Interview with Gennarino Tozzi – Head of Infrastructure Development for the Atlantia Group
The role of infrastructure investment in driving economic recovery is something many governments are looking at. In the USA, President Trump has recently presented plans to invest US$1,500 billion in new infrastructure. The Junker Plan in Europe, launched in 2015, will involve expenditure of up to €500 billion by 2020.
The Atlantia Group is one of the biggest private investors in Italy. Mr. Tozzi, could you describe the Group’s investment programme.
The Atlantia Group is implementing an investment programme worth approximately €30 billion, €21 billion at Autostrade per l’Italia and approximately €8 billion at Aeroporti di Roma.
Effectively, it’s the largest private infrastructure investor in the country, implementing projects using funding raised mainly on foreign markets and so at no further cost to the Italian State.
In detail, Autostrade per l’Italia has already completed investment worth €9.2 billion, whilst works with a value of €2.2 billion are currently in progress, €5.3 billion of works are currently at the design stage and are being approved by the competent authorities, €0.5 billion of works have already been contracted out and €2.2 billion is to be invested by 2023.
The main works that have already been completed are the Variante di Valico (the new section of the A1 motorway between Bologna and Florence), work on widening to 3 lanes the A14 from Rimini to Porto Sant’Elpidio, the widening to 4 lanes of the A4, on improvements to the Modena - Bologna section of the A1, on the Casalecchio - Sasso Marconi section and the section from Sasso Marconi to La Quercia, as well as the Florence North - Florence South section and on a third lane between Fiano and Settebagni. With regards to other improvements to the A1, work on the Barberino - Florence North and Florence South - Incisa sections is currently underway.
We should also remember another important project is the widening to three lanes of the Lainate - Como-Grandate section.
Essentially we have expanded or built 450 km of motorway out of Autostrade per l’Italia’s total network of 830 km.
We hope to start work on the Genoa Bypass, worth €4.2 billion, by the end of 2018 or in the first quarter of 2019 at the latest, depending on receipt of the relevant consents.
At Aeroporti di Roma, investment worth €0.7 billion has already been completed and a further €0.3 billion is in progress. €1.53 billion of works are currently at the design stage and are being approved by the competent authorities, €0.5 billion of works have already been contracted out and €4.6 billion is to be invested by 2035 to build the fourth runway and a new North Terminal for Fiumicino airport.
The main works that have already been completed are the new terminal wing and Pier E, the resurfacing of Runway 3, the upgrade of Runway 1 and of the aprons on the western and eastern side of the airport. The facade of Terminal 3 has been completely renovated and refurbishment work on the General Aviation terminal at Ciampino Airport has also been completed.
A further new terminal wing and Pier A are currently being built.
A new fourth runway and the new North Terminal for Fiumicino airport are currently awaiting environmental clearance.
Can you tell us about the main challenges and difficulties you have dealt with in recent years?
The main difficulties relate to the approval of projects that need to fit in with the local areas affected by the works.
Our projects, especially those involving motorways, are of national interest, but they pass through areas subject to different local interests.
So it’s important to make the affected local communities understand how such projects can create jobs and bring benefits for the surrounding areas.
Unfortunately, the advantages that everybody benefits from as a result of these works can be seen only at the end, while, throughout the construction phase, opposition from small groups is very frequent.
So we need to involve these communities and listen to their needs as much as possible.
For example, during construction of the Variante di Valico, we organised a number of public meetings in municipalities affected by the works, to try and explain all the positive aspects of the project and, meanwhile , also prepare citizens for the temporary disruption they were about to face.
For the Genoa Bypass, we were the first to arrange a public consultation, which in our opinion was extremely useful in helping to improve both the design and the construction process.
Another critical issue relates to the regulations for public tenders that have led to fierce competition, because of the rules and of the significant decline in investment in recent years.
This tough competition has weakened the financial positions of all companies and led to a decline in the number of competitors.
