A new study shows that while the U.S. still claims the #2 spot for asset productivity, decades of chronic under-investment have reduced the performance of our assets overall. This loss of productivity from transit, rail, ports, aviation, buildings, and roads is pulling negatively against the nation's gross domestic product's (GDP) return on assets.
If, however, we do invest $1 trillion in infrastructure improvements over the next 10 years, our return on investment would increase 3%. Proactively managing those assets could improve national productivity by 20%.
The Arcadis 2016 Global Built Asset Performance Index is an alternative economic indicator that measures how built assets can power more growth to economies and contribute to stronger, sustainable performance. Conducted with the Centre for Economics and Business Research (CEBR), the index examines income generated by homes, schools, roads, airports, power plants, malls, railways, ports, and all other fixed assets in the world's 36 largest economies. The index measures returns in terms of purchasing power parity to ensure figures are adjusted to how much they are worth in that country.
- China $10.4 trillion
- USA $5.4 trillion
- India $3.6 trillion
- Japan $1.9 trillion
- Mexico $1.4 trillion
- Indonesia $1.2 trillion
- Germany $1 trillion
- Brazil $966 billion
- Turkey $807 billion
- France $794 billion
China’s assets account for 54% of economic gains compared to 30% for the U.S. Mexico, which trails the U.S. in total income from built assets, receives nearly 64% of GDP returns thanks to its reliance on infrastructure spending.
"Investing $1 trillion could increase growth an additional 3% over a 10-year period," says Tom Morgan, Arcadis business advisory leader, North America. "Without that infusion, the U.S. is forecasted to grow by only 1% of GDP returns. While 3% may appear a small percentage, the impact is huge.
“Making more sophisticated use of built assets can also squeeze higher, more sustainable financial performance from existing infrastructure, even if overall funding lags. For instance, implementing building information modeling, analytics, or visualization technologies can maximize financial performance on existing assets from 15% to 20%."
Examples include Airbnb-type office leasing or using drones for maintenance inspections. Owners can also maximize returns by taking an integrated, holistic view of their cities so they can better understand their total expenditure (TotEx).
“Transportation, infrastructure, and water agencies typically work in silos when it comes to budget allocation. Yet planning across their total assets can optimize municipal and state budgets and maximize financial performance. Asset investment strategies performed with centralized planning that leverage people, data, and analytics can produce a more efficient spend. Improved design and integrated thinking ultimately reduce costs and produce better outcomes.”
The full findings of the Arcadis Global Built Asset Performance Index are available at http://arcad.is/gbapi-pr.
