Infrastructure financing and project development

Module topical coverage

• Global infrastructure trends on infrastructure financing and investment
• Public-private partnerships, risk management approaches, and institutional investors
• Project and programme management: Critical Path Programming and the Five Case Model
• Asset management (operations and maintenance)

Introduction

Project preparation is fundamental to the successful delivery of infrastructure, the achievement of desired outcomes, and the generation of expected long-term societal benefits. Global infrastructure investment needs are estimated at approximately $90 trillion over the next fifteen years, with annual requirements in developing countries alone reaching around $1 trillion. A robust preparation stage underpins the entire infrastructure project cycle and encompasses critical elements such as risk management, which involves identifying and mitigating financial, political and environmental uncertainties; project and programme management, including tools such as Critical Path Programming and the Five Case Model; and asset management approaches that address operations and maintenance strategies to ensure long-term value and service delivery.

Following the adoption of the 17 Sustainable Development Goals (SDGs) in 2015, the International Conference on Financing for Development set out the ambition of turning development assistance from billions into trillions, by unlocking private sector investment. This vision, articulated by the World Bank and other multilateral development banks (MDBs), was rooted in the idea that public funding (estimated in the billions) could be strategically deployed through guarantees, blended finance and risk-sharing mechanisms to unlock significantly greater flows of private capital towards sustainable infrastructure. Although progress towards this goal has been limited, Public-Private Partnerships (PPPs) remain an important mechanism for mobilising investment for infrastructure development. Well-designed PPPs can improve infrastructure service delivery and management, incentivise efficiency gains, and help increase infrastructure funding and financing. The integration of gender-responsive measures in PPPs can help to further promote gender equality and achieve stronger socioeconomic impacts.

Institutional investors, particularly pension funds and insurance companies, represent a significant potential source of infrastructure financing. With assets under management exceeding $7 trillion amongst the largest funds globally, these investors have increasingly allocated capital to infrastructure, attracted by stable, long-term returns that match their liability profiles. By 2024, infrastructure allocations amongst institutional investors had grown to an average of 5.5% of portfolios, with Swiss pension funds reaching 2.5% and adoption rates climbing to approximately 50% of funds. However, challenges remain in channelling this capital to developing countries, where perceived risks, limited project pipelines and capacity constraints continue to restrict investment flow.