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Our nation’s critical infrastructure – energy, transportation and water – is failing. In 2009, the American Society of Civil Engineers (ASCE) awarded it an overall grade of D, and that was likely generous. The consequences of this failure are dire. America’s economy can only grow if our critical infrastructure allows it. Militarily, our nation’s armed forces rely on our infrastructure as part of its increasingly complex and far-flung global supply chains.

Alarmingly, our energy, transportation and water systems are beyond mature; they are nearing the end of their useful operating lives and are in desperate need of modernization. As the ASCE report card made clear, this is a jaw-dropping $2 trillion problem. More than a quarter of the nation’s bridges are structurally deficient, and by every measure, the quality of highways and roads continues to decline.

Transportation congestion has worsened to the point that Americans now spend some 4.2 billion hours a year in traffic delays. Total fuel wasted on the road has climbed from 1.7 billion gallons in 1995 to 2.9 billion gallons in 2005. Drinking water systems in dozens of major metropolitan areas are contaminated, corroded water pipes leak as many as 7 billion gallons of clean drinking water per day, and broken sewage systems send billions of gallons of untreated wastewater into streams and rivers each year.

Of the 85,000 dams in the United States, more than 4,000 are deficient, including 1,819 high-hazard-potential dams, and the average age of all dams is about 51 years. Electricity distribution lines have become “bottlenecks,” with outages costing more than $180 billion annually and getting worse, rendering many parts of the electrical grid stressed or unreliable.

Despite the staggering size of these figures, inadequate government funding for infrastructure projects is not to blame, even in these times of lean budgets. It’s certainly true that we haven’t spent enough on infrastructure in recent years, but serious funding constraints on government investment are relatively new and can’t explain underinvestment in infrastructure over the past quarter century. Plus, there’s still enough money in the hands of private investors to meet our infrastructure needs.

So, if the problem isn’t the money, or any significant deficits in technology or skill, then what is it and how can we make it right?

Our real problem is a lack of transformational leadership, an integrating force and governance mechanism to achieve the ends we desire. Modern­izing our nation’s infrastructure is a conceptual, institutional and political challenge and to solve it, we must recreate the government’s integrator role without creating new monopolies or a larger, more centralized government. Four key steps can lead us there.

Step 1: Re-imagining Infrastructure

First, we need to re-imagine the form and function of our old infrastructure. We must view infrastructure as a single complex network of people, processes and technology that range across multiple jurisdictions to deliver a needed end-service. It helps to view this network as a complex system having multiple, interdependent “layers” ranging from its physical components at the foundation to its purpose at the top. Surrounding the layers are communities of stakeholders, each with their own interests and motives. When we re-imagine infrastructure, we must take all layers into account, as each needs to change as part of the renewal of the whole system. It’s not just about the technology or physical assets layer. More often than not, the business model piece of the puzzle is more important. Re-imagination requires optimizing and integrating all these layers as a unified whole and effectively engaging the stakeholder communities, convincing them to take the long view and move beyond their near-term self-interest. The Department of Defense Base Realignment and Closure process has set the precedent for this. It can be done.

Step 2: Future-Proof Design Principles

Second, we need design principles that make future infrastructure robust and adaptable as technology advances, funding changes and the needs of citizens evolve. Infrastructure systems must be easily upgradable when new technologies come to fruition. They must also be environmentally friendly to meet the needs of future generations and pass political muster. In addition, they must be resilient enough to recover from disruption. These qualities don’t emerge by accident; they must be designed in from the start. Most are integral to our telecommunications and computer industries today, but they’re largely absent in our critical infrastructure.

Many of the necessary design principals are already widely understood and implemented in separate realms. For instance, the Defense Department’s planning philosophy, called pre-planned product improvement (P3I) or evolutionary acquisition, yields a system design that incorporates technologies known to be important, but not yet mature or affordable enough to include in the current implementation. Provisions, interfaces and accessibilities are included in the system’s design and plans so that the deferred technology, process or capability can be incorporated in a cost-effective manner when it’s ready or affordable. Using P3I concepts for infrastructure, we can field infrastructure projects as phased solutions that anticipate additional capabilities, innovations or upgrades.

Step 3: Megacommunity Leadership

Third, we need leadership that succeeds by convening, integrating and aligning the interests and actions of a wide set of stakeholders into a collective vision. Stakeholder communities are wired to pursue their own self interest. It’s leadership’s job to broker and enforce a functional common ground by which stakeholders can align their interests with the common good.

