SELECTING INFRASTRUCTURE PROJECTS FOR THE NEXT NORMAL Even as governments and business leaders manage the immediate health crisis and address citizens and businesses urgent financial needs post the COVID-19 pandemic, they are looking for ways to stimulate economic recovery. Infrastructure is at the core of many leaders plans. China, the European Union, Japan, and the United States together with South Africa have all announced stimulus programs in which infrastructure investment is a key component. Investing in new infrastructure can create jobs and have a direct, positive impact on economic growth and meet critical healthcare infrastructure needswhich are particularly relevant and acute now. New and upgraded technology-enabled infrastructure can also reduce costs related to congestion and environmental damage, as well as enable the transition to more efficient, safer, and lower-carbon infrastructure solutions. However, not all infrastructure projects can begin immediately and have an impact on jobs and the economy in the near or medium term. And to deliver services efficiently and equitably, prioritized projects should address the future needs of the population and integrate new design tools and technologies. Furthermore, money for infrastructure projects is tight, and governments face competing priorities for constrained budgets as revenues decline and scarce resources are allocated to immediate health and welfare needs. It is critical in this moment that governments select the infrastructure projects that can both spur recovery in the near term and make the most of available funds. Specifically, governments might consider focusing on projects that are both shovel ready and shovel worthy and using publicprivate partnership models to attract private capital for infrastructure. What might success look like? An analysis conducted by a team of project managers suggests that a selection of potential priority projects in the United States alone could generate $80 billion in investments and create more than two million new jobs. Given limited budgets and stimulus funding, governments may consider prioritizing some infrastructure projects that can be delivered in a way to attract private capital. In 2020, the top ten investing firms, globally, raisedbut did not deploy$84 billion in infrastructure capital. Much of this is earmarked for long-term infrastructure projects, with investors still looking for both brownfield and greenfield infrastructure investment despite coronavirus-related impacts to traffic. Governments therefore may choose to encourage the deployment of private and stimulus capital in helping fill urgent infrastructure needs. To contribute to economic recovery, infrastructure investors have actions to consider beyond working to develop innovative engagement and funding models. For example, they will need to identify which investable opportunities support economic development and address public-sector needs. They can take risks on early-stage development by investing in design and feasibility studies for projects that support economic recovery and develop unsolicited proposals even before a request, knowing that their limited investment may ultimately be a public good. And they can engage with public-sector entities to build support for the project and establish the value private investment could bringand build coalitions with technology providers, labor unions, communities, and citizens in a constructive way. Extracted from: https://www.mckinsey.com/business-functions/operations/our-insights/selecting-infrastructure-projects-forthe-next-normal

QUESTION 1 It is critical at this moment that governments select the infrastructure projects that can both spur recovery in the near term and make the most of available funds. Specifically, governments might consider focusing on projects that are both shovel ready and shovel worthy and using publicprivate partnership models to attract private capital for infrastructure. Considering this statement provide advice to project managers on the criteria that they need to apply in selecting projects that are worthy.

QUESTION 2 One of the reports submitted by the infrastructure development team revealed the following

YearCashflows ACashflow B0- R 210 000- R 21 0001 R15 000R11 0002R 30 000 R 9 0003R 30 000R11 0004R 370 000R 9 000

Suppose you require a 15 per cent return on investment.

2.1 Using the discounted payback period which investment would you choose and why?

2.2 If you apply the NPV rule which investment, will you choose and why?

2.3 Based on the provided answers which project would you finally choose and why?