as a project prioritisation and selection criterion, in fact project appraisal takes place very late in the project prioritisation process. Since the assessment of the feasibility and the value for money of each project is made once the selection of the project has already been made, these analyses do not inform the decision-making process.

Figure 3.4. Formal process/legal requirement for absolute (A and B) and relative (C and D) value for money in infrastructure projects

 

Notes: A. The data for Portugal is referring to central government and SOE’s PPPs only. In Denmark, there is a formal process that ensures that the VfM analysis is being conducted, so the politicians make their decision on an informed basis. But in the end it is a political decision which infrastructure project is undertaken and which is not;

B. France has a mandatory cost benefit analysis for all government projects. Portugal does not cover PPPs at regional or local level;

C. In Switzerland, there is a formal obligation to consider PPPs if suitable (=more efficient/effective); Data for Belgium, Canada, Finland, Iceland, Korea, Latvia, Poland and the United States are not available; Data for Estonia are not available for this question (PPPs and TIPs); Data for Portugal are not available for this question (TIPs); Information on data for Israel: http://dx.doi.org/10.1787/888932315602

Source: (OECD, 2018[31])

Projects that have been prioritised by the Spanish government must undergo robust preliminary feasibility studies, including an assessment of the most suitable corridors according to cost-benefit and multi-criteria analyses (e.g. environmental viability, demand forecasts, and socio-economic and technical considerations). Feasibility studies usually include an assessment of the positive and negative impacts of infrastructure projects, both directly on transport users but also on the wider economy and society.

Unlike other OECD countries, there are not uniform requirements for all transport modes. The analytical work required is set out in each sector law and corresponding regulation (Box 3.13). During the consultation process carried by AIReF under the transport spending review process, the lack of homogeneous appraisal methodologies across sectors hampered the comparability across projects and was highlighted as an issue in terms of transparency (AIReF, 2019[55]).

Box 3.13. Sector-based project appraisal in Spain

As a result of the regulatory fragmentation in Spain, the project appraisal requirements differ depending on the mode of transport. Some of the salient differences across sectors are indicated below:

• Road infrastructure law requires the preparation of cost-benefit analyses for the approval of preliminary studies and it is mandatory to demonstrate that the project represents the best value for money. Furthermore, when different works are planned within the same section of the road, a multi-criteria analysis must inform which sub-project must be prioritised.

• Although the rail infrastructure regulation does not explicitly list the different analyses to be undertaken, preliminary studies are subject to a more thorough review by key stakeholders prior to the MITMA’s approval, including civil society, sub-national governments, the Ministry of Environment, the National Railway Safety Agency and the Council of Ministers. Nonetheless, regulation does not specify formal requirements for its preparation. Regulation vaguely touches on the assessment of value for money and affordability of the projects undertaken by public administrators ADIF and ADIF-AV.

• Seaport regulation sets clear and defined obligations in terms of assessment of value for money and affordability of infrastructure projects and overall fiscal sustainability of port authorities. Each port authority must provide a business plan with a detailed financial analysis of the port authority’s investment plan, the expected returns and the financial and environmental sustainability of each project. Decree 2 of 2011 also grants port authorities the responsibility to prepare preliminary studies to justify the proposed projects and clearly specifies the methodologies to undertake the project’s evaluation, including needs assessment, alternatives, traffic and affordability analyses and an environmental impact assessment.

• The regulation on airport infrastructure does not clearly specify project appraisal mechanisms or tools to be used by AENA and the MITMA for the preparation of the 5-year investment plan included in the DORA. However, Law 18 of 2014 does state that investments must answer to capacity and quality standards of airport infrastructure and to meet the minimum conditions for its adequate functioning.

Furthermore, the events in which a project appraisal is required also differ from sector to sector. For every road infrastructure project that substantially modifies the length or technical and structural characteristics of the National Road Network, preliminary studies must be undertaken. On the other hand, in the case of rail infrastructure these assessments only take place when it comes to new infrastructure projects; the modification of existing infrastructure is explicitly exempt from the preparation of preliminary studies.

Source: (Jefatura del Estado, 2011[35]), (Jefatura del Estado, 2015[36]), (Jefatura del Estado, 2015[37])

An increasing practice across OECD countries is to undertake ex ante evaluations to assess the likely impact of proposed infrastructure project. In Iceland, a recent Gender Impact Assessment helped to identify the gender impact on a community as a result of a planned tunnel development and in Italy a compulsory assessment of all new large high-speed rail projects using cost-benefit analysis was implemented with the support of supervisory authorities (Box 3.14).

Box 3.14. Ex-ante Impact Assessments in Iceland and Italy

• In Iceland, as part of the introduction of gender budgeting, the Minister of Finance appointed a working group and, based on the working group’s suggestions, requested all ministries to consider the gender impact of an area of spend. The objective of this exercise was to make the gender impact of spending across different areas more visible so that is could become possible to respond and re-design expenditures and policies in line with objectives for gender equality. Results of these projects were presented in the bill for the 2012 budget. The Ministry of the Interior undertook an analysis of the social, cultural and financial impact of making a road tunnel between two small towns in the north of the country on the lives of the inhabitants.

As part of the exercise, the Ministry of Interior undertook a research project considering the different elements (transportation, community development, economic conditions, public service and social wealth) from a gender perspective. It was discovered that the new tunnel was more favourable to men than women. Men would benefit more from increased job opportunities, lower travel to work time. Women were concerned about the loss of local services that might result from the two towns being joined. This is in part due to the additional domestic responsibilities that women currently have in these towns, e.g. taking their children to and from school. The Icelandic Government went ahead with the tunnel, but with a greater awareness of how negative impacts for women, who are already in a weaker position in rural areas, could be mitigated.

In the case of Italy, two factors contributed to the rise in scepticism around large infrastructure projects: the emergence of corruption scandals and the budget constraints imposed across economic sectors over the period 2009-2015. Partially in response to those criticisms, the government introduced new safeguards in the decision-making process, such as compulsory assessment of all new large projects using cost-benefit analysis, creation of supervisory authorities. The Ministry issued guidelines for cost benefit analysis. The methodology applies to all projects, with a distinction for projects below and above EUR 10 million. Different options are available, from needs assessment to cost-benefit analysis.

Notwithstanding these measures, opposition to further spending in infrastructure resulted in the Ministry of Transport setting up an expert panel to undertake new cost-benefit assessments of all large proposed investment projects in 2018. The experts submitted their report on the HSR Turin-Lyon to the Ministry in February 2019. The report concluded that none of the proposed engineering solutions would yield a positive cost-benefit ratio and therefore recommended not to pursue the investment. Their calculations estimated a negative net present value of over EUR 8 billion for the project in the base case.

