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The use of\\nsuch data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in\\nthe West Bank under the terms of international law.\\nPlease cite this publication as:\\nOECD (2024), Optimising Public Infrastructure Investments in Czechia, OECD Public Governance Reviews, OECD Publishing, \\nParis, https://doi.org/10.1787/d4532316-en.\\nISBN 978-92-64-32073-4 (print)\\nISBN 978-92-64-91767-5 (PDF)\\nISBN 978-92-64-38080-6 (HTML)\\nISBN 978-92-64-99613-7 (epub)\\nOECD Public Governance Reviews\\nISSN 2219-0406 (print)\\nISSN 2219-0414 (online)\\nPhoto credits: Cover © Sergii Figurnyi/Shutterstock.com.\\nCorrigenda to OECD publications may be found on line at: www.oecd.org/about/publishing/corrigenda.htm.\\n© OECD 2024\\nThe use of this work, whether digital or print, is governed by the Terms and Conditions to be found at https://www.oecd.org/termsandconditions.\\n\\n\\n   3 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nForeword \\nThe imperative to swiftly embrace a low-carbon, climate-resilient economy while harnessing the \\nopportunities of digitalisation underscores the urgent need for action. Prioritising quality infrastructure \\ninvestments is a critical pillar to delivering on these goals and mitigating potential negative impacts, \\nincluding the risks of increased territorial disparities. Regional and local governments, as major public \\ninvestors in infrastructure development, alongside central government, are pivotal actors.   \\nHowever, quality infrastructure investment demands comprehensive, long-term planning and coordination \\nacross various sectors and levels of government. This also necessitates robust project selection processes \\nand the implementation of efficient infrastructure financing and delivery methods. Such investment is often \\nsizeable1, and as government budgets at all levels face increasing pressures, it is important to ensure that \\nlimited resources are used effectively to advance economic, social, and environmental goals. \\nWith significant investment expected from the European Recovery and Resilience Facility, Czechia has an \\nopportunity to address its infrastructure gaps, in particular in areas such as transport, digital infrastructure, \\ngreen and climate-resilient infrastructure and affordable housing.  But ensuring effective use of those funds \\nwill also require effective decision making and implementation across levels of government, in particular in \\nrelation to coherent planning and co-ordination of infrastructure projects, as well stronger institutional \\nnational and subnational capabilities on appraisal, and delivery of infrastructure. This report seeks to \\ndeliver on those goals. It is structured in three parts. The first provides an overview of the Czech public \\ninvestment system across levels of government. The second provides analysis and recommendations for \\nthe national level, and the third provides analysis and recommendations for the subnational level. \\nThe report is part of the project “Improvements in Governance of Strategic Planning of Public Infrastructure \\nInvestments” conducted in Czechia. The project outputs include (i) a benchmarking note that includes good \\npractices from OECD countries, (ii) this assessment and recommendations report; and (iii) guidelines and \\nself-assessment tools to improve governance practices across levels of government. The action was \\nfunded by the European Union via the Technical Support Instrument, and implemented by the OECD, in \\nco-operation with the Directorate-General for Structural Reform Support of the European Commission. \\nThis publication was approved for publication by the Regional Development Policy Committee and the \\nPublic Governance Committee on April 18, 2024. It was prepared for publication by the Secretariat. \\n \\n \\n \\n1 Globally, infrastructure investment needs between 2016 and 2040 are forecasted at USD 94 trillion (Global \\nInfrastructure Hub, 2019[2]) For example, according to the International Energy Agency, in order to meet Net Zero \\ntargets, countries will need a more than 4-fold increase in clean energy financing over the period 2026-2030 (for a \\ntotal of 3.9 TR USD), as compared to investments made over the period 2016-2020. Of this, an estimated 30% will \\nneed to come from the public sector (IEA, 2021[1]) \\n\\n\\n4    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nAcknowledgements \\nThis report was prepared by the OECD Public Governance Directorate (GOV) led by Elsa Pilichowski and \\nthe OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE) led by Lamia Kamal-Chaoui. \\nThis publication is a result of joint efforts by the Infrastructure and Public Procurement Division (GOV) \\nheaded by Edwin Lau and the Regional Development and Multi-level Governance Division (CFE) headed \\nby Dorothée Allain-Dupré. It has been jointly co-ordinated by Matthieu Cahen (GOV) and Isidora Zapata \\nunder the supervision of Isabelle Chatry (CFE). Ana Maria Ruiz Rivadeneira (GOV) coordinated the initial \\nphases of the project. Chapter 1 was drafted by Simon Cox, Matthieu Cahen, and Isidora Zapata with \\ninputs from Aleš Pecka. Chapter 2 was drafted by Simon Cox under the guidance of Matthieu Cahen with \\ninputs from Tenzin Dekyi. Chapter 3 was drafted by Isidora Zapata and Yingyin Wu with inputs from \\nMichael Duffy, Charlotte Lafitte, and Brendan Irish.  \\nThe OECD expresses its gratitude to the Ministry of Regional Development of Czechia for its co-ordination \\nand leadership throughout this project. In particular, the OECD would like to thank Vojtěch Kubát, who \\nserved as the main contact point for the project, Lucie Zapletalová, and Martina Sieber. The OECD would \\nalso like to thank the following entities for their participation: the Office of the Government of Czechia, the \\nMinistry of Finance, the Ministry of Transport, the Ministry of the Environment, the Ministry of Industry and \\nTrade, the Ministry of Education, Youth and Sports, the National Development Bank, the State Fund for \\nTransport Infrastructure, Správa železnic, the State Investment Support Fund, the State Environmental \\nFund, CzechInvest Agency, the National Economic Council of the Government, the Court of Auditors, the \\nUnion of Towns and Municipalities, the National Network of Healthy Cities of the Czech Republic, the South \\nMoravian Region, the Moravian-Silesian Region, the Central Bohemia Region, the Ústí Region, the Hradec \\nKrálové Region, the City of Prague, the City of Brno, the City of Ostrava, the City of Olomouc, the Town of \\nŽďár nad Sázavou, the Town of Sobotka, the Village of Líský, the Czech Chamber of Commerce, and the \\nCzech Infrastructure Association. The co-operation and commitment of these entities was critical for the \\nsuccessful completion of this project.  \\nThis project was funded by the European Union via the Technical Support Instrument and implemented by \\nthe OECD in cooperation with the Directorate-General for Structural Reform Support (DG Reform) of the \\nEuropean Commission. The OECD expresses its gratitude to the European Commission for their support \\nto this project, particularly Mr. Daniele Dotto, Deputy Director of DG Reform and Head of Unit, Governance \\nand Public Administration, and Ms. Milena Raykovska, co-ordinator of the project for DG Reform. \\nThe OECD would like to thank Katarzyna Śpiewok from the Association of Polish Cities, Frits Bos from the \\nNetherlands Bureau for Economic Policy Analysis, and Debbie Curtis and Michael Farrington from the \\nOffice of Government Procurement, Ireland for their valuable insights. Finally, the Secretariat is also \\ngrateful to Aleš Pecka, Consultant, for his contributions to the report. \\n \\n \\n\\n\\n   5 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nTable of contents \\nForeword \\n3 \\nAcknowledgements \\n4 \\nList of Acronyms and Abbreviations \\n7 \\nExecutive Summary \\n8 \\n1 Infrastructure governance and investment trends overview \\n10 \\n1.1 \\nInfrastructure governance in Czechia \\n11 \\n1.2 \\nTrends in infrastructure investment in Czechia \\n18 \\n1.3 \\nOverview of key infrastructure sectors \\n23 \\n2 Improving national infrastructure planning, prioritisation and delivery \\n40 \\nSummary of recommendations \\n41 \\nIntroduction \\n43 \\n2.1 \\nStrengthening strategic planning and cross-sectoral co-ordination \\n44 \\n2.2 \\nImproving project appraisal and prioritisation \\n58 \\n2.3 \\nInvesting in infrastructure delivery capacity \\n70 \\n3 Improving subnational infrastructure investment \\n89 \\nSummary of recommendations \\n90 \\nIntroduction \\n93 \\n3.1 \\nAn overview of subnational infrastructure investment in Czechia \\n95 \\n3.2 \\nImplementing a place-based approach to infrastructure planning \\n102 \\n3.3 \\nEstablishing strong, fruitful partnerships across government \\n113 \\n3.4 \\nReinforcing inter-municipal co-operation \\n121 \\n3.5 \\nEnhancing subnational administrative capacity for quality infrastructure \\n129 \\n3.6 \\nFunding and financing subnational infrastructure investment \\n137 \\n \\nFIGURES \\nFigure 1.1. The State Fund for Transport Infrastructure is the largest of the six funds \\n13 \\nFigure 1.2. Czechia has an above-average share of small municipalities \\n15 \\nFigure 1.3. Greener Europe accounts for Czechia’s largest share of Cohesion Policy funds \\n21 \\nFigure 1.4. Czechia's Recovery and Resilience Plan rests on six pillars \\n22 \\nFigure 1.5. Public investment in rail and road infrastructure is increasing \\n24 \\nFigure 1.6. Housing prices have doubled over the past six years \\n28 \\nFigure 1.7. Public spending on supporting social rental housing is negligible in Czechia \\n29 \\n\\n\\n6    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 2.1. Czechia is one of only six OECD countries that reported a lack a short-list of priority projects \\n49 \\nFigure 2.2. Mechanisms for participation in national infrastructure plans vary across the OECD \\n51 \\nFigure 2.3. A majority of OECD countries have a national digital platform on infrastructure projects \\n53 \\nFigure 2.4. Most OECD countries have a single institution that prioritises infrastructure projects \\n60 \\nFigure 2.5. The majority of OECD countries require independent and impartial expert assessment of \\ninfrastructure projects \\n64 \\nFigure 2.6. Nearly all OECD countries combine financial and qualitative criteria to select proposals \\n77 \\nFigure 2.7. Most OECD countries usually decide to procure an asset before choosing the delivery mode \\n80 \\nFigure 3.1. Effective multi-level public investment governance rests on three pillars and 12 principles \\n94 \\nFigure 3.2. Subnational public investment as a percentage of total public investment, 2021 \\n96 \\nFigure 3.3. Evolution of regional and municipal capital expenditure in Czechia, 2010-2020 \\n97 \\nFigure 3.4. Trends in GDP per capital inequality indicators, TL3 OECD regions, 2000-2020 \\n98 \\nFigure 3.5. Capital expenditure varies significantly across Czech regions \\n99 \\nFigure 3.6. In most regions, per-capita capital expenditure is below average \\n100 \\nFigure 3.7. Czechia has several mechanisms to co-ordinate regional investment strategies \\n103 \\n \\nTABLES \\nTable 1.1. Municipalities and regions have specific roles related to infrastructure \\n16 \\nTable 1.2. Roles and responsibilities in Czechia’s infrastructure lifecycle are fragmented \\n18 \\nTable 1.3. Four key institutions are involved in the transport sector \\n25 \\nTable 1.4. The Ministry of Industry and Trade is Czechia’s main energy sector institution \\n26 \\nTable 1.5. There are two key housing sector institutions in Czechia \\n30 \\nTable 2.1. Summary of recommendations and concrete actions to support their effective implementation \\n41 \\nTable 3.1. Summary of recommendations and concrete actions to support their effective implementation \\n90 \\nTable 3.2. Three policy pillars guide multi-level infrastructure planning system in Czechia \\n102 \\n \\n \\n\\n\\n   7 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nList of Acronyms and \\nAbbreviations \\nCF \\nCohesion Fund \\nCLLD \\nCommunity-led Local Development \\nCZE \\nCzechia \\nCZK \\nCzech koruna \\nERDF \\nEuropean Regional Development Fund \\nESF \\nEuropean Social Fund \\nGHG \\nGreenhouse gas \\nICT \\nInformation and communications technology \\nITI \\nIntegrated Territorial Investment instrument \\nJTF \\nJust Transition Fund \\nLAG \\nLocal Action Group \\nMRD \\nMinistry of Regional Development \\nNRB \\nNational Development Bank \\nORP \\nMunicipality with extended powers \\nPPP \\nPublic-private partnership \\nRDS 21+ \\nRegional Development Strategy 21+ \\nRRP \\nRecovery and Resilience Plan \\nSFDI \\nState Fund for Transport Infrastructure \\nSFPI \\nState Investment Support Fund \\nSFŽP \\nState Environmental Fund \\nSME \\nSmall and medium-sized enterprise \\nSUDS \\nSustainable Urban Development Strategy \\nVAM \\nVoluntary Association of Municipalities \\n \\n \\n \\n\\n\\n8    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nExecutive Summary \\nAt a time of increased pressure on government budgets at all levels, improving infrastructure governance \\ncan help ensure that scarce resources are used to pursue economic, social, and environmental priorities. \\nRelatively low-cost changes to governance processes and practices and investments in capacity can have \\noutsized effects on the effectiveness and efficiency of large infrastructure investments. Improving \\ngovernance across sectors and levels of government can help increase the efficiency of investment \\nspending and promote fiscal sustainability. \\nInfrastructure investment also helps make societies and places more resilient and sustainable. The \\ndemographic, green and digital transitions offer opportunities but also raise challenges. Impacts differ \\nacross places, and potentially exacerbate existing territorial inequalities, which are already high in Czechia.  \\nIt is therefore urgent to invest strategically in place-based infrastructure to bridge these territorial \\ndisparities.  \\nIn Czechia, the importance of good infrastructure governance at all levels of government is underlined in \\nthe Recovery and Resilience Plan (RRP). Achieving the RRP’s goals of accelerating the transition towards \\na low-carbon and climate-resilient economy, maximising the benefits of the digital transformation, and \\nimproving the quality of public administration depends on sound governance of infrastructure investments.  \\nBelow are the main findings and recommendations of this review. Tables in Chapters 2 and 3 provide a \\nlist of concrete actions to help Czechia implement these recommendations. \\nStrengthening the overall infrastructure governance system \\nInfrastructure planning in Czechia is fragmented along sectoral lines, running the risk of missed synergies \\nand positive spill overs. Although there are areas of good practice in specific sectors and institutions, a \\nmore co-ordinated approach to investment could improve value for money and achieve synergies and \\ncomplementarities among investments. Enhanced cross-sectoral co-ordination through mechanisms such \\nas the new Committee for Strategic Investments could reduce overlap between projects, ensure that \\ninvestments are mutually reinforcing, and support Czechia’s efforts to use infrastructure investment to \\nsupport a sustainable recovery. It would also help develop a national project pipeline to improve the \\ninvestment readiness and the absorptive capacity of the public and private sectors.  \\nCzechia does not have a consistent approach to project appraisal and prioritisation across sectors. Some \\nsectors have detailed guidance on project appraisal and rigorous evaluation, but, across the investment \\nsystem, projects are often prioritised based on their readiness to move forward quickly and their ability to \\naccess EU funds. The Ministry of Regional Development could work with other stakeholders to develop a \\nstandard approach to project appraisal across sectors, which could be used by subnational governments \\nto support their prioritisation of infrastructure investments and by ministries and state funds to develop \\nfunding programmes.  \\nThe context and institutional structure of Czechia may exacerbate common public infrastructure \\nprocurement challenges. Many contracting authorities do not have regular experience undertaking \\n\\n\\n   9 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\ninfrastructure investment nor the resources to build capacity. The overall administrative burden of public \\nprocurement and the need to comply with complex requirements is also seen as a significant barrier for \\naccessing EU funds. To address these challenges, the Ministry of Regional Development could work with \\nother stakeholders to increase support for project preparation and facilitate greater use of strategic \\nprocurement tools such as framework agreements.  \\nDesigning and implementing infrastructure investments across levels of \\ngovernment  \\nSubnational governments in Czechia are key providers of economic and social infrastructure. In \\n2020, subnational government investment represented 46.4% of total public investment. While regional \\ncapital expenditure increased by almost 73% between 2010 and 2020, on average, municipalities are the \\nprimary investor, accounting for more than 64% of subnational government investment.  \\nHigh-quality and effective place-based infrastructure investment is needed to address important \\nregional disparities. In Czechia, regional (TL3) income inequality has increased over the last 20 years. \\nThere are significant disparities in infrastructure quality, and the capacity of regions and municipalities to \\ninvest also differs across the country. Fine-tuning the multi-level governance system, overcoming sectoral \\nsilos, and embedding a territorial perspective in decision making is crucial for place-based infrastructure \\ninvestments that help reduce territorial inequalities and pursue resilience and environmental objectives. \\nPlace-based infrastructure investments also require better co-ordination across levels of government in \\nthe design and implementation stages.  \\nIntroducing appropriate incentives to encourage inter-municipal co-operation is crucial to ensure \\nadequate scale and capacity to invest. Czechia has the most, and smallest, municipalities among OECD \\ncountries: 6 258 municipalities, with 96% having fewer than 5 000 inhabitants. Small municipalities and \\nregions often lack the capacity to plan, fund, and implement infrastructure investments at the right scale \\nthat effectively respond to local needs. Establishing financial and non-financial incentives for municipalities \\nto co-operate is necessary to go beyond one-time, single-purpose associations and achieve the scale and \\ncapacities needed for long-term infrastructure investment planning.  \\nStrengthening regional and local capacities should remain a priority to increase the quality and \\nefficiency of investments across levels of government. Czechia, notably through the Client-oriented \\nPublic Administration 2030 and the RRP initiatives, has set capacity building as a key priority, reflecting \\nthe criticality of  training, technical assistance, and the provision of guidance documents in areas such as \\nplanning, project appraisal, project management, financial management and procurement in the design \\nand delivery of strategic infrastructure projects. A proper diagnosis of capacity gaps in regions and \\nmunicipalities is required to target and co-ordinate capacity building in a systemic and sustainable way.  \\nCzech regions’ and municipalities’ dependency on central transfers and limited tax autonomy \\nchallenges subnational infrastructure funding and financing. There are different avenues to increase \\nthe funding capacities of Czech subnational governments. The OECD has provided recommendations to \\nimprove subnational tax revenues, including by revising the tax-sharing formula and making better use of \\nthe property tax in Czechia.  Strengthening other revenue streams, including via land-value capture, and \\nsupporting the use of innovative financing instruments in a prudent manner including green, social, climate \\nand sustainability bonds or loans, could help subnational governments meet the high up-front costs of \\ninfrastructure investment and spread those costs across the future beneficiaries. This could also include \\ntaking advantage of the renewed momentum for PPPs in Czechia to explore a larger engagement in public-\\nprivate partnerships by regions and large cities as an option to accelerate infrastructure investments.  PPPs \\ncan be a means of leveraging private sector resources but also a tool for reforming public procurement \\nand public service delivery.   \\n \\n\\n\\n10    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nThis chapter provides an overview of the Czech public investment system \\nacross levels of government. It depicts the landscape of infrastructure \\ngovernance at the national and subnational levels and finds that the \\ninfrastructure-decision-making process in Czechia is fragmented across \\nsectors and levels of government. Major trends and issues in infrastructure \\ninvestment are highlighted, including the significant role of EU funds. \\nFinally, it provides an overview of institutions in the transport, housing and \\nenergy sectors, as well as cross-sectoral institutions. \\n \\n \\n1 Infrastructure governance and \\ninvestment trends overview  \\n\\n\\n   11 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nQuality infrastructure investment is critical to delivering Czechia’s key policy priorities, including facilitating \\nthe green transition, building resilience and addressing regional disparities. Yet Czechia is facing \\ninfrastructure investment gaps in areas such as transport, digital infrastructure, green and climate transition \\ninfrastructure and affordable housing. These gaps are even larger in lagging regions, despite high levels \\nof public investment supported by European Union (EU) Funds. Current national and subnational \\ninstitutional frameworks also pose challenges to a whole-of-government approach to infrastructure \\nplanning, investment and delivery. Improving infrastructure investment outcomes is essential to addressing \\nthese long-term challenges, as well as responding to crises such as the COVID-19 pandemic and Russia’s \\nwar of aggression against Ukraine. \\nThis report focuses on infrastructure governance: the policies, frameworks, processes and tools used by \\npublic bodies at all levels to plan, make decisions, implement and monitor infrastructure investments. It \\nconsiders all the life stages of a public infrastructure asset, starting from planning, prioritisation and funding \\nthrough to design, procurement, construction, operation, maintenance and decommissioning. The report \\nevaluates the extent to which Czech institutions and decision-making processes at the national and \\nsubnational levels foster efficient and effective investment. It makes concrete and actionable \\nrecommendations for strengthening Czechia’s capacity to prioritise, design and implement sound \\ninfrastructure investments.  \\nThis first chapter provides an overview of institutions and decision-making processes at various stages of \\nCzechia’s infrastructure lifecycle and supports the analysis in Chapter 2 (national infrastructure investment) \\nand Chapter 3 (subnational infrastructure investment). It provides an overview of the government structure \\nand infrastructure decision-making processes, followed by a description of trends, issues and institutions \\nin three key sectors (transport, housing and energy), as well as cross-sectoral institutions. \\n1.1 \\nInfrastructure governance in Czechia \\nNational governance involves ministries and state funds \\nThe Government of Czechia is appointed by the President and consists of the Prime Minister and ministers. \\nThere are currently 18 members of the government: the Prime Minister, 14 ministers in charge of the \\nrespective 14 ministries and another 3 ministers with special portfolios (Science, Research and Innovation; \\nEuropean Affairs; Legislation and Chair of the Legislative Council) (Government of Czechia, n.d.[1]). \\nAlthough the government shares the legislative initiative with Parliament, the Senate and regional councils, \\nit is the government which most often submits draft proposals, especially those of a complex nature. All \\ndraft legislation is sent to the Government Legislative Council for review and scrutiny for compliance with \\nCzechia’s constitutional principles, international treaties, EU law, other laws in force and the rules of the \\nlegislative process (Government of Czechia, n.d.[2]).  \\nMinistries’ competences and mandates are defined in the 1969 Competency Law.1 The Competency Law \\nalso defines the mandates of an additional 17 central state administration bodies, such as the Czech \\nStatistical Office, the Office of the Government, and the Czech Telecommunications Office (Czechia, \\n1969[3]). The Competency Law has been subject to several amendments creating, changing or abolishing \\ninstitutions.  \\nAs competences are defined by legislation, infrastructure investment takes place in a rather rigid \\nframework in which it can be difficult to respond and adapt to changes in interrelations among government \\nactivities, and to address issues which cross ministerial competences. Responding to emerging or newly \\nimportant issues – such as crisis management, the green transition and climate change – which require \\neffective horizontal co-ordination and planning between ministries and where roles are not always clearly \\nassigned by the Competency Law can be particularly challenging (OECD, 2023[4]). \\n\\n\\n12    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nAlongside the ministries which directly oversee infrastructure investments within their competences, \\nanother set of stakeholders in Czechia have a significant bearing on public infrastructure investment: the \\nstates funds. State funds are independent legal entities established by law. The framework for their \\nestablishment is enshrined in the Budget Rules, which define state funds as \\\"legal entities established for \\nthe financial security of specially defined tasks and the management of funds earmarked for them.\\\" \\nIndividual funds are based on dedicated laws which define their operating parameters and characteristics. \\nThere are currently six state funds, and their revenue and expenditure in 2022 are shown in The state \\nfunds most involved in infrastructure investment – the State Fund for Transport Infrastructure, the State \\nEnvironmental Fund and the State Investment Support Fund – were three of the four largest funds by \\nrevenue and expenditure in 2022. \\n \\nFigure 1.1: \\n1. State Fund for Transport Infrastructure (SFDI) \\n2. State Agricultural Intervention Fund (SZIF) \\n3. State Cinematography Fund (SFKi) \\n4. State Culture Fund (SFK ČR) \\n5. State Investment Support Fund (SFPI) \\n6. State Environmental Fund (SFŽP) \\nThe state funds most involved in infrastructure investment – the State Fund for Transport Infrastructure, \\nthe State Environmental Fund and the State Investment Support Fund – were three of the four largest \\nfunds by revenue and expenditure in 2022. \\n \\n\\n\\n   13 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 1.1. The State Fund for Transport Infrastructure is the largest of the six funds \\nState funds revenues and expenditures in 2022, CZK billions  \\n \\nNote: SFDI: State Fund for Transport Infrastructure; SZIF: State Agricultural Intervention Fund; SFKi: State Cinematography Fund; SFK ČR: \\nState Culture Fund; SFPI: State Investment Support Fund; SFŽP: State Environmental Fund. \\nSource: (Ministry of Finance, 2023[5]), State Final Account of Czechia for the Year 2022. https://www.mfcr.cz/cs/rozpoctova-politika/statni-\\nrozpocet/plneni-statniho-rozpoctu/2022/statni-zaverecny-ucet-za-rok-2022-51132 \\nState funds play a significant role in infrastructure investment. For example, the approved 2023 state \\nbudget included CZK 84 billion (approximately EUR 3.4 billion) in investment transfers to state funds, \\ncompared to only CZK 41 billion (approximately EUR 1.6 billion) in direct state acquisitions of tangible \\nassets and CZK 10 billion (approximately EUR 410 million) in investment transfers to municipalities and \\nregions (Ministry of Finance, 2023[6]). Similarly, in the transport sector, investment expenditure by the State \\nFund for Transport Infrastructure (SFDI) represented on average 88% of total annual investment \\nexpenditure on transport infrastructure between 2010 and 2022 (Ministry of Transport, 2010-2022[7]) (State \\nFund for Transport Infrastructure, 2010-2022[8]). \\nThe government plays a strategic role in identifying investment priorities, strengthening the capacities of \\nthe various levels of government involved in managing public investment, and ensuring sound framework \\nconditions for the governance of public investment (OECD, 2017[9]). Line ministries are then responsible \\nfor infrastructure policy and strategic planning in their respective sectors. There are limited high-level co-\\nordination mechanisms; this role is fulfilled by ad hoc inter-ministerial councils or committees on specific \\ntopics. There are a number of these temporary and permanent councils and advisory bodies, most of which \\nare under the Office of the Government (OECD, 2023[4]). While some of these councils are established to \\nprovide visibility and representation to minority groups or to address specific issues (e.g. the Council for \\nRoma Minority Affairs, the Council for Gender Equality), others are tasked with steering and co-ordinating \\ncross-cutting issues (e.g. the Government Council for Sustainable Development, the Research, \\nDevelopment and Innovation Council) (Government of Czechia, n.d.[10]).  \\n\\n\\n14    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nIn June 2023, the government created the Committee for Strategic Investments, a permanent co-\\nordinating, initiating and advisory body. The committee will facilitate the implementation and support of \\nstrategic investments in the areas of transport, housing, energy, education and science, research and \\ninnovation. It will monitor and facilitate the implementation of existing strategies and help co-ordinate new \\nstrategies in its areas of responsibility; co-ordinate cross-cutting legislative proposals to accelerate their \\nadoption and coherence; evaluate options and proposals to finance strategic investments; and identify \\nopportunities to promote best practices. The committee is chaired by the Prime Minister and its \\nmembership includes a number of ministers with infrastructure-focused portfolios, the Chairs of the \\nAssociation of Regions and the Union of Towns and Municipalities, the Presidents of the Chamber of \\nCommerce and the Confederation of Industry and Transport, the National Security Advisor and the \\ncommittee’s Secretary. The committee has the power to establish temporary or permanent working groups \\nwhich can be tasked with conducting analysis and preparing proposals and recommendations on specific \\nissues. The committee will be supported by a secretariat under the Office of the Government (Government \\nof Czechia, 2023[11]; Government of Czechia, n.d.[12]). \\nSubnational governance involves regions and multiple small municipalities \\nSuccessive reforms since 1989 have seen Czechia transition from a centralised system towards a system \\nwith two tiers of self-governing territorial entities. In 1990, the Constitution recognised local communities’ \\nright to self-government and designated municipalities as the basic structure for this new local self-\\ngovernment, with their own budgets and assets. In 1991, Law No. 367/1990 Coll., on Municipal \\nAdministration established self-governing municipalities with a high level of independence and simplified \\nthe process for creating new municipalities (by removing constraints or limits, such as a minimum number \\nof inhabitants, or territory size). As a result, between 1990 and 1993, the number of municipalities \\nincreased by 50% (OECD, 2023[4]). The legal framework, organisation and responsibilities of municipalities \\nwas revised in 2000 with the adoption of the Law on Municipalities 128/2000, and the Law on the Capital \\nPrague 131/2000 that gives a special status to the capital city. As of 2021, the municipal level comprised \\n6 258 municipalities of several categories, 604 cities/towns (mĕsto), 26 statutory cities (statutarní mĕsto) \\nand 223 market towns (mĕstys). Of these, 95.7% of municipalities had fewer than 5 000 inhabitants, and \\n88.6% had fewer than 2 000, with a median size of 442 inhabitants (OECD, 2023[4]). Czechia’s average \\nmunicipal size of 1 710 inhabitants per municipality is the smallest among OECD countries (Figure 1.2), \\nand well below the OECD average of 10 250 (OECD-UCLG, 2022[13]).  \\n\\n\\n   15 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 1.2. Czechia has an above-average share of small municipalities \\nMunicipalities by population class size, % of municipalities, 2022-2023  \\n \\nNote: Earlier years may have been used for some countries (based on last available census). The United States’ size-classes are slightly \\ndifferent: less than 2 499 inhabitants, 2 500 to 4 999, 5 000 to 24 999, 25 000 or more. For Türkiye, metropolitan municipalities are not included \\nto avoid double counting. \\nSource: (OECD, 2023[14]), Subnational Governments in OECD Countries: Key data. https://www.oecd.org/regional/multi-level-\\ngovernance/NUANCIER%202023-3.pdf. \\nReforms have also led to the progressive establishment of regions and the transfer of competences from \\nthe central government to regions and municipalities. The 14 self-governing regions were created in 1997 \\nbut were only effectively established in 2000 through Regional Act No. 129/2000 Coll., which transferred \\na series of responsibilities to the new entities. The act entered into force in 2003 after creating the \\nconditions for the regions to function effectively (OECD, 2023[4]). Decentralisation continued with the \\nreplacement of 77 district offices (former administrative divisions executing state administration at the local \\nlevel) by municipalities with extended competences, which became effective from January 2003. Since \\nthen, districts  exist solely as territorial units and remain the seats for some offices, notably the courts, \\npolice and archives. The Act on Territorial Division of the State, in effect since 2021, aims to simplify the \\nsystem of state territorial administration by completing the transition from the system of districts to the \\ndelegation of functions at the municipal level (OECD, 2023[4]). With this, Czechia finalised its transformation \\ninto a combined or mixed model of public governance involving a two-tier system of territorial self-\\ngovernment, i.e. a model with municipalities and regions carrying out both their own self-governmental or \\nautonomous competences and competences delegated by the central state administration. \\nMunicipalities differ in the extent of their delegated competences: \\n\\n\\n16    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nAt the upper level, 205 municipalities have “extended powers” to fulfil several administrative \\nfunctions delegated by the central government on behalf of smaller surrounding municipalities (e.g. \\nmaintaining civil registers, issuing identity cards and driving licences, co-ordinating social services).  \\n• \\nAt the intermediate level, 388 municipalities (including the 205 municipalities with “extended \\npowers”) have an “authorised municipal authority” to perform delegated functions, but on a smaller \\nscale (e.g. operating the building authority and registry office, offering social assistance, \\nadministering war graves), and with a specific agenda for environment and agriculture.  \\n• \\nAt the primary level, all municipalities have basic delegated powers (e.g. holding elections, \\nmaintaining population records, managing water management). Smaller municipalities can also \\ndelegate additional functions to the intermediate and upper-level municipalities through public law \\ncontracts if they are unwilling or unable to provide them due to a lack of capacity (OECD, 2023[4]). \\nRegional governments also have autonomous and delegated competences. Regions are responsible for \\nseveral functions related to the development of their own territory: for example, they approve planning and \\nzoning documents and are responsible for regional economic development and environmental protection. \\nThey are also responsible for regional transport.  \\nAs a result of these successive reforms, regions and municipalities in Czechia have significant \\nresponsibilities for infrastructure and service delivery in the areas of education, health, utilities, social \\nprotection and economic affairs (Table 1.1). Regarding infrastructure, municipalities are responsible for \\nbuilding utility networks in their territory (e.g., sewerage, including connection to wastewater treatment \\nplants; gas, water and heat supply); constructing local roads, parking spaces, pavements; building leisure \\nfacilities (e.g. playgrounds and sports grounds, facilities for cultural and social activities in larger \\nmunicipalities); and maintaining local public and green spaces. Meanwhile, regions are responsible for \\nbuilding and maintaining Class II and III roads. They are also in charge of establishing and managing the \\nregional hospitals, as well as establishing social service centres, homes for the elderly, shelters, residential \\nhomes and other social service institutions. \\nTable 1.1. Municipalities and regions have specific roles related to infrastructure \\nLocal government  \\nPublic \\nutilities/transport \\nSocial services \\nHealth  \\nEducation  \\nMunicipalities \\nInfrastructure \\nMunicipal roads and \\nstreets \\nAsylum \\nhousing, \\nresidential services for \\nthe elderly  \\n-- \\nPre-school \\nfacilities \\nand \\nprimary schools \\nCompetences \\nMaintenance, \\nconstruction \\nand \\nrepairs  \\nProvision \\nof \\nsocial \\nservices  \\n-- \\n \\n-- \\nSource of funds and \\ntheir use \\nMunicipal \\nbudgets, \\nand grants \\nMunicipal \\nbudgets, \\nsubsidies and grants \\n-- \\nFinancing \\noperating \\ncosts and investments \\nfor construction and \\nrenovation of facilities \\nRegions \\nInfrastructure \\nClass II and Class III \\nroads \\nBuilding social service \\ncentres, homes for the \\nelderly, shelters, \\nresidential homes, etc. \\nas contributory \\norganisations \\nBuilding and \\nmanaging regional \\nhospitals and medical \\nrescue services \\nBuilding and \\nmanaging secondary \\nschools and higher \\nvocational schools   \\nCompetences \\nManagement, \\nmaintenance and \\nrepair \\nMaintenance of the \\nregister and quality \\ncontrol of the services \\nprovided \\nAuthorisation of \\nprovision of health \\nservices \\nAllocating funds from \\nthe state budget for \\npedagogical and non-\\nteaching staff salaries \\n\\n\\n   17 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nin the region’s schools  \\nSource of funds and \\ntheir use \\nRegional budgets, \\nstate subsidies \\n(SFDI), EU Funds \\n(Regional Operational \\nProgramme)  \\nSubsidies from the \\nMinistry of Labour and \\nSocial Affairs. \\nAllocation of funds  \\nOperating costs and \\ninvestments for \\nconstructing and \\nrenovating facilities  \\nRegional budgets and \\nsubsidies. Operating \\ncosts and investments \\nfor constructing and \\nrenovating facilities  \\nSource: Authors, based on (OECD, 2023[4]). OECD Public Governance Reviews: Czech Republic: Towards a More Modern and Effective Public \\nAdministration. https://doi.org/10.1787/41fd9e5c-en. \\nThe infrastructure decision-making process in Czechia is fragmented \\nGiven infrastructure’s cross-cutting nature, multiple institutions and arrangements are responsible for and \\ncontribute to ensuring that investment achieves policy objectives. The governance arrangements and \\nscope of action of these institutions vary from country to country, depending on history, constitutional \\narrangements and government capacities. Furthermore, these institutions often have complementary and \\nsometimes overlapping responsibilities, creating an additional level of complexity (Ruiz Rivadeneira and \\nMcmaster, 2023[15]). \\nIn Czechia, the national government takes a sectoral approach to infrastructure governance and decision \\nmaking. Each line ministry is primarily responsible for infrastructure policy and for making decisions on \\nplanning and investing in their sector. With each ministry generally planning and prioritising projects related \\nto their own sectoral remits, the roles of infrastructure planning, financing and delivery are spread across \\na number of institutions. This sectoral approach is mirrored at the subnational level. As a result, processes \\ncan differ significantly depending on the sector and whether responsibility lies primarily with the central \\ngovernment or with regions and municipalities. This approach has the advantage that line ministries and \\nother sectoral bodies or local governments often have specialised technical, sectoral or local knowledge \\nthat can contribute to more efficient and effective infrastructure planning and delivery. However, the \\nincreasing number of cross-sectoral policy challenges can create potential responsibility overlaps, gaps \\nand co-ordination issues (Ruiz Rivadeneira and Mcmaster, 2023[15]). This siloed approach also reduces \\nopportunities for understanding the territorial impact of infrastructure investments. Place-based \\ninfrastructure planning requires a cross-sectoral approach that understands the territory and the \\ncomplementary investments that are needed.  \\nThe Spatial Development Policy of Czechia (Ministry of Regional Development, 2021[16]) is a national \\nspatial planning document prepared by the Ministry for Regional Development2. It serves mainly as a tool \\nfor co-ordinating spatial development at the national level, as well as spatial planning activities by regions \\nand municipalities. It defines nationally relevant areas, axes and corridors (for example, for high-speed rail \\nlines, motorways, or large water works). It does not include project details or constitute project approval, \\nbut only requires that the identified areas, axes and corridors be reflected in subsequent regional and \\nmunicipal spatial planning documentation.  \\nRegions develop their own regional spatial plans, which define the areas and corridors which require a \\nmore thorough examination. Where appropriate, they set out the sequence of development for the region \\nand requirements for municipal planning. Municipalities also develop strategic development and spatial \\nplans. Strategic development plans set the direction and priorities for the municipality's development. While \\nsuch plans are not mandatory, they are important when applying for grants and other support from the \\nstate budget and EU funds. Larger municipalities are more likely to have strategic development plans; a \\n2015 survey found that more than 90% of municipalities with over 10 000 inhabitants had a strategic plan \\n(Ježek, 2015[17]). Municipal spatial plans are mandatory, and function primarily as a regulatory tool that \\nsets direction and limits on land use. The Ministry of Regional Development currently operates a web \\napplication, ObcePRO,3 to support municipalities and associations of municipalities in preparing their \\ndevelopment programmes. The application also allows for monitoring and evaluating implementation. \\n\\n\\n18    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nTable 1.2 provides an overview of the roles and responsibilities of the various institutions throughout \\nCzechia’s infrastructure lifecycle. Given the diversity of processes across sectors, this is only illustrative.  \\nTable 1.2. Roles and responsibilities in Czechia’s infrastructure lifecycle are fragmented \\nInfrastructure lifecycle stage \\nProcess and institutions responsible \\nStrategic planning \\nAt the national level, line ministries are responsible for developing strategic plans \\nfor specific sectors. These plans set objectives, identify priority areas and outline \\nthe strategic direction for infrastructure projects. The consultation process \\nincludes formal commentary from other ministries, as well as consultation with \\nstakeholders (e.g. regions and municipalities) and the public. \\n \\nMunicipalities and regions are responsible for spatial planning at the local level, \\nas well as local planning for the infrastructure and services they provide (e.g. \\npublic transport).    \\nPrioritisation and funding \\nLine ministries are responsible for project appraisal and prioritisation within their \\nsector. Different prioritisation and appraisal methodologies are used to select \\nprojects aligned with available funding and strategic plans. Line ministries and \\nstate funds operate grant and loan programmes to fund municipal and regional \\ninfrastructure. \\n \\nThe Ministry of Finance is responsible for budget allocations for line ministries, \\nregions and municipalities (including co-financing from EU funds) and for \\nreviewing ministries’ multi-year plans and major projects. State funds allocate \\nfunding for infrastructure investments, as well as providing loans and guarantees \\nfor national and subnational entities. The National Development Bank can provide \\nproject financing and advice in certain circumstances, including for subnational \\ngovernments (e.g., for public-private partnerships). \\nDesign, procurement and construction \\nDepending on the sector, projects may be delivered by ministries, regions and \\nmunicipalities, or other public bodies (e.g. Railway Administration). \\n \\nDepending on the size and nature of the project, planning and construction \\npermissions are the responsibility of municipalities and regions, or the Transport \\nand Energy Construction Authority. Environmental impact assessments are \\nsimilarly the responsibility of municipalities and regions or the Ministry of the \\nEnvironment. \\n \\nThe Ministry of Regional Development is responsible for procurement policy at \\nthe national level. \\nOperations, maintenance and \\ndecommissioning \\nThroughout the maintenance and operating phase, relevant institutions, for \\nexample the Roads and Motorways Directorate in the case of highways, are \\nresponsible for undertaking maintenance and operations, while line ministries \\nestablish policies and the Ministry of Finance and state funds finance operations, \\nmaintenance and renewal. \\n \\nMunicipalities and regions are responsible for the operation and maintenance of \\nthe infrastructure assets they own. \\n1.2 \\nTrends in infrastructure investment in Czechia \\nCOVID-19 and the Russian war of aggression have affected Czechia’s fiscal position \\nCzechia’s post-COVID recovery was disrupted by the Russian war of aggression against Ukraine.  \\nIncreases in energy and commodity prices and disruptions to oil and gas imports from Russia triggered a \\ncost-of-living crisis. High uncertainty and energy price increases resulted in declines in consumer and \\n\\n\\n   19 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nbusiness sentiment and real wages fell steeply. Growth in gross domestic product (GDP) slowed to 2.5% \\nin 2022, with core inflation among the highest in the EU. The OECD’s 2023 Economic Survey forecasts \\nthat economic growth will be subdued in 2023, before picking up in 2024 (OECD, 2023[18]).  \\nCzechia is making progress towards all the United Nations Sustainable Development Goals (SDGs), but \\nis lagging behind the EU average for some targets, mainly those related to environmental sustainability. It \\nperforms extremely well on SDG targets related to equity such as zero poverty (SDG 1), decent work and \\neconomic growth (SDG 8), and reduced inequalities (SDG 10) (European Commission, 2023[19]). \\nWhile Czech public debt is low (44.1% of GDP in 2022 compared to the EU average of 85.3%), the \\nstructural deficit and medium-term risks have increased in the last three years. Expansionary fiscal policy, \\nespecially in 2020 and 2021, weakened the public finance position as Czechia responded to the challenges \\nof the COVID-19 pandemic and the energy crisis resulting from Russia’s invasion of Ukraine (European \\nCommission, 2023[19]). To address these fiscal pressures, the government has committed to measures \\naimed at reducing the deficit by at least CZK 70 billion (approximately EUR 2.9 billion) in 2024 (Ministry of \\nFinance, 2023[20]).  \\nCzechia’s challenging fiscal position may limit the near-term scope for significant new infrastructure \\ninvestments funded through the national budget. This difficult environment increases the importance of \\nstrong infrastructure governance, which can improve outcomes from existing levels of investment rather \\nthan requiring expenditure increases. By improving the efficiency and effectiveness of infrastructure \\nspending at all levels of government, Czechia can maximise the value of the investments it is able to make \\nat a time of fiscal consolidation. \\nEU funds are a significant source of historical and planned infrastructure investment in \\nCzechia \\nBefore its accession to the EU, Czechia drew from three pre-accession instruments (Phare, SAPARD and \\nISPA programmes), which provided technical, economic and infrastructural expertise and assistance to \\nsupport accession, as well as a focus on financing infrastructure projects in the areas of environment and \\ntransport (European Commission, n.d.[21]). Upon accession in May 2004, Czechia joined the 2000-2006 \\nprogramming period, during which it accessed over EUR 1.69 billion overall from 2004 to 2006 across 13 \\nprogrammes (Ministry of Regional Development, n.d.[22]). \\nIn the next programming period (2007-2013), Czechia was allocated approximately EUR 26 billion under \\nthe cohesion policy through the European Regional Development Fund (ERDF), European Social Fund \\n(ESF) and Cohesion Fund (CF). In this period, infrastructure investment through the cohesion policy \\nrepresented over 40% of total public investment, indicating its major role in Czech public investment4 \\n(European Commission, 2022[23]). Investment focused on the European Union cohesion policy objectives \\nfor the 2007-2013 programming period: \\nConvergence: aimed at promoting the economic and social development of regions with GDP per capita \\nof less than 75% of the EU average. This objective was financed by the ERDF, ESF and CF and covered \\nall Czech regions except the City of Prague. \\nRegional competitiveness and employment: this supported regions with GDP per capita of more than 75% \\nof the EU average. This objective was financed by the ERDF and ESF, and only covered the City of Prague. \\nEuropean territorial co-operation: this promoted cross-border, interregional and transnational co-operation \\nbetween regions located along Member States’ internal and certain external borders. This objective was \\nfinanced by the ERDF (Ministry of Regional Development, n.d.[24]). \\nIn the 2014-2020 period, EUR 22.7 billion were available to Czechia under the cohesion policy. Including \\nnational financing, the total investment amounted to EUR 29.6 billion, approximately 2.2% of GDP for 2014-\\n2020 (European Commission, 2023[19]). Funding was delivered through the European Regional \\n\\n\\n20    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nDevelopment Fund, Cohesion Fund, European Social Fund and Youth Employment Initiative. \\nInfrastructure investments through the cohesion policy funds in this programming period still played a \\nsignificant role in infrastructure investment, representing approximately one-third of national public \\ninvestment (European Commission, 2022[23]).  \\nMajor infrastructure programmes included the Transport Programme, which invested in sustainable \\ntransport modes and removing bottlenecks on key network infrastructure; the Integrated Regional \\nProgramme, which sought to improve regional connectivity through investments in regional roads and the \\ndevelopment of public transport; and the Environment Programme, whose priorities included improving \\nwater quality, reducing flood risks and enabling public sector energy savings (European Commission, \\n2023[25]). \\nPlanned investments during the current programming period are significant  \\nCzechia will benefit from sizeable EU cohesion policy funds over the 2021-2027 period. The country’s total \\nallocation is EUR 26.7 billion (including both the EU share and national co-financing), divided among the \\nEuropean Regional Development Fund (EUR 13.8 billion), European Social Fund+ (EUR 3.2 billion), \\nCohesion Fund (EUR 29.2 billion), and Just Transition Fund (EUR 7.2 billion) (European Commission, \\n2023[26]). This funding is divided into five themes, with the Just Transition Fund and technical assistance \\nmaking seven overall (see Figure 1.3 for the overall amounts for each): \\n• \\nGreener Europe: investing in low-carbon transitioning towards a net zero carbon economy, the \\ncircular economy, climate change mitigation and adaptation, risk prevention and sustainable urban \\nmobility. \\n• \\nSocial Europe: investing in a more social and inclusive Europe through the implementation of the \\nEuropean Pillar of Social Rights. \\n• \\nConnected Europe: investing in enhanced sustainable mobility, including Trans-European \\nTransport Network priorities. \\n• \\nSmarter Europe: investing in a more competitive and smarter Europe by promoting innovative and \\nsmart economic transformation and regional ICT connectivity. \\n• \\nEurope closer to citizens: fostering the sustainable and integrated development of all types of \\nterritories and supporting local initiatives. \\n• \\nJust Transition Fund: The JTF supports regions most affected by the transition towards climate \\nneutrality through the shift away from coal. In Czechia, this includes the regions of Karlovarský, \\nÚstecký, and Moravskoslezký. \\n• \\nTechnical assistance: Investing in administrative capacity to manage complex investments and \\nensure quality governance. \\n\\n\\n   21 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 1.3. Greener Europe accounts for Czechia’s largest share of Cohesion Policy funds  \\nCohesion policy funds in Czechia by theme, EUR billions (2021-2027) \\n \\nNote: Refresh date: 19 July 2023 \\nSource: European Commission, Cohesion Open Data Platform, https://cohesiondata.ec.europa.eu/  \\nWithin the cohesion policy funds, investments in the green transition total EUR 14.1 billion. This amount \\nincludes: 1) investments through the ERDF to promote energy efficiency and help to improve the energy \\nperformance of around 750 000 square meters of public buildings; and 2) through the Cohesion Fund to \\nsupport climate adaptation measures enhancing water retention, resulting in over 2 000 hectares of green \\ninfrastructure being built or upgraded. Across themes, investments in digital transformation total EUR 1.7 \\nbillion, and include measures to accelerate the building of very high-capacity networks to close deep digital \\ndivides between urban and rural areas in terms of coverage and exploitation (European Commission, \\n2023[19]). \\nInvestments across themes are also aimed at addressing significant, though stable, regional disparities. \\nWhile more developed regions suffer from unaffordable housing and pressures on transport networks, less \\ndeveloped regions face issues arising from demographic pressures, social exclusion and insufficient focus \\non areas such as the energy transition and digitalisation. The City of Prague is Czechia’s most developed \\nregion, with a GDP per capita that was 203% of the EU-27 average in 2020. There are six moderately \\ndeveloped regions,5 with 2020 GDP per capita ranging between 73% and 85% of the EU average. The \\npoorest region (Severozápad) had a GDP per capita that was 61% of the EU average in 2020. While all \\nthe other Czech regions are converging on the EU average, Severozápad has persistently lagged behind \\n(European Commission, 2023[19]).  \\nCzechia is also benefiting from other EU programmes in the 2021-2027 programming period, notably the \\nConnecting Europe Facility, which has allocated EU funding of EUR 462.6 million to 17 specific projects \\non strategic transport networks to date. The Public Sector Loan Facility under the Just Transition \\nMechanism also makes EUR 125 million of grant support available for projects over 2021-2027, which will \\nbe combined with European Investment Bank loans to support investments by public sector entities in just \\ntransition regions (European Commission, 2023[19]). \\n\\n\\n22    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nCzechia’s Recovery and Resilience Plan includes a significant focus on physical \\ninfrastructure and the green transition \\nThe Recovery and Resilience Facility is part of the EU’s broader NextGenerationEU package and runs \\nconcurrently with the EU cohesion policy funding instruments. It will support Member States’ investments \\nand reform measures aimed at allowing them to emerge stronger from the COVID-19 pandemic. Czechia \\nwill receive grants totalling EUR 7 billion (2.9% of 2021 GDP) through this facility, to be disbursed by 2026 \\n(OECD, 2023[18]).  \\nCzechia’s Recovery and Resilience Plan (RRP) details its approach to the use of Recovery and Resiliency \\nFacility funds and was officially adopted on 17 May 2021 by Government Resolution No. 467. The plan \\nwas formally submitted to the European Commission on 1 June 2021, and approved by the Council of the \\nEuropean Union on 31 August 2021 (Council of the European Union, 2021[27]). The RRP has six main \\npillars (Figure 1.4). \\nFigure 1.4. Czechia's Recovery and Resilience Plan rests on six pillars \\nEUR billions \\n \\nSource: Adapted from (European Commission, 2021[28]), Analysis of the Recovery and Resilience plan of Czechia. \\nAs part of the physical infrastructure and green transition pillar, the RRP includes EUR 1.4 billion to finance \\nlarge-scale renovation programmes to increase the energy efficiency of residential and public buildings, \\nincluding childcare and long-term care facilities. This pillar also includes investments of EUR 1.1 billion in \\nsustainable mobility, notably in low-emission vehicles for the public and business sector, improving railway \\ninfrastructure, and promoting electric charging stations and cycling pathways. Key infrastructure \\ninvestments will also include EUR 227 million in very high-capacity networks (VHCN) as part of the digital \\ntransformation pillar. These allow for expanded and faster internet connectivity, particularly in less \\ndeveloped or rural regions that would benefit from better provision of digital services and business \\nopportunities. The component also foresees the development of 5G networks, particularly in rural areas, \\nboth through reforms and investment. The plan also includes EUR 130 million to support the regeneration \\nof brownfield sites owned by municipalities and regions (European Commission, 2021[28]) (European \\nCommission, 2021[29]). \\n\\n\\n   23 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nThe RRP also includes measures to strengthen the capacity of the public administration and increase the \\nefficiency of investment. Recently adopted amendments to the Building Act (152/2023 Coll.) are expected \\nto shorten the length of time it takes to issue construction permits. Measures aimed at building \\nadministrative capacity are planned to support the delivery of public investment projects by providing \\nmethodological assistance to strengthen investment readiness and increase the use of public-private \\npartnerships (PPP). The plan also intends to increase the use of non-price criteria in public procurement \\n(European Commission, 2021[28]). \\nFinally, the EU launched the REPowerEU Plan after Russia’s invasion of Ukraine to scale up renewable \\nenergy sources, boost energy efficiency measures and reduce dependence on Russian fossil fuels. The \\nplan adds additional grants totalling EUR 20 billion to accelerate Member States’ implementation of their \\nclimate and energy saving plans (European Commission, 2023[30]). Czechia will receive approximately \\nEUR 680 million in additional funding for initiatives supporting energy security, an increase in the uptake \\nof renewables and energy efficiency, an increase of energy storage capacities and a reduction in \\ndependence on fossil fuels (Ministry of Finance, 2022[31]). \\nThe size of planned investments makes strong infrastructure governance critical \\nOver the next decade, Czechia is expected to absorb approximately EUR 40 billion of EU funds (European \\nCommission, 2023[19]). The Recovery and Resilience Facility and cohesion policy funds will require greater \\nimplementation capacity and efficient procedures to prepare and successfully deliver public sector \\ninvestment projects. Absorption rates in Czechia remain above the European average, but were lower in the \\nmost recent programming period. In the 2004-2006 programming period, Czechia absorbed almost all its \\nallocated financing (99.5%), falling slightly to 96% in the 2007-2014 period, and further to 84% for the 2014-\\n2020 programming period  (Ministry of Regional Development, n.d.[22]; Ministry of Regional Development, n.d.[32]; \\nEuropean Commission, 2023[33]) \\nSufficient implementation capacity is also needed to address the green and digital transitions and \\nsuccessfully seize the opportunities created by the European Green Deal and the Digital Europe \\nProgramme. The European Commission’s 2023 country report found that low absorption capacity is a \\ncontributing factor to the growing disparities between the Severozápad region and other Czech regions \\n(European Commission, 2023[19]). \\n1.3 \\nOverview of key infrastructure sectors \\nThis section provides a short overview of trends and challenges in three critical infrastructure sectors: \\ntransport, energy and housing. It also provides a brief description of the most important institutions \\n(ministries, state funds, etc.) in these sectors, as well as cross-sectoral institutions involved in infrastructure \\ninvestment.  \\nTransport investment is important for Czechia’s green transition and regional equity \\nTransport is one of the sectors in Czechia with the highest emissions growth (European Commission, \\n2021[34]). It is therefore a key target for investment to support energy efficiency and reduce carbon \\nemissions and air pollution (OECD, 2020[35]). Car ownership in Czech cities increased significantly after \\nthe fall of communism: in Prague it doubled – from 276 per 1 000 inhabitants in 1990 up to 550 in 2014 \\n(Huerta Melchor and Gars, 2020[36]). The uptake of zero-emission road mobility has been modest, with the \\nshare of new electric vehicle registrations at only 3.8%, and only one-third of the railway network electrified \\n(European Commission, 2023[19]). The European Commission’s analysis of Czechia’s RRP noted that \\nupgrades to key areas of the transport infrastructure could boost the shift towards more climate-friendly \\nand sustainable modes of transport. A modernised passenger rolling stock could increase the \\n\\n\\n24    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nattractiveness and service quality of rail transport, while at the local level, modern and attractive public \\ntransport should help to reduce emissions (European Commission, 2021[28]). \\nAfter falling in the wake of the global financial crisis, public investment in transport infrastructure grew again \\nduring the second half of the 2010s (Figure 1.5). The 2022 Programme Statement of Czechia commits to \\ncreating an investment plan for transport and increasing the efficiency of funds spent on transport \\nconstruction. The government has also committed to considering the use of public-private partnerships \\n(PPPs) in transport infrastructure projects (see Section 2.4 in Chapter 2), while improving procurement \\npractices more generally (e.g. ensuring transparent and fair selection procedures) (Government of \\nCzechia, 2022[37]).  \\nFigure 1.5. Public investment in rail and road infrastructure is increasing \\nCZK millions \\n \\nNotes: Includes investment in motorways and Class I, II and III roads, but not in urban roads. Does not include investment in vehicles or rolling \\nstock. \\nSource: \\n(ITF, \\n2023[38]), \\n“Transport \\ninfrastructure \\ninvestment \\nand \\nmaintenance”, \\nITF \\nTransport \\nStatistics \\n(database), \\nhttps://doi.org/10.1787/g2g55573-en \\nGreater regional connectivity can help to advance economic development (ITF, 2023[39]). Connectivity in \\nCzechia, including access to the country’s transport network, is still relatively uneven and limits the \\ndevelopment prospects of less developed regions. In 2018, more than 88.7% of the population of Prague \\nlived within a radius of 120 km that could be reached in less than 90 minutes (on average). In Jihozápad \\nand Severovýchod, two moderately developed regions, this share was only just over 50% (European \\nCommission, 2023[19]). Infrastructure investment in transport connectivity through the RRP is aimed at \\nlevelling out these regional inequalities.  The investment in public transport networks is particularly relevant \\nfor structurally disadvantaged regions, where the modernisation of rail infrastructure and investment in \\nsustainable transport links are expected to help connect remote regions to economic centres, improving \\nlabour market outcomes (European Commission, 2021[28]). \\nKey transport sector institutions include the Ministry of Transport and the State Fund for Transport \\nInfrastructure (Table 1.3). \\n\\n\\n   25 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nTable 1.3. Four key institutions are involved in the transport sector  \\nInstitution \\nDescription \\nMinistry \\nof \\nTransport \\n(Ministerstvo dopravy, MD) \\nThe Ministry of Transport is responsible for the state transport strategy and, within the \\nscope of its competence, for its implementation. This includes developing the Transport \\nPolicy and associated sector strategies. \\n \\nThe ministry works with the Ministry of Finance to determine the expenditure framework \\nfor transport investment. It also works with the State Fund for Transport Infrastructure \\n(SFDI) in preparing the available financial resources and drafting the outlook for the \\ninfrastructure financing framework for future years. The planning is typically done with a \\none-year perspective, in which concrete financial resources are granted by the \\ngovernment to transport. The outlook for future years is for information purposes.  \\nState \\nFund \\nfor \\nTransport \\nInfrastructure \\n(Státní \\nfond \\ndopravní infrastrukury, SFDI) \\nThe State Fund for Transport Infrastructure’s objectives are the development, \\nconstruction, maintenance, and modernisation of roads, motorways, railways, and inland \\nwaterways.  \\n \\nThe SFDI has the largest budget of all Czechia’s state funds. In 2023, its budget totalled \\nCZK 150.9 billion (approximately EUR 6.4 billion), of which CZK 46.6 billion \\n(approximately EUR 2.0 billion) was allocated for operational expenditures and CZK 104.3 \\nbillion (approximately EUR 4.4 billion) for capital investment. Of this total, CZK 65.5 billion \\n(approximately EUR 2.8 billion) was allocated to the Motorway Directorate and CZK 70.4 \\nbillion (approximately EUR 3.0 billion) to the Railway Administration. A further CZK 6.0 \\nbillion (approximately EUR 250 million) per year (for the 2023 budget year and the \\nmedium-term outlook for 2024 and 2025) were allocated to Class II and III roads, which \\nare under the competence of the regions. SFDI revenues are provided from a road tax, a \\npercentage of the excise duties on hydrocarbon fuels and mineral oils, and motorway tolls \\nand charges. In addition, EU funds provide complementary funding, totalling CZK 27.6 \\nbillion (approximately EUR 1.2 billion) in 2023 (State Fund for Transport Infrastructure, \\n2022[40]). \\n \\nThe SFDI is administered by a committee chaired by the Minister of Transport and \\ncomposed of members selected by the government. A supervisory board is elected by the \\nChamber of Deputies to oversee its operation and management (State Fund for Transport \\nInfrastructure, n.d.[41]). \\nRoad and Motorway Directorate \\n(Ředitelství silnic a dálnic ČR, \\nŘSD) \\nThe mission of the Road and Motorway Directorate (ŘSD) is primarily the construction of \\nroads and motorways, as well as the maintenance and repair of motorways and Class I \\nroads.6 The ŘSD undertakes activities for the preparation and implementation of \\nconstruction, upgrading and repair, including the proper handover of the works to the \\nsubsequent administrators in the case of Class II and III roads. The ŘSD is also \\nresponsible for implementing the approved transport policy and strategy for Class I roads \\nand motorways. Currently, more than 7,127 kilometres of motorways and Class I roads \\nare under the management of the ŘSD, of which more than 1,360 kilometres are \\nmotorways. \\n \\nThe ŘSD will become a state enterprise in 2024. In its current legal form, it is bound by \\ngeneral government regulations on salaries and hiring. Becoming a state-owned \\nenterprise is expected to improve how it hires and retains technical experts, and allow it \\nto insource currently outsourced functions (Ministry of Transport, 2021[42]).  \\nRailway Administration (Správa \\nželeznic, SŽ) \\nAs the manager of state-owned railway assets (over 9,400 kilometres of track, over 2,500 \\nstations and stops and over 6,00 bridges), the Railway Administration’s main activities \\ninclude maintaining existing infrastructure and preparing and implementing projects to \\nmodernise and expand the network. It also manages the Czech and foreign carriers \\noperating on its network (Railway Administration, n.d.[43]). \\n \\nIn 2022, the Railway Administration’s total budget was CZK 66.9 billion (approximately \\nEUR 2.8 billion), including CZK 42.5 billion (approximately EUR 1.8 billion) in capital \\ninvestments (Railway Administration, 2023[44]). It is overseen by a Supervisory Board \\nwhose members are appointed by the government on the recommendation of the Minister \\nof Transport. \\n\\n\\n26    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nEnergy investments can help reduce Czechia’s high emissions  \\nCzechia has some of the highest per-capita greenhouse gas (GHG) emissions in the EU, and the \\nemissions intensity of its GDP is also above the EU average. This is largely due to its significant reliance \\non coal, large transport sector and inefficient energy use (European Commission, 2021[28]). In 2019, coal \\naccounted for one-third of total energy supply, 46% of electricity generation and over 25% of residential \\nheating (IEA, 2021[45]). Energy intensity per unit of GDP is also considerably higher than in many other \\nOECD countries, driven in part by the energy-inefficient stock of residential buildings. Energy use in Czech \\ndwellings, per square metre, is among the highest in the EU, partly because of the large share of older \\nbuildings. Nevertheless, Czechia has made headways in reducing its GHG emissions over the past three \\ndecades, including significant reductions in the share of coal in the primary energy supply (OECD, 2023[18]).  \\nThe International Energy Agency’s (IEA) 2021 Energy Policy Review of Czechia found that more efforts \\nare needed to reach the target set out in its National Energy and Climate Plan of reducing GHG emissions \\nby 30% compared to 2005 levels by 2030. After declining noticeably from 2005 to 2015, total greenhouse \\ngas emissions have remained relatively stable at approximately 17% lower than 2005 (IEA, 2021[45]). Along \\nwith the GHG impacts, a reliance on coal and emissions from road transport and residential housing means \\nthat more than 75% of the population is exposed to harmful levels of air pollution (OECD, 2021[46]). \\nCzechia’s high reliance on fossil fuels calls for a faster roll-out of renewables and energy efficiency \\ninvestments, as well as a diversification of energy supply sources. As Czechia reduces its use of coal, a \\nbroad range of technologies, including solar, wind, geothermal, hydrogen and biomethane, could be \\ndeveloped further to substitute for natural gas imports, particularly in households and industry (European \\nCommission, 2023[19]). Intermediate plans to reduce GHGs, which relied on switching from coal to natural \\ngas for energy general and heating, have been delayed by the Russian aggression against Ukraine, which \\nled to a significant increase in the price of natural gas.  \\nGHG emissions per capita differ across regions. The per-capita emissions in the majority of large regions \\nare below 10 tons of carbon dioxide equivalent (tCO2e) per capita. Only the Central Bohemian Region, \\nMoravia-Silesia and Severozápad exceed the OECD average per-capita emissions of 11.5 tCO2e. \\nSeverozápad’s estimated per-capita emissions are more than 12 times higher than those of Prague \\n(OECD, 2021[47]). All regions use coal in electricity generation, with Prague depending exclusively on coal \\nfor electricity.  \\nInitiatives being undertaken under the RPP are designed to contribute to the ambitious EU targets of \\nreducing GHG emissions by 30% by 2030 compared to 2005, and of achieving carbon neutrality by 2050, \\nthrough an optimal energy mix and the use of renewable energy sources (European Commission, 2021[28]). \\nFor example, they seek to tackle the regulations and lengthy construction processes that have been \\nbarriers to green investment in Czechia. The new Building Act (No. 283/2021 Coll.) has made important \\nchanges aimed at reducing waiting times for renovations or new construction projects. In addition, an \\namendment to the Energy Act (No. 458/2000 Coll.) has increased the threshold for the obligation to hold \\na licence for electricity generation from 10 kW to 50 kW. The same threshold will also apply to building \\npermits for renewables projects, shortening construction lead times and reducing the barriers to investing \\nin renewables (OECD, 2023[18]). Czechia’s main energy sector institution is the Ministry of Industry and \\nTrade (Table 1.4). \\nTable 1.4. The Ministry of Industry and Trade is Czechia’s main energy sector institution \\nInstitution \\nDescription \\nMinistry of Industry and Trade \\n(Ministerstvo \\nprůmyslu \\na \\nobchodu, MPO) \\nThe Ministry of Industry and Trade (MPO) is the central state administrative body for state \\nindustrial policy, trade policy, foreign economic policy and energy policy. It is also the \\ncentral body for promoting entrepreneurship and investment in manufacturing and \\nindustrial R&D, technology and engineering, including the use of European funds in this \\n\\n\\n   27 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\narea. The MPO is tasked with developing and implementing energy policies, including the \\nState Energy Policy – the main strategic document guiding energy policy in Czechia (IEA, \\n2021[48]). \\n \\nThe MPO consults with municipalities and regions on project investment plans during their \\npreparation and implementation. It works with the Ministry of Finance on a broad range of \\naspects related to the conditions and parameters of subsidy programmes, the approval of \\nbudgets, and the approval of applications for subsidies and the evaluation of subsidy \\nprogrammes. For example, the government regularly publishes calls to support energy \\nmanagement projects as well as for technical assistance with the application \\ndocumentation through the State Programme for Support of Energy Savings and Use of \\nRenewable Secondary Energy Sources (EFEKT). This includes a network of energy \\nconsultation and information centres which provide free advice to SMEs and municipalities \\nto support the uptake of energy-saving measures and renewable energy sources (IEA, \\n2021[48]). The MPO is also responsible for the overall National Recovery and Resilience \\nPlan, while the preparation and delivery of specific components of the plan are the \\nresponsibility of individual ministries (Ministry of Industry and Trade, n.d.[49]).   \\nHousing investment is needed to increase supply  \\nHousing is, on average, the largest expenditure for OECD households, and its share in household spending \\nhas risen over time (OECD, 2021[50]). In Czechia, the share of housing related items in total spending is \\nhigher than the OECD average (28% compared with 23%) (OECD, 2023[51]). House prices have doubled \\nover the past six years (Figure 1.6) (OECD, 2023[18]). Average property price growth has exceeded 12% \\nin recent years, significantly exceeding growth in average household income in the same period (Czech \\nNational Bank, 2022[52]). The high and growing demand for housing in Czech cities has not been met by a \\nsufficient increase in housing supply. Construction activity has not kept up with its pre-2009 levels, and \\nzoning and land-use planning do not steer housing development to where it is most needed. The shortage \\nof qualified construction workers and the complexity of the building permit process pose further constraints \\nto private sector housing supply (OECD, 2021[53]).  \\nHowever, while the cost, quality and affordability of housing are major concerns in many Czech cities, there \\nare regional differences. For instance, in 2016 only 30% of Prague residents considered it to be easy to \\nfind good housing at reasonable prices, compared to 65% of people in Ostrava. Similarly, the average \\nprice per square metre of an apartment in Prague was 30% higher than in Brno (Huerta Melchor and Gars, \\n2020[36]). \\n\\n\\n28    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 1.6. Housing prices have doubled over the past six years \\n \\nSource: (OECD, 2023[18]), OECD Economic Surveys: Czech Republic 2023, https://doi.org/10.1787/e392e937-en \\nAccording to a 2020 survey of municipalities, the main constraints for private developers were the costs of \\ninfrastructure provision, the lack of available land and the lack of infrastructure capacity. Municipalities tend \\nto lack a local housing policy framework and inter-municipal co-ordination on housing policy remains limited \\n(OECD, 2021[53]). Municipal rental stock is also very limited and there are no incentives for increasing rental \\nor co-operative housing in order to increase the supply of affordable housing. Moreover, the integration of \\npeople fleeing from Ukraine could put further pressure on housing demand (European Commission, \\n2023[19]). \\nThe private rental market offers few alternatives to ownership due to rising rents and relatively limited \\nsupply, while the social housing stock is too small to meet the demand from low-income and vulnerable \\nhouseholds (OECD, 2021[53]). The housing stock was largely privatised in the 1990s and government \\nexpenditures on social housing are very low (Figure 1.7). The number of co-operatively owned dwellings \\ndeclined from 700 000 in 1991 to 140 000 in 2021 and rentals declined from 1 465 000 to 890 000 (Czech \\nStatistical Office, 2021[54]). The combined share of outright owners (58.9%) and those with mortgages \\n(16.6%) is higher than the OECD averages (48.2% and 23.3%, respectively), while the combined share of \\nprivate renters (17.8%) and subsidized renters (1.2%) is lower (16.8% and 6.7% respectively across the \\nOECD) (OECD, 2023[55]; OECD, 2023[56]). \\n\\n\\n   29 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 1.7. Public spending on supporting social rental housing is negligible in Czechia \\nGovernment spending as percentage of GDP in selected OECD countries, 2020 or latest year available \\n \\nNote:  \\n1. Data for Australia are based on the 2019/2020 fiscal year. GDP is adjusted to reflect this. \\n2. Data refer to 2020, with the exceptions of Austria and Ireland, where they refer to 2019; France, where they refer to 2018; and Finland and \\nGermany, where they refer to 2017. \\n3. Data for the United States are based on the 2020/2021 fiscal year. GDP is adjusted to reflect this, based on OECD projections for 2021. \\n4. For Finland, France and Germany data are based on responses to previous QuASH rounds. \\nSource: (OECD, 2023[57]),  OECD Questionnaire on Affordable and Social Housing (QuASH), 2019, 2021. \\nThe government’s 2022 Programme Statement highlights housing as a key issue and commits to \\nsupporting both owner-occupied and rental housing, including social housing. This includes accelerating \\nthe building process in co-ordination with local governments, as well as creating new tools for municipalities \\nand new financial instruments for affordable housing construction. The Programme Statement also \\ncommits to supporting programmes for renovating buildings and replacing existing heating sources with \\ngreener options (Government of Czechia, 2022[37]). In 2023, a new Rental Housing Programme was \\nannounced with a total allocation of CZK 800 million (approximately EUR 33 million), of which CZK 500 \\nmillion (approximately EUR 21 million) is intended for municipalities. Under the scheme, applicants can \\nreceive grants for up to 25% of eligible expenditure and loans for up to 90% of eligible expenditure. Support \\ncan be obtained, inter alia, for constructing apartment buildings containing rental flats, or for renovating \\nunfit family or apartment buildings (State Investment Support Fund, n.d.[58]). The RRP also includes \\nmeasures related to housing investment, including investing in the energy efficiency of housing stock and \\nmodernising district heating distribution networks.  \\nKey housing sector institutions include the Ministry of Regional Development and the State Investment \\nSupport Fund ( \\nTable 1.5). Effective co-ordination between the various public bodies will be key for providing affordable \\nand quality housing (European Commission, 2021[28]). \\n\\n\\n30    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\nTable 1.5. There are two key housing sector institutions in Czechia \\nInstitution \\nDescription \\nMinistry \\nof \\nRegional \\nDevelopment (Ministerstvo pro \\nmístní rozvoj, MMR) \\nThe Ministry of Regional Development’s areas of responsibility include regional policy, \\nhousing policy and legislation, spatial planning (including building and permitting rules), \\nand public procurement (Ministry of Regional Development, n.d.[59]): \\n \\n• \\nOn regional policy, the Ministry of Regional Development prepares and \\nimplements conceptual documents and strategies and provides grants through \\nsupportive programmes.  \\n• \\nThe ministry is responsible for the legal and regulatory framework for housing, \\nas well as the development and implementation of supportive housing \\ninstruments.  \\n• \\nIn the fields of spatial planning and building rules, the ministry is responsible for \\nspatial development policy, maintaining planning activity records and overseeing \\nthe work of the Advisory Board for the Application of Building Regulations. It also \\nassesses draft development principles developed by the regions, and generally \\nsupervises spatial planning matters.  \\n• \\nFinally, the ministry is the National Coordination Authority for implementing \\nprogrammes co-financed by EU funds. \\nState Investment Support Fund \\n(Státní fond podpory investic, \\nSFPI) \\nThe State Investment Support Fund supports the development of housing in Czechia and \\nthe sustainable development of municipalities, cities, and regions. The main pillars of the \\nSFPI’s housing policy are ensuring the availability of adequate housing, helping create a \\nstable environment for housing and supporting the improvement of housing quality. The \\nSFPI therefore aims at regenerating the existing housing stock, reducing the energy \\nconsumption of housing, and the construction of housing (State Investment Support Fund, \\nn.d.