Prioritizing capital improvement planning.

• Author: Donaldson, Gary

The nation's backlog of infrastructure construction and repairs, which was last estimated at $2.2 trillion, is a primary challenge for state and local governments. U.S. roads, streets, bridges, and fixed assets are critical components of future economic development and growth. Tangible and intangible benefits (such as individual and institutional confidence in a governments infrastructure capacity and return on investment) are important considerations in the deliberation and formulation of a well-planned and prioritized capital improvement program (CIP).

The improved economy has allowed state and local governments to proceed with greater confidence in initiating CIPs. The prioritization of capital projects has taken on additional importance, given the limited availability of financial resources to meet the competing interests for infrastructure requirements. (1)

The importance of developing and annually updating a multi-year CIP cannot be overstated. As noted in GFOA's best practice guidelines, CIPs should be updated at regular intervals, generally corresponding with the government's annual budget process.

OVERSIGHT COMMITTEES

The question of which projects get funded first when they are all important can be answered by a CIP oversight committee, which adds additional governance, structure, and accountability. (See Exhibit 1.)

The composition of the oversight committee generally includes representation from the executive and legislative branches, neighborhood and citizen groups, public works engineers, project managers, and finance officers. Regular standing meetings that are aligned with the government's fiscal year provide the framework for the iterative steps that follow. These steps should lead to the authorization of projects to be funded in the capital budget and any related operating budget requirements. The reporting and monitoring step is required for post-budget adoption.

Larger governments can deploy a two-tiered approach that acts as a filtering stage for project evaluation and ranking. Tier 1 consists of the director level or agency head, and the executive and legislative branches. Tier 2 consists of the level just below director and agency head, and includes neighborhood and citizen groups. Tier 2 would provide Tier 1 members with key analysis and reporting, as shown in Exhibit 1. The Tier 1 group would then provide final approval through the executive and legislative branches. The monitoring component includes budget review...