One of the lessons emerging from the Italian experience is that introducing a requirement for ex-ante cost-benefit analysis does not magically solve the methodological and institutional issues linked to decision-making in infrastructure. Most notably, the Ministry does not provide a coherent methodological framework for all CBAs. In the absence of a minimum common denominator, each technical analysis requires some value judgement by its authors and can be more easily criticised.

A lack of stakeholder consultation processes to run in parallel with technical analyses is also worth noting. However, a marked improvement in transparency and the greater focus of the national debate on technical questions emerged from greater reliance on expert advice and public disclosure of their analysis.

Source: (OECD, 2017[58]), Section 2: OECD Benchmarking Exercise

CBA is the most common approach to assess absolute value for money amongst OECD countries, although countries also make use of other techniques such as net present value, cash-flow estimates over the project lifecycle, internal rate of return, analysis of the willingness of users to pay or business case methodologies (OECD, 2019[57]). However, assessment criteria included in CBA in Spain are not public and appear narrow relative to other OECD countries. The role of socio-economic factors in the assessment is not well-defined and it is unclear the overall weight attributed to each criterion in the preparation of these analyses (AIReF, 2019[55]). Chile has developed a methodology for the assessment of socio-economic criteria in CBA (Box 3.15). One of the strengths of the Chilean model is its social cost-benefit evaluation system which imposes a considerable degree of rigour on the project selection process. The social evaluation methodology ensures that only projects that generate a minimum social return receive funding.

Box 3.15. Socio-economic evaluation in Chile

Socio-economic evaluation of proposed infrastructure projects follows a rigorous process in Chile. All major projects are appraised under the national investment appraisal system (SNI), overseen by the Ministry of Social Development.

CBA lies at the heart of project evaluation. The SNI provides a methodology to assess costs and benefits for each type of infrastructure, based on years of experience accumulated in each sector and international good practice. For the railway sector, the official methodology was updated in 2016. It provides guidelines to project developers in relation to asset lives, discount rates, rates of return, etc.

The SNI also states the importance of building a link between ex-ante and ex-post evaluation. In particular, it advises project developers to develop indicators of performance (financial, operational, socio-economic) that can help mid-term and ex-post assessments of the project in question.

This framework provides a number of advantages:

• First, it ensures that a uniform and consistent methodology is available for all infrastructure projects, allowing a like-for-like comparison between appraised alternatives;

• Second, it assigns clear responsibilities between project development (regions, sectoral ministries), evaluation (Ministry of Social Development) and approval (Ministry of Finance);

• Third, it introduces a high degree of transparency because all inputs and outputs of the process are public on the Ministry of Social Development’s website.

However, the OECD has also identified some shortcomings of the SNI system in Chile. The requirement to have a socio-economic assessment is not binding, and the Ministry of Social Development can instead authorise the use of least-cost analysis for a majority of projects. In addition, the system does not integrate environmental impacts in the assessment. The SNI also places considerable requirements on project developers. In the case of smaller and poorer regions, there may not be sufficient resources to produce a detailed and compelling ex-ante analysis.

Source: (Ministerio de Desarrollo Social, n.d.[59]) (OECD, 2017[48])

The consultation made by AIReF revealed that in some cases the result of the CBA and MCA are not made available to the public (AIReF, 2019[55]), which also hinders the transparency of the process. Moreover, the project appraisal process in Spain is lengthy. On average, it takes 63 months between the moment the administration starts preparing the preliminary studies and the final approval. The assessment of the environmental impacts of transport infrastructure projects in Spain is mandatory by law. The existing environmental regulation is comprehensive and provides a detail description of the contents and methodologies for the preparation of environmental impact evaluations. In a number of occasions, negative environmental impact assessments have stopped the execution of infrastructure projects in Spain (AIReF, 2019[55]).

Consultation and stakeholder engagement occur at a later stage in the project life cycle

The process for managing infrastructure should rest on broad-based consultations and open dialogue drawing on public access to information and a focus on users’ needs. Public consultation processes are essential for legitimacy, transparency and the identification of infrastructure needs and can thus enhance the performance of infrastructure projects (OECD, 2017[42]). OECD best practices suggest that countries must ensure the provision of information and “proactive” measures to disseminate information and allow for continuous and open dialogues that are broad-based, involving relevant stakeholders in planning, decision-making and oversight. Elected politicians are most likely to respond to demands from their constituents. Public awareness of, and demand for, efficient public investment is therefore an important influence on project planning, selection and prioritisation.

Furthermore, governments should ensure meaningful stakeholder engagement with communities, users and impacted people to collaborate during all phases of the project life cycle and ensure debate on the main economic, environmental and social impacts of the project. For instance, France has adopted good practices in terms of stakeholder engagement throughout the life cycle of the project for the development of high-speed rail (Box 3.16).

Box 3.16. Stakeholder engagement for major transport infrastructure investments in France

France has developed an effective consultation process for major transport infrastructure investments following problems with the acceptability of motorway projects and later high-speed rail lines*. Stakeholder engagement, is mandatory for any transport infrastructure project with a budget from EUR 300 million or a length of more than 40 km. Good practice in stakeholder engagement tends to add one year to project completion, but the ownership and quality of the projects is improved.

The extensions to the Atlantic high-speed rail line provide a good illustration of stakeholder consultations in France. The Tours-Bordeaux project involved 150 public meetings to provide information on the project from its very earliest stages and 2,000 stakeholder consultations. 500 visits to four construction sites were organised, principally for local residents, with nearly 20,000 people attending over a period of three years. Consultations resulted in modifications to the route of the line and improvements to roads in the neighbourhood of the line. They also resulted in 10% of the construction jobs on the project being reserved to local people on job creation programs and 10% of the value of construction contracts being sub-contracted to local suppliers. Stakeholder consultations also resulted in agreements on environmental protection, avoiding sensitive sites, and creating natural environments close to the line in compensation for comparable sites disturbed or destroyed. Local elected politicians have a strong role in promoting the strategic case for the project.

