DISCUSSION FORUM Examining the global project league table Jan 2012
Peter Kenyon, Tunneltalk
As the world struggles to recover from the financial crisis of 2008-2009 and the resulting austerity measures and public spending controls put in place by the governments of many Western economies, new international project finance figures show there may be signs of recovery.
Figures from financial services information provider Dealogic, which exclude real estate, shipping, aircraft and manufacturing projects, show that in 2011 global project finance volume grew 13.2% on 2010, to US$405 billion.

Project finance deals closed in 2011 by region

A record 945 projects reached financial close during 2011, 8% more than the 875 in 2010, and 33% more than the 712 in 2008.
India comfortably topped the country rankings with $87.7 billion worth of new project finance deals signed during the year, which means the world’s second most populous country now accounts for more than a fifth of the total value of new projects (Table 1).
Whichever way one looks at it, India is where the money for large scale projects is being spent, and it is the only region out of eight that has recorded project spending growth in each of the three years since the 2008 global economic crisis.
Regional rankings
In just four years India has gone from the bottom of the league to the top: from $18.8 billion in 2008 to $88.2 billion last year. Asia project financing, excluding India, has remained quite static throughout the four-year period 2008-2011, while Latin America and Eastern Europe saw significant project spend increases during 2011, enough to return these regions to 2008 levels.
Table 1: Project financing totals by region (2008-2011)
2011 US$bn 2010 US$bn 2009 US$bn 2008 US$bn No. top 10 by value projects
(2009-2011) **
India 88.2
18.8 7
Western Europe 74.4
83.5 3
(ex India)
47.5 6
Middle East/Africa 49.4
55.0 5
North America 47.3
36.9 1
Australia 39.6
21.2 1
Latin America 30.2
29.8 4
Eastern Europe 27.6
27.8 3
* Total projects financed per year
** Number of projects recorded in Dealogic's world top 10 of largest financially closed projects for 2009-11
Project numbers on the North American continent have remained static at 114, but although financing levels are 28% up on the $31.2 billion low of 2009 (which at that time was North America's lowest spend since 2005) growth in project finance on 2010 looks fairly static. In a separate country-by-country calculation the USA has slipped behind Australia for the first time, and into third place in a league which it once headed.
In Western Europe, with its sovereign debt crisis, although spending levels on major projects have remained static at $75 billion, and represent a significant improvement on the 2009 total of $54.3 billion, project financing is yet to recover to its 2008 peak of $83.5 billion, and the total number of projects is significantly down to 265.
This is in spite of the 330km high-speed rail extension between Bordeaux and Tours passing through the books in June 2011.
Valued at $9.15 billion this was the world's second biggest project financing deal of the year behind Qatar's $9.8 billion Barzan Gas Project.
Looking forward, there is the prospect of the UK's £32 billion High Speed 2 rail project linking London and Birmingham, which is programmed to start in 2017.

Breakdown of 2011 project spending by sector

It is in the Middle East where the worst effects are being felt, a fact reflected well in engineering consultancy Halcrow's balance sheet before it was acquired by CH2M Hill at the end of last year (2011).
But for Qatar's Barzan Gas Project, which closed financing 18 days before the year end and was the world's biggest value project of last year at $9.8 billion the decline of the last few years would have been more marked.
A reversal is also expected for the region as a result of Qatar’s hosting of the Soccer World Cup in 2022. Next month (February 2012) delegates from some of the world's largest infrastructure construction companies will gather in Qatar for a conference that will outline more than $106 billion of projects expected to be let between now and 2022.
Of particular interest to the tunnelling industry is that some $65 billion of this will be spent on infrastructure projects including the $35 billion Doha Metro, design and construction procurement for which is expected to begin by March this year.
Sector analysis
An analysis of the figures by sector reveals that, encouragingly for the tunnelling industry, transport infrastructure continues to grow although indications are that the future seems to be in rail and not road. The Bangalore Metro project in India, Bordeaux-Tours high-speed rail extension in France, and the Hong Kong-Zhuhai-Macao Bridge project, which includes in its scope a 6.7km immersed tube tunnel, all made it into the top ten of individual projects in 2011.

Sector volumes by year (2006-2011)

In 2009 financing for road projects accounted for 40% of all infrastructure spending, whereas last year it stood at 25% with much of the difference being made up by port and rail projects. The $1.5 billion Guri Pocheon Highway Project in South Korea at $1.5 billion was the largest road project of 2011 to reach a final close.
But the worry remains that a headline growth in both the number and value of global projects, albeit with a shifting focus towards Australia and India, presents a snapshot of the world as it is today.
Infrastructure projects are many years in the planning, design and environmental assessment stages, and the pipeline still contains projects that have already been in this process for years.
Governments and private enterprises need to be bold enough to plan the projects of the future regardless of the financial climate as it is today, with a cautious expectation that by the time it comes to financing the deals the recovery will be in full swing. This will also require continued expenditure on engineering design and planning of current projects even while economies worldwide are faltering, and it is to be hoped that there will be no compromise on that.
Bad debts and downturn left Halcrow exposed - TunnelTalk, September 2011
Qatar drives forward with Doha metro - TunnelTalk, December 2011
China's mega sea link moves forward - TunnelTalk, June 2011
2012 perspective - TunnelTalk, December 2011

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