By Casey Patton, Bartlett & West
How can economic research and engineering work together toward the common goal of informing funding policies and decisions in order to prioritize limited dollars and maximize return on investment?
One example is the Missouri Department of Transportation’s request for proposals in late 2016 to perform an Economic Impact Study for Public Ports in the State of Missouri. It was important to quantify the direct, indirect, and induced economic impacts because the state has access to more than 1,000 miles of Missouri and Mississippi rivers and more than 500 million tons of cargo flow annually on these rivers. By analyzing economic impact, Missouri can understand potential return on investment should the state invest further in these key facilities.
Economic impact is also important in prioritizing limited public infrastructure dollars. Because infrastructure projects are extremely capital-intensive, they often need to be financed through taxpayer-funded programs, bonds, or other private/public partnership (often known as P3) funding programs. This analysis is often paired with public education and outreach to build consensus for additional funding sources or decisions about utilizing public funds for investments that might also have private benefits. The results of an economic impact study quantify in dollars the additional benefits that would be realized if the project was completed.
How else can agencies determine return on investment? Economic impact is only one factor. There must be a realistic project budget to determine the amount invested and what the ongoing costs will be. The project budget must include not only the construction costs, but also other project costs such as land acquisition, legal fees, financing costs, ongoing maintenance and operations, and professional engineering services. The budget must have reasonable contingencies built in to account for unanticipated conditions that are a part of any project.
With thorough analysis and careful project planning, economic research and engineering can form strong partnerships to strengthen project proposals that drive community and industry forward, together.
- economic impact