Note: * The approach was initially built around provisions of a 1993 law to protect landscapes and biodiversity (Loi Paysage)

Source: Section 2: OECD benchmarking exercise

While Spain also has public consultation processes, public engagement is only available late in the project selection process. According to legislation, after the feasibility studies are finalised they must be subject to public consultation for 30 days. This is the only mandatory consultation process for infrastructure projects in Spain. In contrast, mandatory consultation processes are used at all stages of the infrastructure governance process across OECD countries. Likewise, the majority of OECD countries also have mandatory consultation processes for the project preparation phase, the evaluation of infrastructure needs and for the decision process of prioritising infrastructure projects (Figure 3.5). During the construction phase, mandatory consultation is less common. The feedback of these consultation processes are for example used for environmental impact studies, to incorporate results from public hearings into the infrastructure preparation period, as well as analysis and evaluation throughout the project (OECD, 2017[42]).

Figure 3.5. At which stages of development do consultation processes take place?

Note: Total respondents: 21 (Countries with mandatory consultation processes), (Others: not specified)

Source: (OECD, 2016[60])

According to the consultation processcarried by AIReF under the transport spending review process, transparency and public consultation were some the aspects that stakeholders highlighted as more problematic in Spain (along with ex-post evaluation). Late engagement in the project preparation process limits stakeholders’ ability to influence projects as modifications are more costly and difficult to make at later stages of project development. As a consequence, the country might have consultation process in place but they rarely have a strong impact on the decision-making process. Likewise, current framework assumes that public and intermediaries, such as industry associations, have the capacity to engage on a high volume of complex infrastructure projects. Finally, access to information could be improved to ensure meaningful stakeholder engagement. In particular, increasing transparency on the methodologies and processes used to appraise public investment as well as the use of integrated databases for infrastructure investment are common practices among OECD countries (Box 3.17).

Box 3.17. Chile’s National Investment System

Chile’s National Investment System exhibits a high degree of transparency. The various methodologies and processes for undertaking social evaluations are published on the MDS’s website, as are the social prices used in those evaluations. An online Integrated Project Database provides information relating to the status and costs of all public investments, thereby enabling civil society, the private sector and the general public to monitor investments across sectors in different regions. The Concession Co-ordination Unit within the Ministry of Public Works also publishes extensive information on concessions during each of phase of the project’s life cycle. This system, which combines rigorous processes, independent review and a high degree of transparency, has undoubtedly contributed to the relatively high quality and efficiency of Chile’s infrastructure investments over the past 20 years.

Source: (OECD, 2017[48])

Budgeting for capital investment

Having a sound capital budgeting framework is essential to ensuring that the budget meets national development needs in a cost-effective and coherent manner. OECD best practices suggest that countries should develop a robust capital budgeting framework, identifying, measuring and regularly updating infrastructure expenditure in relation to both development of new infrastructure and maintenance and decommissioning of existing assets in all key budget documents (i.e. the annual budget and accounts, as well as the medium and long-term fiscal projections). Furthermore, governments must ensure that infrastructure projects are affordable and the overall investment envelope is sustainable. Decision-making should be informed by affordability concerns, measuring and disclosing multi-year spending commitments, including running and maintenance costs, and contingent liabilities resulting from infrastructure projects.

The process for capital budgeting in Spain

Unlike most OECD countries, in Spain line ministries are required to separate their capital from operating budget requests and the process for deciding upon capital and operating budget requests are distinct (Figure 3.6). Having separated budgets for capital and current expenditure can ensure that mandatory items such as entitlements do not crowd out discretionary items such as capital investment (Posner, 2009[61]). However, it also imposes greater challenges to co-ordinate expenditure decision. When a government decides to submit capital and current budgets separately, it will need to strengthen the selection mechanisms of capital projects to ensure that line ministries better integrate their capital and current expenditure decisions (Burger and Hawkesworth, 2013[62]).

Figure 3.6. Distinction between capital and current expenditure requests (2018)

Notes: In Germany capital and current expenditures are outlined separately in the budget, but negotiated and decided in an integrated way; Data for Belgium, Canada, Finland, Iceland, Korea, Latvia, Poland and the United States are not available; Data for Portugal are not available for this question; Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

Source: (OECD, 2018[31])

During the annual budget preparation process in Spain, the MOF sets the investment ceilings for all line ministries, including the MITMA. Likewise, it sets a number of limitations for budget setting including the allocation of resources to comply with future appropriations or investment commitments previously acquired. The budget bill is submitted to the cabinet for approval and subsequent referral to the general courts. The MITMA has extensive discretion over budget allocation across projects, modes of transport and decentralised entities.

Project selection and prioritisation in the annual budget process

Generally, since there are more infrastructure projects than can be accommodated within budget constraints, governments must prioritise those projects (OECD, 2017[46]). A common approach is to develop a short-list of priority projects taking into account available funding for infrastructure investment. As was previously mentioned in the first section of this chapter, there is complete disconnection between the strategic planning process and the allocation of resources in Spain. Similarly, the project appraisal process is not linked with the resource allocation process either; feasibility studies do not always include an analysis on affordability or budget availability.

Even if every project included in the annual budget process must have a feasibility study approved, the preparation of a feasibility study itself does not immediately entail that the project will be included in the annual bill. As a matter of fact, there is a considerable pipeline of projects that are waiting to be included in the annual budget process due to fiscal constraints. All in all, limited resources for transport infrastructure investment demand the MITMA to perform an additional project prioritisation and selection process specifically for the preparation of the annual budget. Granted that the role of the MOF is restricted to the establishment of an investment ceiling, this prioritisation process is discretional to the MITMA.

A non-binding multiannual appropriation

A Medium-Term Budget Framework (MTBF) is a set of interrelated systems, rules and procedures ensuring that budgets are set with a medium-term perspective and are compatible with fiscal sustainability (European Union Independent Fiscal Institutions, 2018[63]). An MTBF generally mirrors the format of the budget of a country in that it provides the same level of detail as the annual budget (OECD, 2008[64]). As such, an MTBF is a technical and institutional framework that expresses fiscal objectives over a multi-annual period.

A well-established MTBF gives an overall picture of developments on the revenue and on the expenditure sides of government, including by subsectors and policy areas, thereby making trade-offs and highlighting the budgetary impact of policy initiatives. In particular, the multi-annual focus helps to make visible the medium-term impact of expenditures and savings whose impact may only be evident over several years. An MTBF also provides line ministries some degree of certainty over fiscal envelopes available over the next few years. Some relevant features of the MTBFs in OECD countries are detailed in Box 3.18.

Box 3.18. Medium-Term Budget Frameworks in OECD Countries

MTBFs reflect the institutional arrangements and economic circumstances of a country and as such, there is no single best design of an MTBF. Rankings on the effectiveness of MTBFs, such as the EU assessment framework should be interpreted with caution (European Commission, 2019[65]). Selected country examples illustrate how countries have adapted the frameworks to suit national circumstances.

