North American road investment to fall short of demand

TORONTO — Some small growth in North American road spending will help ease traffic woes, but won’t likely be enough to meet demand over the next five years.

That according to KPMG International, a global network of audit, tax and advisory firms. In a recent report titled "Trend Monitor: North American Roads, Outlook 2009-2013," the firm predicts total annual road expenditure in the U.S. in 2013 to reach $124.8 billion, a 2.9 percent increase from 2009 estimated spending.

In contrast, the American Society of Civil Engineers’ 2009 Report Card predicts that $186 billion in road expenditures is needed annually over the next five years to significantly improve road conditions.

"North American roads, particularly in the United States, are hampered by two major challenges — scarcity and congestion," said Stephen Beatty, partner, KPMG in Canada, and head of infrastructure advisory for KPMG in the Americas. "We have used up most of our excess capacity, and now we’re faced with either rationing the capacity we have, or building new capacity."

It’s important that governments approach the challenge
of upgrading highway infrastructure holistically, says KPMG

Beatty continued, "North America has been living off the grand infrastructure investments of 50 years ago, but it’s time to bite the bullet and find ways to make strategic transportation investments. With foresight and conviction, we can develop new, large-scale projects that can help enhance North America’s competitive position and positively impact future generations."

KPMG’s report estimates the size and growth prospects of road investment in the United States, Canada, and Mexico, including breakdowns by jurisdiction. It also provides a qualitative assessment of the infrastructure investment climate, such as the legislative environment for infrastructure investment.

"As governments look for ways to fund major, strategic infrastructure projects in the midst of a massive financial crisis, it’s important that they approach the challenge holistically," said Richard Lee, partner, KPMG LLP (U.S.), and head of KPMG’s U.S. Infrastructure Advisory group. "It’s not about a new bridge here or a toll road there, but how to spend money wisely so the benefits can be enjoyed by many generations to come. While this may require an overhaul of the current infrastructure delivery system in the U.S., our national competitiveness depends on it."

KPMG’s analysis also validates the views of C-level executives who participated in a recent KPMG International survey conducted by the Economist Intelligence Unit, in which roads were named as the most urgent infrastructure need in North America by 62 percent of the respondents.