A new engagement type, known as a “megacommunity,” recognizes that complex problems and transformational projects cannot be resolved by a single stakeholder or even distinct groups of stakeholders. All sectors must participate: business, government and civil society. A “mega,” or larger community forms an expansive, self-sustaining network that puts people with the right resources in the right place at the right time. A megacommunity is not just another term for a public-private partnership. A public-private partnership focuses on a relatively narrow purpose and is formed, governed and constrained by a static legal agreement. A megacommunity is a sphere in which stakeholders voluntarily join together around a compelling issue of national importance and follow a set of practices and protocols that make it easier for them to achieve results. The participants remain interdependent because their common interest compels them to work together, even though they might not see mutual problems in exactly the same way.

Perhaps the most powerful aspect of the megacommunity is that it does not discourage self-interest; it actually promotes it. Overlapping vital interests – the essential goals the stakeholders share – unite megacommunity members around a common purpose and encourage them to act. This allows organizations to participate without worrying about giving up their identities or betraying core constituencies, whether they be voters, stockholders or contributors. Through a collaborative approach, stakeholders “optimize” rather than “maximize.” That is, they see how working toward the good of the whole pays better than a parochial, competitive approach.

Step 4: A New Infrastructure Vision

Finally, we need a new national vision for America’s infrastructure. The monumental achievements of our past were made possible by a clear vision and focused effort on a national scale. This vision is an explicit road map that sets priorities and defines the function and performance of the whole infrastructure system over its entire life cycle. With this vision, we can devise a policy framework that creates more stability in long-term funding, performance requirements and functionality, and policy leadership, which all require stability to succeed.

The magnitude of the challenge we face requires bold thinking and the mobilization of our national political will. President Obama and several congressional leaders on both sides of the aisle have proposed creation of a National Infrastructure Bank, initially capitalized at $50 billion. Other proposals would fund, separately, the Department of Transportation, the Department of Energy, the EPA and the Department of Defense – the largest federal energy user. These efforts, though laudable, do not match the magnitude of the challenge, nor do they enable the integration of national efforts toward a common vision.

What’s needed is a presidential commission comprised of members of the executive branch, Congress, state and local governments, the private sector, universities, and nonprofit organizations and associations. This commission would formulate major recommendations for action and convene several national forums to elicit broad stakeholder involvement and build momentum for the long-term campaign at hand. 

Accompanying laws, regulations and policies at the federal level may be necessary, as well. Given that Congress itself is segmented by its committee structure, a special congressional infrastructure committee could ensure integrated policy and budget formulation. National infrastructure legislation will need to set new integrated policy mandates, authorize a range of financing approaches, refine new agency responsibilities, provide oversight and target specific appropriations. Coordinated legislative enactments need to create a menu of approaches for infrastructure development by federal agencies, states, localities, utilities and the private sector. One size will not fit all, and it is imperative that policies, programs and funding mechanisms remove barriers and create meaningful incentives for bold actions.

Above all, this unified approach to new regulations must provide a framework in which the private sector can invest in our nation’s infrastructure. The action plan will require regulatory reform across all agencies to deliver more impact from existing grant funds and formulas while enabling the use of significant private capital.

Other options could include implementing a permanent commission to oversee our infrastructure renewal agenda or elevating this role to the Council level, similar to the National Economic Council or Domestic Policy Council, both of which are responsible for coordinating, overseeing and reporting on progress to the president and Congress.

A third alternative would be to constitute a congressionally mandated interagency task force, as has been done with the 13 agencies comprising the U.S. Global Change Research Program. Whatever option is selected, coordination and accountability for the system as a whole are key.

Opportunity for a Better Tomorrow

We owe it to ourselves to think hard about how to modernize our nation’s infrastructure, for our infrastructure crisis also presents a great opportunity. We have it within our power to re-imagine America’s infrastructure as a system of systems, with revolutionary advances in information technology as the nerve center of that new multi-layered system.

We have it within our power to adjust the relevant business models that will enable the system to work with the proper balance of centralized and decentralized functions. To seize that opportunity, we need a new form of leadership to re-conceive the relationships of infrastructure stakeholders and then to institutionalize a new path forward.

If we fail, we risk our nation’s future – not only our quality of life, but also our economic competitiveness and our national security. We will also miss the opportunity to benefit from recreating a world-class industry to renew or build infrastructures needed here and abroad.

Mark Gerencser is an executive vice president at Booz Allen Hamilton, a McLean, Va.-based strategy and technology consulting firm. A co-author of the bestselling book “Megacommunities: How Leaders of Government, Business and Non-Profits >Can Tackle Today’s Global Challenges Together,” he leads Booz Allen Hamilton’s Infrastructure Center of Excellence. For more information, call 703-902-5000 or visit www.boozallen.com/consulting/streamline-operations/public-infrastructure.