• Australia: The MTBF relies on the notion of forward estimates, that is, a baseline projections for all expenditure and revenue for three years beyond the next budget. After the Parliament approves the budget, the first year of the forward estimates becomes the starting point for preparing next year’s budget, and another year is added to the three-years of forward estimates. The forward estimates record the cost of ongoing programmes without new decisions by the government, for examples new programmes or extension of ongoing programmes. The forward estimates are prepared at the same level of detail as the budget, thereby allowing each year’s budget to contain a reconciliation between its own figures and the first outer year in the previous year’s forward estimates. Variances between a forward estimate and the new budget can be traced back to policy decisions, changes in economic parameters, and other variables. The forward estimates are managed actively throughout the year, to ensure they reflect the available information on the evolution of parameters and policy decisions. All new policy proposals are assessed and discussed in terms of the four-year period of the MTBF (and in some instances a longer cycle, such as defence procurement).

• France: The Lois de Programmations des Finances Publiques (LPFP), the MTBF in France was adopted in 2008. The reform process in France that resulted in the LPFP has parallels to the one launched by the Budget Framework Law in Portugal. The LPFP contains a MTFF of the general government, consistent with France’s European commitments. It includes the State Budget for each mission or policy area, and the social security funds. The State adopts budget ceilings for a three-year period. The ceilings for the first year constitute the basis of the coming year’s budget. The ceilings for the second year are binding on each mission; and the ceilings for the third year are only binding at the aggregate level, and not for individual missions. However, in practice ceilings in the second year may vary relative to the annual budget, provided the variations are justified in the budget documentation.

• The Netherlands: The MTBF applies to the four-year period following parliamentary elections, and covers the period up to the next election and normally reflects the outcome of coalition negotiations between the political parties that won the election. The MTBF sets expenditure ceilings for the four-year period. It also outlines the maximum amount of discretionary tax measures for the same period. Ceilings are binding and annual budgets should be in line with the coalition agreement reflected in the MTBF. Each ministry is accountable for its ceilings and any excess expenditure vis-à-vis the ceilings is to be offset by reductions in the other expenditures of the Ministry. Tax revenue windfalls cannot be used to offset expenditure overruns. The Bureau for Economic Analysis (CPB) is an independent institution and plays a role in the preparation of the MTBF by analysing expenditure programmes and the coalition agreement, and proposing adjustments to the medium-term baseline if necessary).

The absence of multi-year budgeting creates challenges for infrastructure planners. Most infrastructure investments take place over multiple years. The lack of medium-term commitments generates uncertainty for both the procuring authority and the contractor. Moreover, without medium-term visibility as to the availability of budget resources, infrastructure planners find it difficult to develop a pipeline of projects.

There is great variation between the ways OECD countries fund multi-year capital projects. While some countries have budget requests funding for the entire cost of the multi-year project up-front, some budget requests funding incrementally each year until the project is completed, and some others have alternative types of budgeting approaches (Figure 3.7).

In Spain, public resources can only be committed for one budget year. Projects that require multi-annual investments are approved by the Council of Ministers depending on the availability of resources in future budget years; once approved these projects are incorporated in the annual budget bill as an investment annex. Nonetheless, the investment annex is not a binding document and it is open to modifications on a yearly basis. Therefore, the approval granted by the Council of Ministers is a general authorisation rather than an instrument to plan and budget future commitments. Recent legal provisions on economic and budgetary stability allow the approval of annual budgets even if these are below the aggregate value of commitments previously acquired by the central government. In practice, there is no certainty that the budget bill will ultimately incorporate the necessary resources for the execution of multi-annual projects.

Figure 3.7. Budgeting of multi-year capital projects

Notes:1. Norway budget requests funding incrementally each year, but the system includes authorisation for the executive to plan and implement large capital projects based on the entire cost up-front, unlike the case of Spain where the multi-annual investments incorporated in the investment annex are not binding and can be changed each fiscal year.

1. Data for Portugal are not available for this question; Data for Belgium, Canada, Finland, Iceland, Korea, Latvia, Poland and the United States are not available; Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

Source: (OECD, 2018[31])

The MOF has a limited role on infrastructure investment

According to OECD best practices, decision-making must take into account affordability of new projects and should minimise sustainability risks by measuring and disclosing multi-year spending commitments, including running and maintenance costs, and contingent liabilities resulting from infrastructure projects.

In most OECD countries the Central Budget Authority has a formal gatekeeping role in approving infrastructure projects. This means that in most countries if approval by the Central Budget Authority is not obtained, the project cannot proceed. The criteria used by the Central Budget Authority for the approval of infrastructure projects and assuring their affordability focus on the projects affordability for both the national budget and users, value for money, and to a lesser extent on the presence of mandated documentation for all projects.

Furthermore, in most OECD countries transparency about the cost of the asset is furthermore assured by accounting for future costs and liabilities a priori. Most countries have formal requirements in place to account for running costs and contingent liabilities associated with an infrastructure asset (Box 3.19).

Budgeting for capital investment and the level of central government debt appear to be the two tools available to the MOF to enforce fiscal discipline on infrastructure investment. The MITMA has extensive discretion over the allocation of the budgeted ceiling on investment projects, modes of transport and decentralised entities. The MOF has oversight over public debt and deficit of state-owned enterprises and companies partially owned by the State. However, it principally has regard for the national level of debt, not the viability or sustainability of individual projects. In this regard, there is little oversight performance by the MOF on the investment decisions of the MITMA. There is little control or monitoring of contingent liabilities associated with an infrastructure asset.

Box 3.19. Measuring and valuing contingent liabilities in Chile

The Fiscal Responsibility Law mandates the Chilean government to provide information on contingent liabilities. The Budget Directorate in the Ministry of Finance DIPRES must inform annually on the total amount and characteristics of state guarantees. Given the size of contingent liabilities, these are taken into account when calculating the structural balance target.

Since 2007, DIPRES publishes a report on contingent liabilities yearly. This report carries out sensitivity analysis on minimum income guarantee on concessions, state guarantee on debt of state owned enterprises, guarantee of higher education loans, state deposit guarantee, Chilean Economic Development Agency (CORFO) hedge fund risk and small business guarantee fund, and guarantees of the pension system.

