It is a truism of efficient organizational operations that all decisions need to be aligned with corporate strategies, plans as well as the municipality’s policies, methodologies, standards and organizational culture and philosophy.
No organization can afford to pursue schemes merely because they are technologically fascinating. However, even profitable schemes that serve a valid organizational purpose cannot be justified where the cost of completion is disproportionate to the benefit that is to be derived.
Concern must always be raised where a single department or individual within an organization is pushing a development that fails to address a broad organizational need.
The more focused and resource-consuming a particular project may be, the greater the caution that should be exercised before allowing it to go ahead.
In assessing the worth of any proposed capital project, critical questions include:
- To what extent does the project mesh with (and further) the execution of the municipality’s mission and the attainment of its strategic objectives? What long-term use will the project serve? What net income will it generate? Will that income justify the cost?
- How will the municipality be better off after the project is completed?
- Is the market evolving in a way that will make the project unnecessary or reduce the benefit that it provides?
- Is the project technically feasible? If it is not, why bother? If it is, but the project pushes the limits of current technical capacity, what reason is there to believe that it can be carried out on time and within budget? The more the technical envelope is being stretched, the less likely it is that either of these targets can be met.
- Are there cheaper ways of accomplishing the same general purpose?
- How firm are the costing estimates?
- To what extent does the success of the project turn upon the co-operation of third parties. Is it realistic to expect that co-operation to be forthcoming?
The viability of government capital facilities often turns upon the last question. What is the point of building an NHL level arena in rural Saskatchewan, if there is little hope of ever getting an NHL team to operate from that venue?
What is the point of building a municipal convention centre if the municipality lacks the supporting infrastructure of restaurants, hotels, transportation and tourist diversions needed to attract a significant volume of convention business?
Public tastes and preferences may also be relevant; people are not prepared to drive four hours to get to an airport. It is not difficult to identify the kinds of high-profile projects that have been found to present long-term fiscal and other problems to government.
Most projects of this kind start off with the best intentions. These days, vast amounts of government capital are being committed to mass transportation programs of one kind or another. However, the U.S. experience with the creation of public transportation networks is less then encouraging on a cost-benefit basis.
The long-term experience of government in trying to provide seed capital infrastructure is that if you build it, very often people still do not come. Although rapid transit systems are often touted as a panacea to all manner of municipal problems, ranging from a decaying city centre to the abandonment of merchants and customers from old shopping areas, the evidence in that direction is limited.
Undoubtedly, public transit systems do confer some benefit, but care should be taken when listening to testimonials as to the extent of the benefit in question.
For instance, in both Canada and the United States, much is made of the possibility of introducing a network of high-speed train lines as an alternative to road traffic.
The experience elsewhere is decidedly discouraging. Since Japan introduced high-speed bullet trains, passenger rail has lost more than half its market share to the automobile.
Stephen Bauld is a government procurement expert and can be reached at [email protected]. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