The result is that today, in Italy, there are very few construction companies that are in a position to implement projects in an effective way from a technical point of view, whilst also managing to make money.
In such a difficult market, companies appear to be mainly concerned with going to court, instead of trying to develop from a technical and organizational point of view in order to improve their efficiency and reduce their costs.
The latest Tenders Code, which among other things has resulted in a sharp reduction in calls for tenders, has, in my opinion, made the situation worse. And this will certainly influence the progress of future investments and may lead to delays.
What could be the solutions to the issues you face?
First of all, there needs to be a review of project approval procedures. The first thing that should be done is to merge the Environmental Impact Assessment and the Services Conference, currently two completely separate stages of the process, to create a single procedure. By doing so, approval times would fall significantly.
As for the Public Consultation there’s no doubt that is a very useful tool, but it needs to be managed in such a way that the promoter of the project does not find itself having to adopt all the suggestions that emerge from the process, only taking into consideration and adopting those deemed useful for the project’s success.
Another issue is the Tenders Code, which, in my opinion, needs at least to be thoroughly revised, possibly even scrapped in favour of an immediate introduction into Italian law of all the European regulations.
What this would mean is giving greater flexibility to the market without affecting transparency.
The current rules, which are based on awarding contracts to the lowest bidder, should also be supported by a careful pre-qualification process, and the competing companies should have the capabilities and levels of efficiency suited to the work at hand. As things stand, too many companies take part without being qualified to do the work they are tendering for. For example, the temporary consortia that are formed to meet the requirements needed to participate in a tender do nothing but bring together a series of weaknesses, at the expense of well-organised and well-qualified companies.
What’s more, only choosing on the basis of the most economically advantageous tender for a construction project effectively limits the benefits that competing companies can bring, by offering more effective and cheaper solutions during the tender stage.
After all, the principle that inspired the new Tenders Code was precisely the need to align Italian legislation with European standards. The introduction of such standards into Italian law would, therefore, allow the sector to immediately recover, resolving the critical issues I have mentioned.
The Atlantia Group has always led the way in using engineering excellence in construction and to ensure safety. Can you give us an idea of some of the innovative technologies and tools that have been used in projects?
The Atlantia Group, through its various companies, has always tried to adopt cutting-edge solutions.
To create the Sparvo tunnel along the Variante di Valico, which was on a critical section, we used a tunnel boring machine, which at the time had the widest diameter in Europe at 15.5 metres. This allowed us to dig over 10 metres per day, compared with an average of 2 metres per day using traditional methods.
Also, to dig the Santa Lucia Tunnel between Barberino and Florence North, in order to speed things up, we used a tunnel boring machine that was even more modern and wider with a 16-metre diameter, one of the largest in the world.
I would also like to mention the attention the Group has always paid to the issue of occupational safety, offering bonuses to workers who show a positive approach to safety, reporting critical situations and near misses; this particular initiative was awarded by the Presidency of the Republic.
Another important initiative concerning safety was being the first in Italy, and possibly the world, to use, during the excavation of tunnels, an automated system for installing supports. The supporting structure is set up without human intervention at the excavation face, a situation that is always dangerous even when all safety standards are respected.
To conclude, Mr. Tozzi, in your experience, do public-private partnerships work?
The use of private money to finance infrastructure is very common, and is an effective solution when there is a shortage of public funds.
The concession mechanism sees private investors come up with the money to fund investment, which is then paid back through the tariffs paid by users of the infrastructure over the concession term. This model has worked in Italy, where we have carried out a number of major projects without having to take money from the public purse, including 6,000 kilometres of toll motorway. To ensure that the system works smoothly, however, we need to reduce red tape, bring local communities on side and, above all, provide contractual certainty and stability. The latter is an essential ingredient if private investors are going to put their money into infrastructure projects, which require large amounts of investment, but provide returns that are spread out over a fairly long time.