In the particular case of PPP, it should be noted that Chile started estimating the fiscal effect of revenue guarantees and revenue sharing for PPP in the late 1990s. This work led to the development of a spreadsheet model that could estimate the expected cost of revenue and exchange-rate guarantees (and the expected revenue from revenue- and gain-sharing arrangements) for each year of each concession. The model also generated an estimate of the probability distribution of future spending and revenue each year, which allowed estimates of cash flow at risk and similar measures. The Ministry of Finance took over the model and developed it further, extending its scope to include airports as well as roads. The ministry now uses the model to estimate the cost of possible guarantees, to set guarantee fees, and to report information on the costs and risks of guarantees.

Source: (Vammalle and Ruiz Rivadeneira, 2017[66]; Irwin and Mokdad, 2010[67])

Monitoring the implementation of infrastructure investment

Monitoring refers to the function performed by government ministries and related entities to seek assurance on the implementation of an infrastructure investment relative to the milestones and undertakings established at the time the decision to investment was given. International research shows that significant value is lost during the implementation of infrastructure investments (PMI, 2019[68]). The implementation period refers to the period from when a decision is taken to proceed with an infrastructure investment project through to the active use of that infrastructure. The OECD has identified implementation challenges that include guarding affordability and value for money (OECD, 2016[69]).

The Project Management Institute in the United States estimates that 14% of the value of a project is wasted in the government sector because of poor performance with only 45% of projects completed on time and 54% completed within budget (PMI, 2019[68]). The losses from the ineffective implementation of strategy in the government sector are slightly higher than the average (10%) reported across all sectors.

The implementation of infrastructure assets can be subject to delays, higher than expected costs and changes to the specification of the investment due to differences from how implementation was planned relative to real life circumstances at the time of implementation. Monitoring the implementation of an infrastructure asset is a function performed by the government agency responsible for the implementation, combined with oversight by at least one other government organisation, such as the MOF or a similarly specialised body, to help governmental decision-makers stay appraised of the circumstances and take remedial action as required.

The monitoring is part of a system of assurance, an integrated set of responsibilities and functions designed to identify, report and take action on risks and challenges facing an infrastructure project during its implementation in order to minimise waste and achieve the desired outcomes. Figure 3.8 shows the relationship between monitoring and other supporting functions of assurance. The figure shows that monitoring can be performed by more than one party depending on its purposes across three lines of defence. A line ministry might perform monitoring to keep its chief executive and other decision-makers appraised of the status of implementation, and an independent organisation might perform a similar role as part of an external assurance function, separate from the line ministry.

Figure 3.8. Project assurance from three lines of defence

Source: Institute of Internal Auditors, United Kingdom

The institutional arrangements to monitor the implementation of infrastructure, beyond that which occurs in a line ministry, typically takes place within a ministry of finance or a specialised agency. The case supporting a separate agency is related to the role of a ministry of finance. In the case of Spain, the MOF performs specific functions on the strategic merits of investment and it’s financing. The Ministry does not perform an assurance role on the implementation of infrastructure.

The OECD review found that there was a potential gap in the assurance functions relating to the implementation of infrastructure, as these functions were performed in-house by the MITMA, other than the periodic role of the external auditor. Although the present arrangements have resulted in the delivery of infrastructure, relative to the arrangements in the countries referred to the accompanying Benchmarking Study there is an absence of monitoring separate from the ministry responsible for implementation. Between 1985 and 2010 the real net capital stock in transport infrastructure tripled in Spain (IVIE, Forthcoming[52]). However, there are relatively few processes in place to ensure that infrastructure is delivered as initially planned. There is thus limited information on project implementation in terms of the cost, timeliness and specification of infrastructure. By way of contrast, the Infrastructure and Projects Authority in the United Kingdom performs a range of monitoring functions, separate from those performed by the line ministry (Box 3.20).

Box 3.20. The British Infrastructure and Projects Authority priorities and activities

To ensure that infrastructure and major projects are delivered efficiently and effectively and to continuously improve the project delivery system, the Infrastructure and Projects Authority to prioritises the following four activities.

 

Setting up projects for success	Success or failure of a project is often determined by how it is set up. We help set up projects for success by influencing the policy environment, deploying our expertise as early as possible, developing tools and standards
Creating market confidence	We need a confident private sector to help deliver and invest in infrastructure and major projects. We create confidence by providing foresight and transparency on the future pipeline of projects, establishing financial policies and products to support private investment and ensuring government priorities are consistent and clear so the market can plan.
Building delivery capability	Great project leaders deliver great projects. We develop project leadership in government and build delivery capability by providing world class leadership programmes, developing career pathways, leading the project delivery and project finance professions and developing government to act as an exemplary client.
Measuring and improving performance	We do all we can to help infrastructure and major projects deliver their intended benefits for society and provide value for money for the taxpayer. We seek to measure the performance of projects over time, to understand what is necessary to improve performance of the system and adjust the system accordingly.

Source: (Infrastructure and Projects Authority, 2017[70])

Implementation risks are not considered in the portfolio management and reporting

The government undertakes multiple infrastructure investments at any one time. In aggregate, the activity represents an investment portfolio which can be assessed and managed based on a range of criteria, including implementation risk.

While the government ministry responsible for the implementation of an infrastructure asset would be expected to monitor the implementation progress of its projects, a government will want to stay appraised on implementation risks across all government agencies and asset types. In order to help determine which projects would benefit from monitoring assurance, some governments, for example the New Zealand Government, identify a risk profile for each investment project to determine whether monitoring is advisable. Government ministries complete a Risk Profile Assessment to determine the inherent risk of a project (New Zealand Treasury, 2019[71]). The risk profile assessment helps to prioritise the use of resources to projects with identifiable characteristics of implementation risk. Where monitoring is advisable to help ensure the delivery of an infrastructure project as expected, portfolio of high-risk projects is able to be monitored using portfolio management techniques to manage the extent of risk the government is exposed to by measuring such things as:

• The rate at which projects are added and completed within the portfolio,

• The whole of life expense for the government relative to the construction costs,

• The delivery confidence assigned to each project regarding successful completion,

• Identification of the projects that replace existing assets, respond to changes in demand or are transformational in nature.

During the OECD’s engagement with AIReF, the use of similar tools in government ministries in Spain was not apparent. The use of such tools are relatively simple to implement and can be spreadsheet-based. In this regard, the Spanish government would be able to establish the risk characteristics of its implementation activities within a relatively short period of time to keep ministers and other decision-makers appraised of the potential risks across the portfolio of public investment activity.

The reporting practices on the status of infrastructure projects during the implementation period of each project varies across governments. In countries such as Australia, Canada and the United Kingdom, the status of the implementation of infrastructure projects is reviewed on at least an annual basis. In the United Kingdom the information is available in the Annual Report on the Government Major Projects Portfolio (GMPP) (IPA, 2019[72]). The reports increase awareness across government, the private sector and stakeholders generally of the implementation status and risk of projects. The reports also supports the identification of lessons and corrective measures that may be possible for future projects. A similar example is the 2018 Australian Infrastructure Budget Monitor which focuses on the status of the implementation of transport infrastructure in Australia (IPA, 2018[73]). In the case of Spain, the OECD team did not find similar reports to assist the government to have awareness of the implementation of public investment.

Assurance tools and processes during the implementation phase are not in place

Having identified institutional arrangements for monitoring, selected which projects contain inherent risk and a way to report on implementation, as discussed in the above sections, the next crucial aspect of monitoring is to identify critical points during the implementation phase where decision-makers can be most effective in taking action to manage the risks reported to them for specific projects.

A number of countries, including Spain, use assessment tools such as CBA and independent quality assessments to help analyse and select which projects should be implemented. Tools also exist during the implementation stage, such as the Gateway Project Assessment Tool to establish milestones where decisions from the governance group(s) responsible for an infrastructure project are needed for a project to progress from one stage, or “gate”, to the next (Figure 3.9). The tool originated from the United Kingdom and is used widely across the world, supported by accreditation processes.

Figure 3.9. Gateway Project Assurance Tool

Source: (Infrastructure and Projects Authority, 2017[70])

Weak whole-of-life monitoring, ex-post evaluations and impact assessments

Monitoring the ongoing operation of an infrastructure project after it is completed and commissioned continues through to its retirement and disposal. The obligations for the whole-of-life monitoring usually lies with the ministry responsible for operating and reporting on the delivery of public services generated from the infrastructure. This obligation is supported by external oversight from the government’s external audit function. In the case of transportation infrastructure, the transportation regulator also performs a role with respect to public safety.

Monitoring the whole-of-life performance of an asset is crucial to ensure the asset fulfils its intended purpose. Asset performance measures on the condition, use and functionality of an asset help inform the maintenance required to ensure the delivery of public services are effective, safe and accessible. The transport sector in OECD countries has well developed performance measures (Box 3.21) to monitor such things as the timeliness of transport, the incidence of accidence, the capacity utilisation. Transport operators in Spain also make such information available, but at present there is no obligation to provide the information to central government to help calculate the actual whole-of-life cost of infrastructure to support comparisons across modes of transport, such as road and rail, to inform future investment decisions.

Supreme Audit Institutions periodically undertake ex post reviews of a government’s infrastructure investment activity. The publications can refer to the process and the results achieved. International examples include the National Audit Office in the United Kingdom (NAO, 2018[74]) and the European Court of Auditors special report on the European High-Speed rail network (European Court of Auditors, 2018[75]).

Third parties also undertake evaluations, for example the National Research Council of Canada (2018) Audit of Major Capital Project Management (NRCC, 2018[76]). In the United Kingdom, the National Infrastructure Commission prepares an Annual Monitoring Report on the progress the government has achieved to progress the recommendations the Commission had recommended through its earlier work, as such the report is providing an evaluation of the status of the work completed (NIC, 2019[77]).

Box 3.21. Ex post assessment of public infrastructure investments in France

Governments must make sure that the infrastructure assets perform throughout their life by ensuring effective monitoring, operation and maintenance. Adequate monitoring of the performance of the assets should be undertaken, including a regular review of the value and depreciation of assets and their impact in the accounts, as well as ex-post evaluations of value for money to be used in future decision-making processes.

France provides an example of ex-post assessments in OECD countries. These ex-post evaluations of major transportation projects became compulsory with the passage of the "Domestic transport planning law" of December 1982. In 2010, that obligation was reiterated and spelled out in a new "transport code". France provides a coherent methodological framework on methods for the economic evaluation of transport projects (January 2015), a benchmark for evaluation based on the principle of a multi-criteria analysis. Under this framework, socio-economic as well as environmental assessments of the projects are not only conducted prior to any financing agreements, but also several years after their commissioning during the ex-post assessment.

Source: (OECD, 2017[58]), Section 2: OECD Benchmarking Exercise

Conclusions and recommendations

There is consensus within the Spanish authorities on the need to improve the decision-making process for infrastructure investment. Spain has adopted a number of overall long-term infrastructure plans as well as sector-based transport infrastructure plans over the last three decades. However, infrastructure plans have been consistently overambitious and the criteria for the selection of a pipeline of projects is unclear. Furthermore, the link between the large list of projects included in the long-term strategic plan and the projects that are actually implemented is weak and the criteria used is not standardised. Project delivery and implementation is not a major concern, however there is limited information on the performance of implementation activities in terms of the cost, timeliness and specification of infrastructure. In order to improve the decision-making process and better align the Spanish framework with OECD good practices, the government could consider the following recommendations:

Develop a robust framework for long-term strategic planning

With only four more years to go, it would be timely to enhance Spain’s strategic planning framework in time for the adoption of a new long-term national infrastructure plan in 2024. These reforms should include a formal and inclusive process for its formulation, a defined pathway to achieve the long-term vision and clear steps that can be implemented in the coming budget period.

Identify, establish, and adequately resource a function to develop a whole-of-government strategy and strengthen the capacities of the MITMA for long-term planning

An independent function should develop an overarching infrastructure strategy across the whole of government in Spain. This function should generate alignment across infrastructure sectors, not simply transport infrastructure, and define investment priorities that serve as an anchor for policy making across line ministries and levels of government. Initially, the role of the Transport, Mobility and Urban Agenda Council could be strengthened in order to develop such cross-sectoral infrastructure strategic vision. However, in the long run Spain could consider transferring this function to an independent agency at the centre of government. The high-level strategic vision should guide the MITMA in the development of more detailed national and sectoral transport infrastructure plans.

Capacities for long-term planning within the MITMA should be strengthened by putting in place a system to ensure the systematic collection of relevant data and a clear institutional framework for analysis, dissemination and learning. This system could be managed by an existing unit at the MITMA or a newly created unit. Should this be an existing unit, it will be key to provide clear direction and sufficient resources for this task in order to avoid the risk that this role becomes less of a priority than the unit’s traditional and more immediate roles.

The Spanish government could also benefit from translating existing research outputs into policy-relevant insights for the policy-making and strategic planning processes, making use of existing technical capacities from bodies like CEDEX and INECO. These entities could work together with the planning unit within the MITMA for the needs assessment, formulation and update of national transport infrastructure plans.

Ensure the long-term strategic vision is integrated across transport infrastructure modes and levels of government

To ensure that the strategy is the product of a broad-base political consensus, is based on clear assumptions, properly co-ordinated across levels of government, and takes necessary complementarities across sectors into account, Spain should consider:

• Reinforcing co-ordination of all relevant institutions to develop an integrated and systemic vision of the transport sector, for instance by regularly using co-ordination mechanisms such as the Logistics Forum and the National Transport Conference, extrapolating these mechanisms to other strategic pillars (i.e. passenger transport), and using these inputs for the development of more comprehensive strategic frameworks;

• Developing a long-term and whole-of-government investment strategy that considers the impact of investments in each territory, balances trade-offs and chooses priorities among different needs. It should be articulated and anchored in a national strategy for regional development that identifies long-term regional development goals;

• Favouring inter-modality as a prioritisation criteria and linking potential projects in different sectors to a broader national strategic infrastructure vision. Institutional and long-term thinking can generate coherent sectoral investments choices, ensuring that such investments contribute to long-term goals and reduce the potential for duplication;

• Including a technical assessment of infrastructure needs and stocktake of existing infrastructure in order to plan for the effective operation and maintenance of the most appropriate assets to meet current and likely future demands, and the disposal of assets that are no longer required.

Make sure that the long-term infrastructure plan establishes concrete actions to protect the long-term vision from political turnovers

Instead of providing only a list of potential projects to be developed, the plan should incorporate a written explanation of the purposes and objectives for the projects selected in the infrastructure plan and their alignment with the overarching infrastructure strategy mentioned above. Although some flexibility is ideal, the infrastructure plans should define concrete actions and explicitly provide timelines for projects’ initiation and completion, in order to ensure that the projects are effectively executed and the provision of such infrastructure services is guaranteed in the long-run. In order to shield the long-term plan from political turnovers, better guidance on how infrastructure needs should be met and prioritised should be specifically stated in the infrastructure plan.

Link the formulation of the overall and sectorial infrastructure plans to the budgetary process and strengthen the horizontal co-ordination with the MOF during the planning stage

A stronger link between the formulation of infrastructure plans and the budgetary process could facilitate that annual budgets and investment ceilings show correspondence with investment objectives and deliverables from national plans. Spain should consider assigning a more active role to the MOF during the preparation of the long-term national infrastructure plan. Once the strategic goals and project pipelines are defined by the MITMA, MOF should provide to the MITMA clearer information on the availability and time-frame in which multi-year commitments can be made in order to fund investments.

Linking planning to the budgetary process should also ensure that the national infrastructure plan will not be unrealistic about budget allocations and that the allocation of resources is made based on public interest priorities. Likewise, this will provide assurance to the relevant stakeholders about the stable, multi-year availability of resources.

Regulate the process for the formulation and update of the national infrastructure plan

Regulating the process for the development of the infrastructure plan could represent a significant improvement in terms of accountability and transparency. A comprehensive regulatory setup should include:

• An identification of the public entities that should participate in the development of the national infrastructure long-term plan. Aside from the MITMA, the Ministry for the Ecological Transition and the Demographic Challenge and the MOF should be to participate in the formulation of the plan;

• A description of the various stages for the plan’s formulation, starting from the definition of a national infrastructure vision, to the assessment of infrastructure needs in the country, the definition of a project pipeline, the preparation of the document and finally the process of review and approval;

• A pre-established time horizon for the infrastructure plan; a long-term plan generally ranges between 10 to 20 years;

• A methodology for the assessment of infrastructure needs, which should incorporate participatory forms of engagement, making sure to identify needs at the subnational and sectoral level;

• A defined procedure for the CCAA and other subnational governments to submit infrastructure proposals to be considered for the preparation of the national infrastructure plan;

• A detailed process for the public consultation of the document formulated by the MITMA;

• A process for the regular update of the national infrastructure strategic vision to take into account the impact of technologic advancements and the evolution of infrastructure needs.

The definition of the publication and transparency requirements in relation to the development and formulation of the infrastructure plan, which should be available to the general public.

Ensure an evidence-based project selection and prioritisation process

Develop a standard process and criteria for selecting and prioritising infrastructure projects

Spain would benefit from having a rigorous process to ensure that investments deliver value for money. Under the current framework preliminary feasibility studies are performed after the decision to prioritise a specific project has been made. Therefore, the criteria to prioritise one infrastructure project over another are not clear for the public nor for other agencies in the administration.

The use of standardised procedures and criteria can guide the decision-making process and ensure that the selection of priority projects are not primarily based on political criteria. The process should be based on assessments to inform project selection and to rank alternative projects. Creating a short-list of priority projects within the medium run could help support this process. The ranking most be based on strong results of projects cost-benefit analysis. Furthermore, there should be transparency requirements to ensure that the link between the long-term strategy and the near-term list of prioritised projects can be clearly understood.

Consider a two-stage quality assurance process for large, high-value infrastructure projects

Ensuring value for of money and quality assurance of large infrastructure projects is critical to maintain fiscal suitability in the medium and long term, increase efficiency of overall infrastructure spending and prove governments capacity to deliver on its infrastructure commitments. As highlighted in the OECD Recommendation on the Governance of infrastructure, for projects that exceed a high investment threshold it is especially important to provide for an independent and impartial assessment to test project costing, risk management and projects’ governance (OECD, 2020[21]).

A two-stage quality assurance process can improve the preparation, selection criteria and implementation of large infrastructure projects in Spain. Experience from OECD countries suggest that the process should be simple to apply, evaluating project proposals according to a straightforward set of criteria. The first stage should aim to strength the choice of concept, investigating, analysing and discussing alternative solutions, social, environmental and economic impacts, and relevance of the project to transport infrastructure needs in Spain. The second stage should focus on the quality of the inputs that inform the decision-making process, in particular the cost estimates, risks, and uncertainties associated with the project. Likewise, this second stage would serve as an opportunity to improve project management in the implementation phase.

Provide an independent function to test project costing, fiscal sustainability, time planning, risk management and governance

Under the current framework the investment decision-making process in infrastructure is completely centralised in the MITMA. In order to ensure that the decision-making process remains impartial it is advisable to have an independent function to test project costing, fiscal sustainability, time planning, risk management and governance. The Transport, Mobility and Urban Agenda Council and the MOF can play an important role in ensuring that projects are selected and prioritised according to social and economic criteria.

The Transport, Mobility and Urban Agenda Council could support the decision making process in the first stage of the quality assurance process. In order to do so in an impartial and effective way, the Council should be redefined to have stronger mandates and independence. Instead of having an advisory role it could have clearer mandates to evaluate and produce an informed formal opinion on the choice of concept made by the MITMA. All projects above a certain threshold should go under the mentioned evaluation, rather than been a discretional choice of the MITMA. In the medium-term, Spain could also consider transferring this function to an independence agency in charge of enhancing strategic planning, project preparation and prioritisation in Spain.

The MOF should also have a more active role on infrastructure investment, supporting the second stage of the quality assurance process. In order to do so, it should enhance its capacity to do a proper assessment of the quality of the inputs that inform the decision-making process during this phase, and the fiscal impact it will have in the medium and long term. In particular, Spain could consider creating an independent unit under the MOF to deal with large infrastructure projects assessment and approval. The MOF could also relay on existing technical capacities from bodies like CEDEX and INECO to inform their assessment process.

Finally, Spain should establish a cross-government expectation of ‘comply or explain’ to support the implementation of the analysis and recommendations of the independent function referred above.

Strengthen the capital budgeting framework to better support infrastructure investment

Strengthen the multiannual perspective in the budget process

The lack of medium-term budget commitments generates uncertainty for both the procuring authority and the infrastructure provider. Without medium-term visibility as to the availability of budget resources, infrastructure planners find it difficult to develop a clear and stable pipeline of projects. Strengthening the medium-term expenditure framework is a precondition for sound infrastructure planning an investment. It helps offset the annual focus of budgets, which tends to impede effective expenditure management decisions on resource allocation covering a number of years.

Spain should work to strengthen the medium-term perspective in the budget process. Currently, there are no explicit mechanisms to ensure that future commitment of public resources for infrastructure investment procured through PPPs or traditional procurement will be accounted for in the annual budget bill. Having forward estimates of spending beyond the budget year can help to have a better understanding of the medium-term implications of budget decisions. The investment annex should be more than a general authorisation and serve as an instrument to plan and budget future commitments.

Improve accounting and monitoring of contingent liabilities on a cross-government basis

Spanish legislation does not incorporate any provisions on the treatment of contingent liabilities or running costs resulting from infrastructure projects. Based on OECD good practices, Spain would benefit from having a registry of contingent liabilities and producing an annual report on contingent liabilities that includes minimum income guarantees on concessions and other relevant contingent liabilities derived from infrastructure projects. This could help strengthen the sustainability of public investment in infrastructure, taking into account the fiscal risks arising from concessions.

Promote systematic and effective stakeholder participation

Engage civil society and relevant stakeholders earlier in the decision-making process

Effective stakeholder participation requires that consultation processes are proportionate to the particular characteristics of the project (e.g. size, political sensitivity, and impacted population) and cover the entire life cycle of the infrastructure asset (OECD, 2020[21]). The Spanish current system requires to publish the final preliminary studies and allow for comments from relevant stakeholders after the investment decision has been made. Consequently, there is little scope for the public to inform the decision-making process.

In order to ensure debate on the main economic, fiscal, environmental and social impacts of the projects, stakeholders should be engaged at an earlier stage, during the strategic planning process (see p. 80) and during the project preparation phase. Likewise, carrying a disciplined, upfront stakeholder mapping and analysis exercise can ensure that engagement efforts are cost-effective and include relevant groups in decision making.

Provide and take proactive measures to disseminate relevant information on infrastructure projects

Effective stakeholders’ participation requires governments to provide and take proactive measures to disseminate information on infrastructure projects, including their potential short and long-term effects (OECD, 2020[21]). In particular, Spain should promote the use of open data in infrastructure, disclosing relevant information to the public in a standardised, accessible, reusable, understandable and machine-readable format, in a periodic and timely fashion (OECD, 2020[21]). Currently, there is a large share of information available to the public, but it is not easy to use or understand. Efforts and resources should be invested to provide information on infrastructure projects in a way that can be better used for decision making. Developing and using an integrated database for infrastructure investment can help to achieve this objective.

Adopt a formal mechanism to ensure discussion on the territorial impact of transport infrastructure investment

As previously discussed, a demand for equal distribution of infrastructure projects across the Spanish autonomous regions has led to investments that do not necessarily meet efficiency and value-for-money criteria. In order to better channel infrastructure needs and demands at the regional level Spain must use formal mechanism to ensure discussion on the territorial impact of transport infrastructure investment in the country, channel regional needs in a productive and transparent way, and promote bottom-up analysis of transport infrastructure priorities in the different subnational governments. In particular, the transport sector conference could serve as a platform to discuss the trade-offs and complementarities of transport infrastructure investment in the country. In order to achieve this objective, the competences and responsibilities of the transport sector conference should be better defined.

Strengthen the monitoring, operation and reporting of public investment during the implementation phase of an investment project and programme

Consider the merits of a monitoring function separate from the MITMA to create an integrated assurance system

Aside from the internal monitoring performed by the MITMA, an independent organisation should monitor the implementation of infrastructure projects as part of an external assurance function in order to guard against a loss of value during the implementation of infrastructure assets. The institutional arrangements to monitor the implementation of infrastructure can take place within the MOF or a specialised agency. Some activities that can be undertaken by the independent function include: providing tools and standards for setting up infrastructure projects and influencing the policy environment, creating market confidence, building delivery capability and measuring and improving asset performance.

Consider the implementation of risk profile and assurance tools to help decision makers understand the existence of potential risks across the government’s portfolio of infrastructure investment and be most effective in taking action to manage the risks’

Spain should adopt portfolio management techniques to manage the extent of risk the government is exposed to. Risk profile tools should allow Spain to assess, at an early decision-making stage, the potential risks across the portfolio of public investment activity and identify the projects that would mostly benefit from monitoring assurance. Some information that could be highlighted include risks associated with the project’s implications on the delivery of national policy goals and its impact on relevant stakeholders, risks associated with the project’s scope and complexity and risks associated with the agency’s project delivery capability. Risk profiles should be reassessed each time the project’s costs or scope changes significantly.

Introduce a systematic method of reporting on the effectiveness of infrastructure investment processes and the results achieved

Spain should put in place a system that ensures the systematic collection, storage and management of relevant data over the entire life cycle of the infrastructure asset. This information can allow the monitoring of asset performance against predefined service delivery targets and expected outcomes (OECD, 2020[21]). The Spanish government should also establish obligations on government ministries responsible for the operation infrastructure to publicly report on the condition, use and functionality of infrastructure to support the effective maintenance, public safety and access to infrastructure across the country.