[60]). \\n \\nIn 2022, SFPI revenues totalled CZK 1.9 billion (approximately EUR 75 million). This \\nincluded CZK 650 million from the state budget (approximately EUR 27 million), CZK 350 \\nmillion in EU funds (approximately EUR 15 million), and CZK 820 million (approximately \\nEUR 35 million) in loan repayments and interest. The SFPI disbursed CZK 1.0 billion in \\ngrants (approximately EUR 42 million) and offered CZK 1.2 billion (approximately EUR 51 \\nmillion) in loans over the same period (State Investment Support Fund, 2023[61]). \\n \\nThe governing body of the SFPI is the Fund Committee, chaired by the Minister for \\nRegional Development and made up of representatives from the Ministry of Regional \\nDevelopment, the Ministry of Finance, the Ministry of Industry and Trade and independent \\nexperts. The Fund Committee is responsible for developing the fund’s draft. A second \\nbody, the fund’s Supervisory Board, is appointed by the Chamber of Deputies and is \\nresponsible for approving the fund’s financial statements and overseeing the fund’s \\nactivities (Government of Czechia, 2020[62]). \\nCross-sectoral institutions are also important for infrastructure governance \\nThis section describes a number of other institutions that play an important role in infrastructure \\ngovernance. \\nMinistry of Finance  \\nThe Ministry of Finance (Ministerstvo finance) is responsible for fiscal policy, macroeconomic and fiscal \\nforecasts, financial market regulation and preparing the state budget (approved annually) and the budgets \\nfor the state funds. The main regulatory framework and rules for these competences are anchored in the \\nAct No.218/2000 Coll., on Budget Rules, which governs the preparation of the mid-term state budget \\noutlook, financial control mechanisms, and the framework for managing the state treasury and state debt.  \\n\\n\\n   31 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nThe ministry has further responsibilities for financial management, financial control, reviewing the \\nmanagement of local self-government units and decisions on co-financing from EU funds. As regards \\ninfrastructure governance, the role of the ministry is primarily limited to the budgeting process and \\nreviewing individual projects (Ministry of Finance, n.d.[63]). \\nCzechInvest \\nCzechInvest’s activities include attracting high value-added investment into Czechia, supporting \\nmunicipalities in attracting investors, and supporting small and medium enterprises. CzechInvest’s 2022 \\nexpenditures totalled CZK 250 million (approximately EUR 10.5 million), funded primarily by the Ministry \\nof Industry and Trade and European Funds (CzechInvest, 2023[64]). \\nCzechInvest has 13 regional offices whose activities include working with municipalities or regions to \\nidentify investment needs and provide support in areas such as brownfield regeneration. For example, the \\nindustrial zone support programme “Smart Parks for the Future” provides for the development of existing \\nindustrial zones and improving their infrastructure, including measures to reduce negative climate impacts \\nand regenerate brownfield sites. CzechInvest also operates a database of business real estate in Czechia, \\nenabling it to offer suitable land, offices and business parks directly to investors (CzechInvest, n.d.[65]). \\nNational Development Bank  \\nThe National Development Bank (Národní rozvojová banka, NRB) is a specialised state-owned banking \\ninstitution. It is the main provider of financial instruments funded from public and European sources, as \\nwell as from its own resources and in co-operation with private capital. Its shareholder, Czechia, is \\nrepresented by the Ministry of Industry and Trade, the Ministry of Regional Development and the Ministry \\nof Finance. The NRB has primarily focused on providing support to SMEs through bank guarantees and \\npreferential loans. The bank has also introduced programmes for financing housing development and \\nmunicipal infrastructure and served as a manager of infrastructure loans from the European Investment \\nBank. The bank has assumed the role of manager of EU funds’ financial instruments.  \\nIts activities are anchored in three main pillars:  \\n1. Financing the investment and operational needs of Czech enterprises through guarantees, loans, \\nequity and quasi-equity instruments.  \\n2. Supporting specific segments of the Czech economy in co-operation with ministries, regions or \\nmunicipalities. This includes programmes for enterprises as well as loans for municipalities. \\n3. Project financing of public infrastructure, particularly transport, social, energy, environmental and \\ndigital infrastructure. This pillar is covered by the NRB (loans, subordinated loans, guarantees) and \\nits two subsidiary companies: the National Development Investments (equity or mezzanine \\nfinancing) and the National Development Fund (mezzanine and junior financing, PPP financing). \\nThe NRB also offers advisory services for clients. Currently, advisory services are available for social \\nenterprises, energy efficiency and energy performance contracting projects, and project financing of public \\ninfrastructure (National Development Bank, n.d.[66]). \\nMinistry of the Environment  \\nThe Ministry of the Environment (Ministerstvo životního prostředí, MŽP) co-ordinates the activities of \\nministries and other central state administrative authorities in environmental matters. It oversees strategy \\nimplementation on climate change and produces annual evaluation reports on the state of the environment \\nin Czechia.  \\nThe ministry is responsible for developing the Czech State Environmental Policy, which outlines \\noverarching environmental priorities, objectives and strategies, as well as the Climate Protection Policy, \\n\\n\\n32    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nwhich sets emission reduction targets and defines climate protection objectives (Ministry of the \\nEnvironment, n.d.[67]). The MŽP oversees the implementation of the Strategic Framework Czechia 2030, \\nthe overarching strategy for sustainable development in Czechia (OECD, 2023[4]), and ensures alignment \\nwith other strategies crucial for climate change, particularly the State Energy Policy and the National \\nEnergy and Climate Plan. The MŽP is also the administrator of the State Environmental Fund and appoints \\nthe fund’s board (State Environmental Fund, n.d.[68]). \\nState Environmental Fund  \\nThe State Environmental Fund (Státní fond životního prostředí, SFŽP) provides direct financial support \\nthrough subsidies, and indirect financial support through loans or contributions towards interest on loans, \\nto environmentally focused projects (e.g. to improve water quality, use of renewable energy sources, \\nbuildings’ energy performance). The SFŽP is also responsible for administering EU funds, funds from the \\nstate budget, and revenues from fees collected from polluters (State Environmental Fund, n.d.[69]). The \\nfund has a nationwide network of consultants and project managers located in 13 offices in Czechia’s \\nmajor regional cities (State Environmental Fund, n.d.[70]). \\nIn 2022, SFŽP revenues totalled CZK 47.5 billion (approximately EUR 2.0 billion; see The state funds most \\ninvolved in infrastructure investment – the State Fund for Transport Infrastructure, the State Environmental \\nFund and the State Investment Support Fund – were three of the four largest funds by revenue and \\nexpenditure in 2022. \\n \\nFigure 1.1), including CZK 2.2 billion (approximately EUR 93 million) from environmental charges (for \\npollution and resource use) and CZK 43.3 billion (approximately EUR 1.8 billion) from EU funds and the \\nstate budget. Expenditures totalled over CZK 10 billion, including CZK 10.2 billion (approximately EUR 430 \\nmillion) in grants and CZK 66 million (approximately EUR 3 million) in loans from the fund budget. The fund \\nalso administered 10.3 billion (approximately EUR 430 million) in project funding on behalf of the Ministry \\nof the Environment  (State Environmental Fund, 2023[71]).  \\nThe Minister of the Environment appoints the SFŽP board, which assesses major matters related to the \\ndevelopment and use of the fund, as well as the annual budget. As of 2022, the board included members \\nof the Chamber of Deputies and the Senate, representatives of the Ministries of the Environment, Finance, \\nIndustry and Trade and Regional Development, representatives from regions and municipalities, and civil \\nsociety organisations (State Environmental Fund, n.d.[72]). \\n \\n \\n\\n\\n   33 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nNotes\\n \\n1 Act No. 2/1969 Coll., on Establishment of Ministries and Other Central Authorities of the State \\nAdministration of Czechia (“the Competency Law”). \\n2 Note that this report refers throughout to the 2021 version of the Spatial Development Policy. Subsequent \\nto the drafting of the report, a new version of the Spatial Development Policy came into effect on March \\n1st, 2024  \\n3 \\nhttps://www.mmr.cz/cs/ministerstvo/regionalni-rozvoj/regionalni-politika/koncepce-a-strategie/rozvoj-\\nobci  \\n4 Note that this comparison takes the ERDF and Cohesion Fund as proxies for public investment, though \\nsome ERDF expenditures finance businesses. \\n5 The NUTS 2 regions of Moravskoslezko, Střední Morava, Střední Čechy Jihovýchod, Severovýchod, \\nand Jihozápad. \\n6 In Czechia, motorways and Class I roads are owned by the state while Class II and Class III roads are \\nowned by the regions. Local roads are owned by municipalities. \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n\\n\\n34    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\nReferences \\n \\nCouncil of the European Union (2021), Council implementing decision on the approval of the \\nassessment of the recovery and resilience plan for Czechia, \\nhttps://data.consilium.europa.eu/doc/document/ST-11047-2021-INIT/en/pdf. \\n[27] \\nCzech National Bank (2022), Financial Stability Report: Spring 2022, Czech National Bank, \\nPrague, https://www.cnb.cz/export/sites/cnb/en/financial-\\nstability/.galleries/fs_reports/fsr_2022_spring/fsr_2022_spring.pdf. \\n[52] \\nCzech Statistical Office (2021), Ownership structure of houses (database), Czech Statistical \\nOffice, Strašnice, https://www.scitani.cz/ownership-structure-of-houses#skupina-54463. \\n[54] \\nCzechia (1969), Act No. 2/1969 Coll., on the Establishment of Ministries and Other Central \\nAuthorities of the State Administration of Czechia, https://www.zakonyprolidi.cz/cs/1969-2# \\n(accessed on 10 June 2023). \\n[3] \\nCzechInvest (2023), Annual Report 2022, CzechInvest, Prague, \\nhttps://www.czechinvest.org/getattachment/03a24875-7757-4fe8-bc6e-\\nddbd6516aed7/Vyrocni-zprava-2022. \\n[64] \\nCzechInvest (n.d.), Services for Municipalities (in Czech), CzechInvest, Prague, \\nhttps://www.czechinvest.org/cz/Sluzby-pro-municipality/Uvod (accessed on 10 June 2023). \\n[65] \\nEuropean Commission (2023), 2014-2020 Cohesion Policy Overview, European Commission, \\nBrussels, https://cohesiondata.ec.europa.eu/cohesion_overview/14-20 (accessed on \\n22 July 2023). \\n[33] \\nEuropean Commission (2023), 2023 Country report - 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Mcmaster (2023), “Mapping institutional arrangements for \\ninfrastructure governance in OECD countries”, OECD Working Papers on Public Governance, \\nNo. 62, OECD Publishing, Paris, https://doi.org/10.1787/31825d0d-en. \\n[15] \\nState Environmental Fund (2023), Management Report of the State Environmental Fund of \\nCzechia for 2022, State Environmental Fund of the Czech Republic, Prague, \\nhttps://www.sfzp.cz/o-sfzp-cr/vyrocni-zpravy/detail-vyrocni-zpravy/?id=55. \\n[71] \\nState Environmental Fund (n.d.), About us, State Environmental Fund of the Czech Republic, \\nPrague, https://www.sfzp.cz/en/about-us/ (accessed on 3 July 2023). \\n[68] \\nState Environmental Fund (n.d.), Advisory Board, State Environmental Fund of the Czech \\nRepublic, Prague, https://www.sfzp.cz/en/about-us/advisory-board/ (accessed on 4 July 2023). \\n[72] \\nState Environmental Fund (n.d.), What we do, https://www.sfzp.cz/en/about-us/what-we-do/ \\n(accessed on 4 July 2023). \\n[69] \\nState Environmental Fund (n.d.), What we do, State Environmental Fund of the Czech Republic, \\nPrague, https://www.sfzp.cz/en/about-us/what-we-do/ (accessed on 3 July 2023). \\n[70] \\nState Fund for Transport Infrastructure (2022), Budget of the State Fund for Transport \\nInfrastructure for 2023 and the medium-term outlook for 2024 and 2025, State Fund for \\nTransport Infrastructure, Prague, https://www.sfdi.cz/soubory/obrazky-\\nclanky/rozpocet/2023_rozpocet_text-rozpoctu.pdf. \\n[40] \\nState Fund for Transport Infrastructure (2010-2022), Annual Reports and Financial Statements, \\nState Fund for Transport Infrastructure, Prague, https://www.sfdi.cz/rozpocet/vyrocni-zpravy-a-\\nucetni-zaverky/. \\n[8] \\nState Fund for Transport Infrastructure (n.d.), General information, State Fund for Transport \\nInfrastructure, https://www.sfdi.cz/en/ (accessed on 4 July 2023). \\n[41] \\nState Investment Support Fund (2023), 2022 Annual Report and Financial Statements for 2022, \\nState Investment Support Fund, Prague, https://sfpi.cz/vyrocni-zpravy/. \\n[61] \\nState Investment Support Fund (n.d.), Rental housing, State Investment Support Fund, Prague, \\nhttps://sfpi.cz/najemni-bydleni/ (accessed on 30 June 2023). \\n[58] \\nState Investment Support Fund (n.d.), SFPI, State Investment Support Fund, Prague, \\nhttps://sfpi.cz/sfpi/ (accessed on 10 June 2023). \\n[60] \\n \\n \\n \\n \\n \\n\\n\\n   39 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\n \\n\\n\\n40    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nThis chapter analyses challenges in Czechia’s infrastructure \\ngovernance system at the national level and makes \\nrecommendations to address them. It considers whether national \\ninstitutions and processes foster efficient and effective investment \\ndecisions and good governance practices in infrastructure \\ninvestment. It focuses on three critical, interlinked phases in the \\ninfrastructure governance cycle: 1) long-term strategic planning \\nand co-ordination across sectors; 2) project selection, appraisal \\nand prioritisation; and 3) the procurement and delivery of \\ninfrastructure. Across these phases, it explores the mobilisation of \\nprivate investment, stakeholder engagement and the monitoring \\nand evaluation of outcomes. The analysis and recommendations \\nare supported by concrete international examples, references and \\ndata from selected OECD and European Union countries. \\n \\n \\n2 Improving national infrastructure \\nplanning, prioritisation and delivery \\n\\n\\n   41 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nSummary of recommendations  \\nGiven the challenges of implementing a full suite of reforms simultaneously, Czech authorities could consider sequencing concrete actions under \\nbroader recommendations. By grouping actions according to the time horizon (short term, and medium to long term) needed to implement them \\neffectively, Czech authorities could allocate resources to reforms in a way which would provide incremental benefits. However, it should be noted that \\nthe concrete actions listed below, irrespective of their time horizon, are complementary and interconnected. \\nTable 2.1. Summary of recommendations and concrete actions to support their effective implementation \\n \\nShort term \\nMedium to long term \\nNational level recommendation 1: Increase co-ordination in planning and enhance stakeholder engagement \\nConcrete actions to support \\nthe implementation of \\nrecommendation 1 \\n \\n \\n1.1. Make greater use of co-ordinating bodies and newly formed \\ninstitutions to improve the planning and delivery of infrastructure \\ninvestments. Greater co-ordination will allow for a bottom-up approach \\nto strategic planning and ensure synergies between projects.  \\n \\n1.2. Develop and maintain a cross-sectoral short-list of projects. A \\nshort-list would help to improve investment readiness and \\nabsorptive capacity of the public and private sectors and focus \\nfinancing from various sources on the most impactful projects. \\n1.3. Standardise stakeholder consultation processes at the \\nnational level.  This would make stakeholder consultation more \\ntransparent, helping stakeholders better understand methods of \\nengagement, sources of information, and how inputs will be \\nconsidered in decision-making.  \\n1.4. Improve the alignment between infrastructure investment \\nplanning and national strategies and priorities. A long-term \\nstrategic vision could align infrastructure planning with national \\nstrategies and priorities and help to ensure that investments are \\nplanned and delivered in a way that supports broader national \\nobjectives. This could help to provide a longer term strategic \\norientation beyond electoral cycles and European programming \\nperiods. \\n\\n\\n42    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\nShort term \\nMedium to long term \\nNational level recommendation 2: Standardise national project appraisal and prioritisation \\nConcrete actions to support \\nthe implementation of \\nrecommendation 2 \\n2.1. Improve the quality and sharing of data. Evidence-informed \\ndecision making on infrastructure investment can be supported by \\ndata ranging from the condition of existing assets, the use of \\ninfrastructure (e.g., traffic and ridership data), and demographic \\ntrends and distributions. \\n2.2. Introduce a consistent and transparent evaluation appraisal \\nof project costs and benefits across sectors. A standard, \\ntransparent approach to project appraisal could support consistent \\nprioritisation and the efficient use of resources across sectors. \\n2.3. Standardise and expand the use of ex-post evaluations of \\ninfrastructure investments. A common methodology and \\nguidelines for ex-post evaluations across sectors and undertaking \\nthem systematically would improve future investment decisions and \\nenhance accountability. \\nNational level recommendation 3: Improve infrastructure delivery capacity \\nConcrete actions to support \\nthe implementation of \\nrecommendation 3 \\n3.1. Improve investment efficiency by increasing the use of \\nframework agreements. For frequently purchased services and \\nworks, a framework agreement can secure required expertise, \\ngenerate savings and reduce administrative burdens for contracting \\nauthorities and suppliers. \\n3.2. Develop a consistent, evidence-informed approach to \\ndecisions on infrastructure delivery models. There should be no \\ninstitutional, procedural or accounting bias either in favour of or \\nagainst PPPs.  \\n3.3. Increase funding and direct support for project preparation to \\nimprove infrastructure delivery. Smaller entities face challenges in \\nproject preparation, which is a particular issue for the housing sector as \\nmany municipalities lack long-term experience in undertaking \\ninvestment or the resources to invest in capacity.  \\n3.4. Develop the procurement capacity of the public sector to \\nimprove value for money in project delivery. Infrastructure \\nprocurement requires sophisticated legal, financial, technical and \\noperational expertise. \\n\\n\\n   43 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nIntroduction \\nEven in decentralised systems like Czechia’s, the national government has a strategic role – identifying \\ninvestment priorities, strengthening the capacities of the various levels of government involved in managing \\npublic investment, and ensuring sound framework conditions for the governance of public investment \\n(OECD, 2017[1]). In Czechia, the importance of strong national infrastructure governance is critical in the \\ncontext of the recovery from the COVID-19 pandemic and the implementation of the Recovery and \\nResilience Plan (RRP). Achieving the RRP’s goals of accelerating the transition towards a low-carbon and \\nclimate-resilient economy, maximising the benefits of the digital transformation, and improving the quality \\nof public administration depends on strong long-term planning, co-ordination across sectors, robust project \\nappraisal and prioritisation processes, and ensuring value for money, including the appropriate use of \\npublic private partnerships (PPPs). With a total of EUR 7 billion to be invested by 2026 through the RRP \\nalone, Czechia will need to ensure that national institutions are working collectively to make the right \\ninvestments; this is also an opportunity to put in place the governance institutions that can support strong \\nvalue for money over the long term. While Czechia’s absorption rate of EU funds for the 2014-2020 \\nprogramming period was relatively high (84% through 2022; see Chapter 1), directing this funding to the \\nbest projects was consistently raised as a challenge by Czech officials and stakeholders (European \\nCommission, n.d.[2]). \\nThe massive increase in infrastructure investment planned across many sectors reinforces the need for \\nenhanced co-ordination. Major investments are planned in areas such as the expansion and electrification \\nof rail infrastructure, the transition to clean energy sources, the renovation of energy efficient buildings, \\nand climate adaptation. Although there are areas of good practice in specific sectors and institutions, a \\nmore co-ordinated approach to investment has the potential to improve outcomes and value for money, \\nand achieve synergies and complementarities among investments. This could be achieved by \\ndisseminating existing good practices across sectors and levels of government and standardising \\napproaches to infrastructure delivery and data sharing.  \\nAt a time of increased pressure on government budgets, improving infrastructure governance can help to \\nmaximise the use of scarce resources to advance economic, social, and environmental priorities. The \\naverage infrastructure efficiency gap, defined as the deficit between the average and best performers, has \\nbeen estimated at 15% for advanced economies (Baum, Verdier and Mogues, 2020[3]). Relatively low-cost \\nchanges to governance processes and practices and investing in capacity can have outsized effects on \\nlarge infrastructure budgets. Improving co-ordination across sectors, project appraisal and selection, and \\nproject delivery provides an opportunity to increase the efficiency of investment spending, promoting fiscal \\nsustainability and preserving fiscal space for future projects.  \\nAs well as advancing broader policy objectives, better governance of infrastructure has a direct and \\nsignificant impact on downstream productivity growth. A recent study found that sound governance of \\ninfrastructure investment is associated with stronger productivity growth in firms operating downstream, \\nwith a gain in average annual productivity growth of 0.24 percentage points over ten years. The study \\nidentified long-term planning and co-ordination across different levels of government as particularly \\nrelevant for productivity increases (Demmou and Franco, 2020[4]). This chapter focuses on reforms \\nCzechia can make in three critical, interlinked phases in the infrastructure governance cycle: 1) long-term \\nstrategic planning and co-ordination across sectors; 2) project selection, appraisal and prioritisation; and \\n3) the procurement and delivery of infrastructure. Each of these themes are explored in the sections which \\nfollow. \\n\\n\\n44    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n2.1 \\nStrengthening strategic planning and cross-sectoral co-ordination  \\nInfrastructure planning in Czechia is fragmented along sectoral lines; a lack of co-ordination risks missing \\nopportunities for synergies and positive spillovers. Line ministries are responsible for infrastructure policy \\nand strategic planning in their respective sectors, but high-level co-ordination mechanisms are limited \\n(Chapter 1). Although high-level government priorities are set out in documents such as the Policy \\nStatement of the Government and the Resilience and Recovery Plan, translating and co-ordinating these \\npriorities across sectors have proven more challenging. In addition, Czechia has more than 300 sectoral \\nstrategies, adding to the coherence and implementation challenge (OECD, 2023[5]). Co-ordination between \\nsectors on infrastructure planning and investment does take place, but generally on an informal working \\nlevel. While state funds generally have clearly defined responsibilities and close working relationships with \\npartner ministries, their significant role in financing investment increases the number of bodies involved in \\ninfrastructure governance, heightening the need for co-ordination.   \\nThe Policy Statement of the Government commits to close co-operation on climate and the environment \\nbetween the Ministries of Environment, Agriculture, Industry and Trade, Transport and Regional \\nDevelopment. This includes supporting significant infrastructure development for electro-mobility and other \\nclean alternative vehicles to help improve air quality (Government of Czechia, 2022[6]). These commitments \\nare also reflected in Pillar II of the RRP, which foresees investment in approximately 4 700 charging \\nstations for electric vehicles and the acquisition of electric public transit vehicles (European Commission, \\n2021[7]). In the past, however, the implementation of these types of long-term, cross-sectoral commitments \\nand strategies has suffered from the absence or weakness of institutional structures and co-ordination \\nmechanisms to translate them into long-lasting concrete actions.  \\nFor example, in 2019 the Czech government published the National Investment Plan 2020-2050, its unified \\nnational investment strategy (Government of Czechia, 2019[8]). Despite the intention to consolidate long-\\nterm investment planning and co-ordinate public investors, the National Investment Plan has not \\nsucceeded in providing a long-term strategic vision. Challenges reported in the development of the plan \\nincluded a lack of prioritisation or systematic assessment of projects, resulting in a plan without overarching \\nguiding principles or a co-ordinated cross-sectoral approach. Instead of creating a shared vision leading \\nto co-ordinated activity and ongoing monitoring of implementation, it lacked a strong articulation of priorities \\nand raised expectations that were incompatible with available funding.  \\nThe Strategic Framework Czechia 2030 and the Regional Development Strategy of Czechia 2021+ have \\nbeen more durable, but also do not appear to play a prominent role in directing infrastructure investment. \\nThe Strategic Framework Czechia 2030, published in 2017, set out a framework for long-term development \\nin six priority areas: people and society, the economy, resilient ecosystems, regions and municipalities, \\nglobal development, and good governance (Government of Czechia, 2017[9]). Based on Czechia 2030, the \\nRegional Development Strategy of Czechia 2021+ establishes the main objectives of regional development \\nover a seven-year period. It does not take precedence over other national strategies and plans, but should \\nbe reflected in their approach to regional development issues (Ministry of Regional Development, 2019[10]). \\nCzechia 2030 and the Regional Development Strategy both acknowledge the importance of quality \\ninfrastructure and identify specific challenges, such as improving connections to the broader European \\ntransportation network, but do not appear to be clear points of reference in the development of sector-\\nspecific infrastructure policies and strategies.  \\nCo-ordination between sectors can reduce the risk of duplication and promote complementarities between \\ninvestments (OECD, 2020[11]). As infrastructure services become increasingly interdependent across \\nsectors such as housing, energy and transport, siloed infrastructure planning, prioritisation and delivery \\ncan limit the effectiveness and efficiency of public investment (OECD, 2017[12]). For example, investments \\nin housing need to be complemented by the right investments in transport networks, which are generally \\nplanned and implemented by different sectoral ministries or levels of government (OECD, 2017[1]). Co-\\nordinating housing and transport investments can ensure more attractive housing options that provide \\n\\n\\n   45 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\ngreater access to employment and other services. To maximise these benefits, infrastructure entities need \\nto co-ordinate the location and capacity of transport routes with decisions about where and how to invest \\nin housing, as well as related social infrastructure like schools and hospitals. This type of long-term \\nstrategic planning needs to be aligned with a country’s development aims and economic conditions across \\nsectors (OECD, 2023[13]).  \\nTechnological advances further increase the benefits of a cross-sectoral approach to infrastructure \\nplanning as they blur sectoral boundaries in areas such as energy, transport and communications. To \\nrespond to these changes, planning frameworks need to address infrastructure needs in a holistic and \\nintegrated way (OECD, 2021[14]). For example, the de-carbonisation of end-use sectors such as transport \\nand buildings can have interactions with the planning and implementation of energy infrastructure. The \\nwidespread adoption of electric vehicles is a challenge for the transport sector but will also require the \\nlarge-scale expansion of charging stations and will affect patterns of demand on the electricity grid.  \\nThe OECD Recommendation on the Governance of Infrastructure provides guidance on developing and \\nimplementing a successful cross-sectoral approach to infrastructure investment. The Recommendation \\nadvises countries to develop a long-term strategic vision for infrastructure which articulates shared cross-\\nsectoral ambitions and priorities (OECD, 2020[15]). Breaking down sectoral silos requires the active \\nparticipation of multiple stakeholders, whose perspectives and inputs should be gathered through a \\nstructured process. A strategic vision should be informed by a broad-based stakeholder engagement \\nprocess and implemented through an institutional framework which provides clear mandates (OECD, \\n2021[14]). An example from the Australian state of Victoria demonstrates how the development of a long-\\nterm vision can progressively inform a medium-term cross-sectoral plan and a pipeline of specific projects \\n(see Box 2.1). \\n\\n\\n46    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 2.1. Victoria, Australia: from a comprehensive 30-year infrastructure strategy to a project \\npipeline \\nIn the Australian state of Victoria, the independent advisory body Infrastructure Victoria prepares a 30-\\nyear infrastructure strategy that is presented to the State Parliament. The 30-year infrastructure \\nstrategy, which must be reviewed and updated every three to five years, provides the basis for the \\ngovernment’s five-year infrastructure plan. \\nIn developing the most recent 2021 strategy, Infrastructure Victoria undertook extensive modelling, \\nexamined the complementarities between infrastructure and spatial planning, and conducted wide-\\nranging consultations. This included forecasting growth and development; commissioning research on \\nhousing and density targets; a broad social, environmental and economic assessment; and \\nconsideration of distributional impacts. The strategy draws on existing land-use plans to inform better \\ninfrastructure planning, and will act as an important input to future spatial planning. Infrastructure \\nVictoria released a draft strategy which was subject to rigorous collaboration and consultation with \\ncommunity and industry stakeholders. This included surveys, roundtables and sector dialogues, and a \\ndeliberative engagement process. \\nFollowing the release of the strategy, the government is required to prepare a five-year infrastructure \\nplan which responds to the 30-year strategy and the state’s infrastructure needs and priorities across \\nall infrastructure sectors. The government’s plan must identify specific major priority infrastructure \\nprojects and a rationale for their selection, including an explanation of how they will achieve the \\nobjectives of the 30-year strategy. The current plan takes an integrated approach to spatial and \\ninfrastructure planning that seeks to identify key locations for employment and housing growth and the \\ntransport, health and education infrastructure that is required to support that growth.  \\nThe government also maintains a major projects pipeline to make it easier for businesses, suppliers, \\nand contractors to contribute to major projects. The pipeline is updated as new major projects are \\nannounced and budgeted. \\nSource: (Infrastructure Victoria, 2021[16]; Office of Projects Victoria, n.d.[17]; Department of Treasury and Finance Victoria, 2021[18])  \\nThe OECD Recommendation also highlights the need to inform, consult and engage to ensure that \\ninfrastructure planning and investments meet citizens’ needs. Stakeholder participation can lead to better \\ninvestments from an environmental, economic, and social perspective by providing decision makers with \\nbetter information. It can also help avoid conflicts later in the implementation process. Effective \\nparticipation enables stakeholders to express, and decision makers to take account of, relevant needs and \\nconcerns, thereby increasing the accountability and transparency of the decision-making process and \\nbuilding support for the decisions taken (OECD, 2023[19]).  \\nBetter national co-ordination of infrastructure investments and strategies has the potential to improve \\ninvestment outcomes in Czechia. The following recommendations are designed to achieve this at the \\nnational level by strengthening strategic planning and the co-ordination of strategies, plans, priorities, and \\nactivities among sectors. Implementing these recommendations is expected to improve infrastructure \\nquality by allowing for better integrated and more effective investments, maintaining a clear focus on the \\nmost pressing infrastructure needs and linking investments to broader national priorities. Failure to \\nimplement them, by contrast, could lead to decision-making processes that fail to capitalise on the potential \\nfor Czechia’s large, planned infrastructure investments, including over EUR 40 billion in EU funds, to drive \\neconomic growth and the green and digital transitions.  \\n\\n\\n   47 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nImprove co-ordination for more efficient planning and delivery of infrastructure \\ninvestments  \\nCzechia could improve co-ordination among infrastructure investment bodies at the national level. \\nCzechia’s approach to infrastructure investment, with line ministries responsible for overseeing policy in \\ntheir respective sectors and state funds playing a significant investment role, can create challenges for \\neffective co-ordination. While this approach provides clarity for accountability and responsibility, it can limit \\nthe ability of ministries to co-operate on holistic solutions (Huerta Melchor and Gars, 2020[20]). However, \\nan institutional structure where sector or line ministries are collectively responsible for infrastructure policy \\nis not uncommon in OECD member countries. A recent OECD study found that 13 of 38 member countries \\nhave institutional structures in which line ministries are collectively responsible for infrastructure policy, \\nmaking it the second most common set of infrastructure governance institutional arrangements (Ruiz \\nRivadeneira and Mcmaster, 2023[21]).  \\nThese co-ordination challenges could be addressed by improving the instruments and mechanisms for \\nstrategic planning between sectors to enhance the consistency and alignment of infrastructure investment. \\nIn Czechia, institutions and mechanisms for co-ordination between ministries and other entities with \\ninfrastructure responsibilities are currently limited at the national level. While infrastructure investment \\ncomes from both EU funds and the state budget, there is no institution that jointly co-ordinates decision-\\nmaking on both sources of funding. \\nPrevious co-ordination efforts have had limited success. The Council for Public Investment was established \\nby Government Resolution No. 61 of 21 January 2019 to prepare recommendations for the approval of \\nimportant strategic projects and create draft rules for effective public investment. However, after a period \\nof inactivity, the Council was abolished in June 2023. It was described by some officials as largely \\nunsuccessful in providing strategic direction, potentially due to a lack of formal decision-making powers. \\nOther mechanisms exist but are limited in their scope. The Ministry of Finance is involved in both the \\ndevelopment of the state budget and decisions on co-financing from EU funds, but its role is largely \\nrestricted to the budgeting process and reviewing individual projects, rather than overarching infrastructure \\nstrategy and co-ordination. Inter-ministerial co-ordination generally takes place on a working level and \\nthrough the formal inter-ministerial comment process on strategies and plans. The OECD’s Public \\nGovernance Review of Czechia found that the lack of convening power or capabilities of some councils, \\nor their insufficient integration into decision-making processes, made alignment on cross-cutting topics, \\nlike infrastructure, more difficult (OECD, 2023[5]).  \\nThe government has recently sought to address these co-ordination challenges by creating the Committee \\nfor Strategic Investments (see Chapter 1). With an appropriate mandate and support, it could help to \\nensure alignment across sectors and drive a co-ordinated approach to infrastructure investment. While the \\ncommittee is not a decision-making body, high-level political representation1 means it can play a crucial \\nrole in setting policy direction, mobilising support and facilitating dialogue between stakeholders. To play \\nthis role successfully and ensure its decisions are informed by evidence, the committee will need to be \\nsupported by strong technical analysis and expertise. It offers several opportunities: \\n• \\nTo allow ministries, agencies, state funds and subnational governments to communicate their \\nsector-specific challenges and priorities to decision makers and inform the assessment of long-\\nterm infrastructure needs.  \\n• \\nTo oversee the infrastructure lifecycle from the development of sectoral plans and strategies to the \\nmonitoring and evaluation of outcomes.  \\n• \\nTo identify opportunities for co-operation across sectors and between levels of government and \\nestablishing high-level priorities, the committee could help to facilitate collaboration and a coherent \\napproach to investment.  \\n\\n\\n48    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nTo play a role in monitoring the implementation of sector strategies and related infrastructure \\ninvestments. \\nThe importance of strong implementation and monitoring is underlined by the challenges faced by other \\nCzech government strategies for reasons such as a lack of capacity or funding, misalignment with the \\ncurrent priorities of the government, or a lack of focus on implementation (OECD, 2023[5]). For example, \\nCzechia’s Strategy Database is an online register of strategic and conceptual documents where ministries \\nand regions upload strategic and conceptual documents. The Database was created to allow for the \\nconnection of objectives from international, national and local levels and to help avoid duplication and find \\nsynergies. At the same time, the number of strategies in the Database suggests they may be overlapping \\nin their themes and objectives: there are nearly 2,000 active strategies and another 1,000 archived, \\nincluding almost 300 from the national level (Ministry of Regional Development, n.d.[22]).  \\nThe OECD’s Public Governance Review of Czechia found that the lack of convening power or capabilities \\nof some councils or their insufficient integration into decision-making processes made alignment on \\nhorizontal topics, like infrastructure, more difficult (OECD, 2023[5]). As it is chaired by the Prime Minister \\nand includes the Ministers of large infrastructure ministries, the Committee for Strategic Investments has \\nsignificant convening power. \\nWhile the Committee’s statutes indicate that it will make maximum use of existing ministerial and inter-\\nministerial working groups and forums, this will need to be operationalised carefully. It will also be important \\nto clearly define its roles and divisions of responsibility with existing bodies (e.g., the Council for \\nSustainable Development, the Council for Regional Development). Carrying out a co-ordination and \\nmonitoring function will require the committee’s secretariat, planned to be part of the Office of the \\nGovernment, to be adequately resourced with staff with the necessary knowledge and competences. The \\nnew committee’s working group structure could also be leveraged to prioritise key issues such as project \\nappraisal and delivery while ensuring sufficient representation and involvement from key ministries and \\nother stakeholders. The secretariats of the United Kingdom’s National Infrastructure Commission, the \\nNetherlands’ Council for the Environment and Infrastructure and the Irish National Economic and Social \\nCouncil – all with similar mandates – have approximately 15 to 50 staff. The government could consider \\nusing secondments from infrastructure ministries or other bodies to staff the secretariat rapidly with experts \\nwith the necessary skills and knowledge. \\nCoordination could also be improved at an operational level. As a component of its RRP, Czechia has \\nproposed the creation of a Housing Investment Advisory Hub and Housing Investment Support Centres to \\nprovide support and expertise in the housing sector. The main objective is to increase housing affordability \\nin the medium and long term by supporting investment in rental housing. This would involve providing \\nsupport to municipalities through eight regional Support Centres in the form of methodological guidance, \\nconnecting them with local experts, facilitating the co-ordination of local housing policies, and the \\npreparation of projects intended for support by national financial instruments. Two central Support Centre \\nUnits, one focused primarily on the housing sector and the other focused on other public infrastructure, \\nwould provide additional direct support where required. Along with this support through the Support \\nCentres, the Housing Investment Advisory Hub would provide methodological, information and data \\nsupport as well as serving as a hub for disseminating good practices and innovations. Both the Housing \\nInvestment Advisory Hub and the Housing Investment Support Centres would be part of the State \\nInvestment Support Fund.  \\nGiven their direct relationship with municipal stakeholders, there may be opportunities for the Housing \\nInvestment Support Centres and the Housing Investment Advisory Hub to play a co-ordinating role with \\nnational bodies in other sectors that are not focused on housing. The establishment of the Housing \\nInvestment Support Centres could be strengthened by a review of existing service offerings from other \\nministries, state funds and agencies to avoid overlap and identify complementarities and opportunities to \\nco-ordinate efforts (e.g. with the regional offices of CzechInvest). \\n\\n\\n   49 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nCreate a cross-sectoral short-list of projects  \\nA pipeline (or short-list) of projects can help to ensure that the public sector does not contribute to \\nconstruction cost inflation and can encourage investment in private sector capacity. Major infrastructure \\ninvestments involve the participation of the private sector throughout the lifecycle, including during the \\nplanning, design, engineering, financing, construction, and maintenance phases. A predictable pipeline of \\nprojects can give the private sector the confidence to invest in the necessary people and equipment \\n(OECD, 2023[13]). A strong project pipeline can also allow governments and the public to track progress on \\nthe implementation of its overall infrastructure vision. To help co-ordinate investment and promote \\ntransparency, a pipeline or short-list of priority projects should be accompanied by a rationale for their \\nselection and an explanation of their alignment with the overall strategy or vision for infrastructure (OECD, \\n2017[1]). In the 2020 OECD Survey on the Governance of Infrastructure, 47% of respondents indicated that \\ntheir country had a cross-sectoral short list of priority projects at the national level and 34% reported having \\na short list of projects at a sector level; Czechia was only one of six countries that reported not having a \\npriority projects short-list (Figure 2.1) (OECD, 2020[23]). \\nFigure 2.1. Czechia is one of only six OECD countries that reported a lack a short-list of priority \\nprojects  \\n \\nNote: Data for 2020 for Denmark, France, Israel, Netherlands, Poland and Sweden are not available. The 2020 data for Belgium are based on \\nthe responses from Flanders only. \\nSource: (OECD, 2020[23]), Survey on the Governance of Infrastructure. \\nA national project pipeline in Czechia would improve the investment readiness and absorptive capacity of \\nthe public and private sectors. The process of developing a cross-sectoral list of priority projects, based on \\ncommon priorities and a shared vision for infrastructure, would also provide an opportunity to identify \\npotential synergies and complementarities between projects. However, it will be important to ensure that \\nthe process of developing a short-list of priority projects does not unnecessarily slow the decision-making \\nprocess and project delivery process. Establishing a threshold based on project value or national \\nsignificance would help to avoid this by ensuring that large, significant projects went through the \\nprioritisation process while allowing the flexibility for smaller projects to advance more quickly. \\n\\n\\n50    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nThe Committee for Strategic Investments, supported by the Ministry of Regional Development, could be a \\ndecision-making venue for identifying projects to be included in the pipeline. The process could be \\nmodelled on the Ministry of Transport’s Central Committee, which is made up of deputy ministers and \\ndirectors of relevant departments who appraise, evaluate, and make budgetary decisions about planned \\nprojects. It is also supported by the State Fund for Transport Infrastructure, which provides expert opinions \\non materials prepared for the committee. Before each formal central committee meeting, projects are \\nconsulted, developed and appraised at a working expert level, with only sufficiently mature projects \\ndiscussed by the central committee. If given appropriate decision-making powers and resources, the \\nCommittee for Strategic Investments could play a similar role in developing and maintaining a pipeline of \\nprojects across sectors. As it is not a technical body, projects would need to be appropriately appraised \\nand prioritised before reaching the committee, however. \\nStandardise national stakeholder consultation processes  \\nStakeholder and citizen participation can take many forms in infrastructure governance. In the 2020 OECD \\nSurvey on the Governance of Infrastructure, countries reported varying levels of stakeholder participation \\nin the development of national infrastructure plans (Figure 2.2). The appropriate approach will depend on \\nthe project and the stage of the infrastructure lifecycle. Effective consultation requires that processes are \\nproportionate to the particular characteristics of the project or strategy (e.g., size, political sensitivity and \\npopulation affected). For example, larger, longer-lasting public investments that impact a wide range of \\npeople may need a more structured, systematic approach, involving many different methods of gathering \\ninformation, to accurately capture a wide range of perspectives. A more specific public investment with a \\ndirect impact on only a small group of individuals may require more in-depth, targeted engagement  \\n(OECD, 2023[13]).  \\nNevertheless, there are broad principles that are widely applicable. Consultation processes should cover \\nthe full infrastructure lifecycle and include relevant groups in decision making, while at the same time \\nremaining proportionate to the size and complexity of the strategy or project. This can range from sharing \\ninformation (both on-demand and more proactive measures to disseminate information), to a two-way \\nexchange in which stakeholders provide feedback, to active collaboration in design and delivery (OECD, \\n2023[24]). Upfront stakeholder mapping and analysis can help ensure that input is sought early enough in \\nthe process to influence decisions meaningfully, and that it continues throughout the life of the \\ninfrastructure asset. Governments should also provide stakeholders with the most relevant and timely \\ninformation available, expressed in clear language, and should explain how stakeholder input has been \\nassessed and incorporated in the decisions reached. There should be clear objectives for participation, \\nand sufficient time for stakeholders to contribute meaningfully (OECD, 2020[11]; OECD, 2017[25]). The \\nstakeholders can include infrastructure delivery entities (line ministries, agencies and state funds, state-\\nowned enterprises, municipalities, and regions), private infrastructure businesses, membership \\norganisations that represent particular professions (e.g., institutes of engineers), and the general public. \\n\\n\\n   51 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 2.2. Mechanisms for participation in national infrastructure plans vary across the OECD \\n \\nNote: Data for 2020 for Denmark, France, Israel, Netherlands, Poland and Sweden are not available. The 2020 data for Belgium are based on \\nthe responses from Flanders only. Australia’s data on long-term strategic vision for infrastructure are based on the 2021 Australian Infrastructure \\nPlan. The 2021 Australian Infrastructure Plan is a practical and actionable roadmap for infrastructure reform, developed by Infrastructure \\nAustralia, an independent advisory agency. The plan is not a politically sanctioned document. \\nSource: (OECD, 2020[23]), Survey on the Governance of Infrastructure.  \\nMechanisms for stakeholder participation in infrastructure planning and delivery exist in Czechia but are \\ninconsistent between ministries and sectors. While Czechia has general guidelines on consultation in \\nplace, they are not universally used across infrastructure delivery entities. An exception is for \\nenvironmental impact, with infrastructure projects and plans subject to the Law on Environmental Impact \\nAssessment and on Amendments to Certain Related Acts (No. 100/2001 Coll.), which sets requirements \\nfor consultation on environmental policy making (OECD, 2023[5]). The Law on Environmental Impact \\nAssessment requires details on the environmental impact of projects and strategic plans to be published \\nand provides opportunities for the public to comment on assessments and participate in public hearings.  \\nHowever, other than for environmental impacts, national level bodies responsible for infrastructure in \\nCzechia can sometimes struggle to effectively gather inputs, including stakeholder comments, for planning, \\nprogramme design and decision making, leading to challenges in identifying local needs. Drafts of \\nstrategies and plans are published for public comment, but engagement by the broader public can be \\nlimited. In the 2020 OECD Survey on the Governance of Infrastructure, Czechia indicated that consultation \\nguidance addressed the long-term planning and project appraisal phases of the infrastructure lifecycle, but \\nnot subsequent phases such as procurement, construction and operations. Ministries do not always co-\\nordinate their engagement with stakeholders, particularly regions and municipalities. Information provided \\nby ministries is not always clear, and engagement is impacted by staff turnover. These gaps between \\nsubnational and national levels can lead to a lack of responsiveness, or the perception of a lack of \\n\\n\\n52    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nresponsiveness, to local challenges. For example, effective stakeholder participation in the development \\nof housing programmes could make them more attractive for municipalities and raise awareness and \\nunderstanding of funding opportunities. Nevertheless, officials indicated that there is currently limited \\ncommunication between the State Investment Support Fund and municipalities on housing issues.  \\nInformation on infrastructure projects and plans is currently provided to the public through a central portal \\nlinked to the environmental impact assessment process, the Environmental Impact Assessment \\nInformation2/Strategic Environmental Impact Assessment3 (EIA/SEA) system, and the website of the \\nNational Coordination Authority4. The EIA/SEA system provides information on public comment periods \\nas well as evaluations of the environmental impacts of projects and strategies, as required by the Law on \\nEnvironmental Impact Assessment. The National Coordination Authority provides basic project information \\nfor projects funded by EU funds, such as the responsible entity, the project budget, the location and a brief \\ndescription. Finally, the Information System of Project Plans5 collects together the project plans of \\nmunicipalities, regions and national institutions (with the exception of the Moravian-Silesian Region). In the \\n2020 OECD Survey on the Governance of Infrastructure, Czechia indicated a focus on sharing information \\non impact assessments, rather than risks, procurement and project execution. \\nThe Ministry of Regional Development could improve stakeholder participation in infrastructure planning \\nand implementation by promoting a standardised approach across ministries, agencies and state funds.  It \\ncould consider developing a centralised portal containing comprehensive information on infrastructure \\nplans, strategies and projects. Most other OECD countries have taken this approach: in the 2020 OECD \\nSurvey on the Governance of Infrastructure, 19 of 33 respondents (58%) reported having a government-\\nwide digital platform to provide information on infrastructure projects (Figure 2.3). This information could \\nextend beyond environmental impacts and projects supported by EU funds to include information on risks, \\nprocurement and project status. This could build on or supplement the EIA/SEA system, the website of the \\nNational Coordination Authority and the Information System of Project Plans, creating a single point of \\nreference for interested citizens and stakeholders. A consolidated system could also be used to \\ncommunicate with project stakeholders, for example through targeted messages about financing \\nopportunities (as is currently planned for the Information System of Project Plans).  \\nThe housing sector could provide a model for a more comprehensive and cross-institutional approach to \\nstakeholder participation. The Ministry of Regional Development’s proposed Housing Investment Support \\nCentres could play a role in facilitating the bottom-up aggregation of housing needs and identifying \\nchallenges faced by municipalities in planning and implementing housing projects. By aggregating the \\nneeds and challenges of local stakeholders, the Housing Investment Support Centres could help the \\nMinistry of Regional Development, the State Investment Support Fund and other national infrastructure \\nbodies develop strategies, supports, and financing mechanisms that better target the barriers to affordable \\nhousing development. Identifying challenges such as land availability, regulatory constraints, and funding \\ngaps could help to develop sustainable housing plans and facilitate smoother project implementation.  \\n\\n\\n   53 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 2.3. A majority of OECD countries have a national digital platform on infrastructure projects  \\n \\nNote: Data for Belgium based on the survey responses from Flanders only. \\nSource: (OECD, 2022[26]), Survey on the Governance of Infrastructure - Part I: Ensure transparent, systematic and effective stakeholder \\nparticipation. \\nDevelop a national vision for infrastructure that aligns with national policies and strategies  \\nAligning long-term infrastructure plans with other government plans and strategies can increase the \\nefficiency of investments and help ensure that projects are not working at cross purposes. The OECD \\nRecommendation on the Governance of Infrastructure includes a pillar on developing a strategic \\ninfrastructure vision (OECD, 2020[15]). A consistent long-term vision for infrastructure investments can help \\ngovernments establish an appropriate institutional framework, implement clear governance arrangements, \\ndefine needs and targets and co-ordinate with stakeholders. A cross-sectoral vision can help to identify \\nlong-term commitments and challenges and ensure that individual investments are aimed at common \\ngoals. A long-term perspective is particularly important given the long lifespan of infrastructure assets \\n(OECD, 2021[14]).  \\nFor example, spatial planning can protect existing and new infrastructure from future legal challenges or \\ncompeting land uses. Spatial plans often signal new corridors or zones for infrastructure development while \\nprojects are still in the conceptual phase, providing greater certainty over the future location and timing of \\ninfrastructure, which helps send positive investment signals to the private sector (OECD, 2023[13]). Aligning \\ninfrastructure investment decisions with long-term climate and development objectives is also critical to \\navoiding lock-in of emissions-intensive infrastructure (OECD, 2021[14]). For example, Ireland’s National \\nDevelopment Plan 2021-2030 (NDP) sets out an overarching strategy to guide investment worth EUR 165 \\nbillion. The NDP is aligned with Ireland’s Recovery and Resilience Plan and will receive significant support \\nfrom the European Union’s Recovery and Resilience Facility (Box 2.2). \\n\\n\\n54    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 2.2. Co-ordinating Ireland’s National Development Plan with climate and environmental \\nambitions \\nIreland’s National Development Plan 2021-2030 (NDP) sets out an overarching investment strategy to \\nmake Ireland a better country for all and to build a more resilient and sustainable future. The EUR 165 \\nbillion NDP has a particular focus on housing, climate, transport, healthcare and regional jobs growth. \\nAs part of the development of the plan, a climate and environmental assessment of the NDP initiatives \\nwas undertaken, along with an assessment of the plan’s overall alignment with Ireland’s green recovery \\nplan. When developing measures for inclusion in the NDP, seven climate and environmental outcomes \\nwere considered:  \\n1. Climate mitigation \\n2. Climate adaptation \\n3. Water quality \\n4. Air quality \\n5. Waste and the circular economy \\n6. Nature and biodiversity \\n7. Just transition \\nThe NDP includes a number of environmental and climate initiatives, including providing EUR 5 billion \\nin additional carbon tax receipts to increase capital investment levels in energy efficiency; committing \\nto increasing the share of renewable electricity to 80% by 2030; and improving the energy efficiency of \\nhomes through the upgrade of at least 500 000 homes to a Building Energy Rating of B2/cost optimal \\nor carbon equivalent by 2030, and the installation of 400 000 heat pumps in existing homes. It also \\nincludes commitments to further reforms of the Public Spending Code (the rules and procedures \\ngoverning public expenditures) to ensure compatibility with Ireland's climate ambition. \\nIreland’s NDP is aligned with its Recovery and Resilience Plan, with relevant projects rooted in \\nadvancing the green transition, accelerating and expanding digital reforms and transformations, and \\nrecovery and job creation. Ireland will receive approximately EUR 990 million in grants from the \\nEuropean Union’s Recovery and Resilience Facility, which will be used to support investments under \\nthe NDP. \\nSource: (OECD, n.d.[27]; Department of Public Expenditure, NDP Delivery and Reform, 2021[28]) \\nDefining a national vision for infrastructure in Czechia could improve the alignment and co-ordination \\nbetween sectoral infrastructure planning and other national policies and priorities. Existing sector-specific \\ninfrastructure plans provide sector-specific strategies, but a siloed approach can threaten cross-sectoral \\npolicy objectives such as regional development or climate change adaptation and can overlook synergies \\nbetween sectors. Improved cross-sectoral co-ordination could reduce the potential for overlap between \\nprojects, ensure that investments are mutually reinforcing, and support Czechia’s efforts to harness \\ninfrastructure investment to support a sustainable and green recovery. \\nUnlike many OECD countries, Czechia’s responses to the 2020 OECD Survey on the Governance of \\nInfrastructure indicated a lack of co-ordination between infrastructure planning and broader policy goals \\nand plans. Czechia indicated that its long-term sectoral infrastructure plans do not explicitly consider how \\nto align the infrastructure strategic vision with other policies and strategies. This was reinforced in \\ndiscussions with Czech officials and stakeholders held as part of this project, who indicated that despite \\nthe many strategies across sectors and ministries, there is a limited overarching vision or focus on \\nprioritisation and implementation.  \\n\\n\\n   55 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nCzechia could build on its existing sectoral infrastructure plans, its Recovery and Resilience Plan, the \\nNational Investment Plan 2020-2050, and the Regional Development Strategy in aligning infrastructure \\ninvestment with its overall strategic goals. As noted above, Czechia has a number of sector-specific long-\\nterm plans (see Box 2.3 for examples in key sectors). This is similar to many of its peers: responses to the \\n2020 OECD Survey on the Governance of Infrastructure indicated that long-term sectoral plans are in \\nplace in approximately half of OECD (56%) and EU (47%) countries. While these plans are critical for \\neffective investment within a sector, lack of co-ordination may result in missed opportunities to benefit from \\nsynergies among investments in different sectors. In the 2020 Survey, Czechia indicated it had not used \\nco-ordination mechanisms in the formulation of the National Investment Plan 2020-2050. This was \\nconfirmed with discussions with Czech officials and stakeholders held as part of this project, who indicated \\nthat co-ordination at the national level is challenging, both generally and in the development of the National \\nInvestment Plan 2020-2050. This contrasts with the majority of surveyed countries, more than half of which \\n(18 out of 31 OECD countries or 58%; 10 out of 17 EU countries or 59%) indicated that they had used \\nmechanisms for cross-sector co-ordination during the formulation (or revision) of their most recent long-\\nterm national infrastructure plan. \\n\\n\\n56    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 2.3. Sectoral plans in Czechia \\nCzechia has a large number of sector-specific plans and strategies, many of which have a significant \\ninfrastructure component. The main strategic documents in the housing, transport and energy sectors \\nare summarised here. \\nHousing Concept of Czechia 2021+ \\nThe Housing Concept of Czechia 2021+ sets out the national housing policy from 2021. It articulates a \\nvision for the housing sector built around four primary objectives:  \\n• \\nincreasing the availability of affordable, quality housing  \\n• \\ncreating a stable legislative and institutional environment for housing investment  \\n• \\nensuring sustainable housing development \\n• \\ndeveloping an innovative and productive housing sector. \\nThese objectives are supported by detailed measures (e.g., establish an institutional and legal \\nframework for social housing, improvement of energy performance) and further broken down into clearly \\nassigned tasks (e.g., assess the functionality of the current benefit system, identify new energy-efficient \\nproject types) with estimated costs in some cases. The Housing Concept is supported by a monitoring \\nand implementation plan. \\nTransport Policy of Czechia \\nThe Transport Policy of Czechia is the highest-level transport sector planning document. The Transport \\nPolicy is built around three strategic objectives: (1) sustainable mobility, (2) territorial cohesion and (3) \\nthe use of automation and information technology. These are supported by specific objectives, such as \\nadaptation to climate change and the balanced provision of transport infrastructure across regions, \\nwhich are further supported by specific measures (e.g., set quantitative and qualitative standards in the \\nplanning of transport services, support the development of cross-border rail transport projects). The \\nmost recent version of the Transport Policy was published in 2021. \\nThe objectives contained in the Transport Policy are outlined further in other plans, concepts, strategies \\nand processes. For example, specific transport sector strategies constitute the main plans for the \\nfinancing and development of rail, road, and waterway transport infrastructure. These transport sector \\nstrategies create a list of known projects; assess projects based on multi-criteria and cost-benefit \\nevaluation; and prioritise and schedule projects based on the order of importance and the availability of \\nfinancial resources. The Transport Policy refers to other strategic documents such as the Strategic \\nFramework Czechia 2030, the State Energy Concept, and the Regional Development Strategy. \\nState Energy Policy of Czechia \\nThe State Energy Policy aims to ensure a reliable, secure and environmentally friendly supply of energy, \\nreflected in its three strategic objectives of security, competitiveness and sustainability. These \\nobjectives are supported by strategic priorities such as establishing a balanced energy mix, increasing \\nenergy efficiency, and strengthening international co-operation and the integration of regional electricity \\nmarkets. The State Energy Policy provides the basis for further strategic documents, such as the \\nNational Action Plans for Smart Grids, the Action Plan for Biomass, and the National Action Plans for \\nEnergy Efficiency. The most recent version of the State Energy Policy was published in 2015. \\nThe National Energy and Climate Plan, published in 2020, further expands on Czechia’s contribution to \\nEuropean climate and energy objectives, which relate to the reduction of greenhouse gas emissions, \\nefforts to increase the share of renewable energy sources and increases in energy efficiency. \\nSource: (Ministry of Regional Development, 2021[29]) (Ministry of Transport, 2021[30]) (Ministry of Industry and Trade, 2020[31]) (Ministry of \\nIndustry and Trade, 2015[32]) \\n\\n\\n   57 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nSummary of key recommendations  \\nGiven the challenges of implementing a full suite of reforms, Czech authorities could consider sequencing \\nthe recommendations made above. By grouping recommendations according to the time horizon needed \\nto implement them effectively (short term, and medium to long term), Czech authorities could allocate \\nresources to reforms in a way which would provide incremental benefits. A potential sequencing is included \\nbelow. \\nShort-term reforms \\n1. Make greater use of co-ordinating bodies and newly formed institutions to improve the \\nplanning and delivery of infrastructure investments. Greater co-ordination will allow for a \\nbottom-up approach to strategic planning and ensure synergies between projects.  \\n• \\nGiven its mandate and responsibilities, the Committee for Strategic Investments could serve to \\nensure alignment across sectors and drive a co-ordinated approach to infrastructure investment. It \\ncould help communicate sector-specific challenges and priorities, and inform the assessment of \\ncross-sectoral needs, thereby improving strategic planning.  \\n• \\nEnsure that relevant stakeholders are well represented in the committee and its working parties \\nand that the supporting secretariat is adequately resourced with experts with the necessary skills \\nand knowledge. \\n• \\nFocus on the committee’s role in monitoring the implementation of sector strategies and related \\ninfrastructure investments to provide greater insight into their effectiveness. \\n• \\nIncrease co-ordination for the delivery of infrastructure investments. The Ministry of Regional \\nDevelopment’s proposed Housing Investment Advisory Hub and Housing Investment Support \\nCentres could play a co-ordinating role between national bodies and municipalities in housing-\\nrelated investments, for example. \\nMedium to long-term reforms \\n2. Develop and maintain a cross-sectoral short-list of projects. A short-list or project pipeline \\nwould help to improve the investment readiness and absorptive capacity of the public and private \\nsectors and focus financing from various sources on the most impactful projects. \\n• \\nDevelop the short-list using objective and transparent criteria. This would clarify the decision-\\nmaking process and foster trust by helping stakeholders and the public understand why certain \\nprojects are prioritised and how they align with broader objectives.  \\n• \\nEnsure the short-list is cross-sectoral to promote the efficient use of available funding and reduce \\nthe risk of disproportionately targeting investment towards a single sector. \\n• \\nThe new Committee for Public Investments could be a decision-making venue for identifying \\nprojects to be included on the short-list. As a high-level body with representation from multiple \\nsectors, the committee would provide legitimacy and would attach political commitment to the \\nshort-list, sending clear signals to the market.  \\n3. Standardise national stakeholder consultation processes. This would make stakeholder \\nconsultation more transparent, helping stakeholders better understand methods of engagement, \\nsources of information, and how inputs will be considered in decision making.  \\n• \\nCreate a standardised approach to stakeholder consultation that covers the full infrastructure \\nlifecycle. Develop central guidance on consultation that is proportional to the characteristics of the \\nproject or strategy (e.g. size, political sensitivity, environmental aspects, population affected) and \\nto the overall public interest. \\n\\n\\n58    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nTo support this standardised approach, Czechia could consider providing comprehensive project \\nand strategy information to stakeholders in one location, such as a central portal. Information \\nshould cover the infrastructure lifecycle from planning to regulatory approvals and construction for \\nall projects, regardless of funding source. This improved access to information for stakeholders \\ncould increase the breadth and quality of their inputs.   \\n4. Improve the alignment between infrastructure investment planning and national strategies \\nand priorities. A long-term strategic vision could align infrastructure planning with national \\nstrategies and priorities and help to ensure that investments are planned and delivered in a way \\nthat supports broader national objectives. This could help to provide a longer-term strategic focus \\nbeyond electoral cycles and European programming periods. \\n• \\nEnsure the long-term infrastructure vision outlines desired investment outcomes, identifies priority \\nsectors and defines the role of infrastructure in achieving broader goals. It could be developed \\nbased on the detailed existing national and sectoral plans and strategies.  \\n• \\nRequiring that infrastructure planning and project selection explicitly consider key national priorities \\nas articulated in the long-term vision could create coherence between strategic priorities and \\nindividual investments. \\n2.2 \\nImproving project appraisal and prioritisation  \\nStrong project prioritisation and appraisal are critical elements of infrastructure governance. Governments \\nface a significant challenge in determining which of the many investment possibilities are best able to \\nachieve their policy goals and strategies. Strong appraisal ensures that potential projects are rigorously \\nevaluated based on their feasibility; their economic, social and environmental impacts; and their alignment \\nwith broader policy goals and development strategies. To ensure that limited resources are allocated \\nefficiently while maximising benefits, governments require infrastructure investment selection processes \\nbased on a sound understanding of the expected returns (OECD, 2021[14]). If assumptions and findings \\nare made public, appraisal and prioritisation processes can also play an important role in ensuring \\ntransparency in decision-making processes.  \\nCzechia lacks a consistent approach to project appraisal and prioritisation across sectors. In some sectors, \\nsuch as transport, there is detailed guidance on project appraisal and rigorous evaluation. For example, \\nthe Departmental Guideline for the Evaluation of Economic Effectiveness of Transport Construction \\nProjects provides detailed methodological guidance for evaluating transport infrastructure investments \\n(Ministry of Transport, 2018[33]). Originally developed for the EU funds programming period 2014-2020, the \\nguideline is used to evaluate transport projects with costs of over CZK 30 million (approximately EUR 1.3 \\nmillion). However, across the investment system as a whole, projects are often prioritised based on their \\nreadiness to move forward quickly and their ability to access European funds rather than conducting a \\nstandardised appraisal of the costs and benefits of the investment. In the 2020 OECD Survey on the \\nGovernance of Infrastructure, Czechia indicated that while project benefit estimates in the transport and \\nenergy sectors are based on international benchmarks, in other sectors such as social or water \\ninfrastructure they are not. The difficulty of prioritising across sectors was also reported by officials as a \\nfactor in the challenges in implementing the National Investment Plan 2020-2050. \\nThe fragmentation of decision making and responsibility for infrastructure investment across sectors in \\nCzechia makes a consistent approach to project prioritisation and appraisal challenging. In each sector, \\ndifferent entities are responsible for developing their own prioritisation criteria. Prioritisation is often based \\non eligibility under EU Funds, with funding reallocated to less efficient projects due to timing challenges. A \\nlack of structured analysis can also contribute to inconsistent prioritisation across the electoral cycle: the \\nfocus is often on quick wins where spending can align with political and programme timelines, rather than \\nprojects with the greatest return.  \\n\\n\\n   59 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nAnother issue for Czechia is that high-quality data are not readily available for project analysis, and \\ncapacity challenges can limit the ability of the public sector to generate and use data to inform decision \\nmaking. Fragmentation can also limit the availability of data on infrastructure performance, making it \\ndifficult to assess how future investments could be optimised. Existing decision-making frameworks are \\nnot always suitable for accommodating a more diverse set of policy goals, such as the green transition and \\ndigital transformation. However, these issues are not unique to Czechia: while many countries do collect \\ndata, most of the data required to compare the overall cost and performance of projects across sectors are \\nnot systematically aggregated or used (OECD, 2017[1]). \\nEffective prioritisation and appraisal should be informed by data-based evidence. Governments should put \\nin place systems that ensure the systematic collection, analysis, dissemination, and use of relevant data \\nfor project prioritisation and appraisal (OECD, 2017[1]). Specific sectors require more targeted data: for \\nexample, evaluating transport projects often requires data on topics such as traffic patterns and \\ncongestion, while energy infrastructure decision making requires data on trends in consumption and \\nplanned production. However, these data requirements are often interlinked: housing investments, for \\nexample, can impact both traffic patterns and energy consumption. A lack of systematic data collection on \\ninvestment performance can therefore undermine decision making by limiting governments’ ability to \\nidentify strengths and weaknesses. The limited availability of data can also make it difficult to assess the \\npotential impacts and estimated costs of infrastructure projects. Ex-post evaluations can be a valuable \\nmeans of producing data and evidence for future decision making. The OECD Recommendation on the \\nGovernance of Infrastructure advises adherents to ensure that ex-post value-for-money evaluations are \\ncarried out and that the results are used in the decision-making process for future investment projects \\n(OECD, 2020[15]).  \\nStandardising project appraisal and prioritisation processes has the potential to improve the effectiveness \\nof infrastructure investment. The sections which follow make recommendations for how Czechia could \\nmake the appraisal of project costs and benefits more consistent and improve the availability of evidence \\non which to base those evaluations. Implementing these recommendations is expected to increase the \\nconsistency and transparency of decision making, reduce investment risks and allow resources to be \\nallocated more efficiently. While estimates will vary depending on the national context, one study found \\nthat choosing the right combination of projects and eliminating wasteful ones could save 7% of total \\ninfrastructure investment on a global basis (Dobbs et al., 2013[34]). While this is necessarily a high-level \\nestimate, it indicates the scale of the potential fiscal impact of better project appraisal and prioritisation: \\n7% of planned investments of EU funds in Czechia alone over the next decade would total EUR 2.8 billion.  \\nStandardise the evaluation of project costs and benefits across sectors \\nThe Ministry of Regional Development could work with other stakeholders to develop a standard approach \\nto project appraisal across sectors. The standardised methodology could be used by ministries and state \\nfunds when developing funding programmes, and also be made available to subnational governments to \\nsupport their prioritisation of infrastructure investments. As noted above, it is not unusual among OECD \\ncountries for line ministries to have responsibility for infrastructure investment in their sector. However, it \\nis less common for line ministries to set their own prioritisation criteria – this occurs in only 7 of 33 countries \\n(including Czechia) responding to the 2020 OECD Survey on the Governance of Infrastructure (Figure 2.4) \\n(Ruiz Rivadeneira and Mcmaster, 2023[21]).  \\n\\n\\n60    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 2.4. Most OECD countries have a single institution that prioritises infrastructure projects \\nPrimary institution for setting the criteria to prioritise infrastructure projects in OECD countries, 2020 \\n \\nNote: Data for 2020 for Denmark, France, Israel, Netherlands, Poland and Sweden are not available. The 2020 data for Belgium are based on \\nthe responses from Flanders only. \\nSource: OECD (2020), Survey on the Governance of Infrastructure. \\nProject selection should be based on a rigorous appraisal of costs and benefits, driven by factors such as \\nforecast demand or need, economic efficiency, and environmental and social sustainability. As highlighted \\nby the OECD Recommendation on the Governance of infrastructure, it is especially important to provide \\nfor an independent and impartial assessment of the costing, risk management and governance for projects \\nthat exceed a high investment threshold (OECD, 2020[15]). When processes for identifying priority projects \\nand choosing delivery modes are not sufficiently formalised, political dynamics can undermine sound \\ndecision making (OECD, 2021[14]).  \\nTo be applied widely, project appraisal methodologies need to be flexible to reflect differences in project \\nsize and complexity and differences between sectors. Countries take different approaches to setting a \\nthreshold for full project appraisal (see Box 2.4 for examples). However, a standardised approach could \\ninvolve (OECD, 2020[35]; World Bank, 2021[36]):  \\n• \\nA holistic cost-benefit analysis, including the evaluation of economic, environmental, and social \\ndimensions (see Box 2.5). This could include a set of common assumptions and a methodology \\nfor evaluating common project elements across sectors (e.g., carbon impact) and a consistent \\napproach to cost estimation.  \\n• \\nA calculation of lifecycle costs or total cost of ownership, which is critical for ensuring that projects \\nenable the most efficient use of funds and minimise sustainability risks.  \\n\\n\\n   61 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nAn assessment of whether the project is feasible and deliverable, and a review of elements such \\nas risk, the capacity of the implementing agency, the quality of project governance and whether \\nthe supplier market has been tested and the procurement strategy is well developed.  \\n• \\nAn evaluation of strategic alignment with major policy objectives, as well as alignment with other \\ngovernment policy tools (such as spatial planning and regional development plans). This should \\ninclude establishing the rationale for the project and placing it in the overall strategic context, along \\nwith identifying potential linkages and alignment with other infrastructure projects and sectors.  \\nCzechia does already have a standardised methodology for presenting business cases for data, digital \\nand information technology projects developed by the Office of Chief Architect of eGovernment of the \\nMinistry of the Interior. The Information Concept of Czechia includes general principles on planning, \\nprocurement and operations and is accompanied by the forms which central institutions need to complete \\nto present business cases for information and communication technology projects (OECD, 2023[5]). These \\nmay act as a model for the type of guidance materials that could support stronger project appraisal across \\nsectors. \\nBox 2.4. OECD country examples of thresholds for applying the project appraisal system  \\n• \\nIn Chile, all investment initiatives financed by the government are subject to technical and \\neconomic analysis. This includes municipal projects financed with capital transfers from the \\ncentral government, provided the transfers cover more than 50 percent of project costs. \\n• \\nIn Korea, the threshold is KRW 50 billion (EUR 35 million) for central government projects, and \\nKRW 30 billion (EUR 21 million) for subnational government projects or projects with private \\nparticipation receiving a central government contribution equal to or greater than that amount. \\n• \\nIn Norway, the threshold is NOK 750 million (EUR 65 million) for central government projects. \\n• \\nIn Ireland, the appraisal methodology depends on the type, scale, and complexity of the project: \\no \\nFor project proposals below EUR 10 million, approving authorities (government department \\nwith the ultimate responsibility for the project) should decide with sponsoring agencies \\n(primary responsibility for evaluating, planning, and managing projects) as to whether an \\neconomic appraisal is required and what type of economic appraisal is appropriate. \\no \\nFor project proposals over EUR 10 million, approving authorities and sponsoring agencies \\nshould engage on the choice of the appropriate appraisal methodology in line with sectoral \\nguidance. Wherever possible, cost-benefit analysis should be used. In cases where this \\nmay not be possible or desirable, cost-effectiveness or multicriteria analysis may be used. \\no \\nAs a general rule, cost-benefit analysis is required for all major projects with an estimated \\ncost over EUR 200 million, as well as a mandatory assurance process involving independent \\nexpert reviews. \\nSource: (Baum, Verdier and Mogues, 2020[3]), (Department of Public Expenditure, NDP Delivery and Reform, 2023[37]) (OECD, 2023[38]) \\nInfrastructure investment is increasingly expected to address multiple economic, social, and environmental \\nobjectives beyond a narrow definition of user needs. This creates challenges for decision makers, who are \\nrequired to weigh and balance different (and sometimes competing) goals in selecting and prioritising \\nprojects (OECD, 2021[14]). The OECD Recommendation on the Governance of infrastructure advises \\nadherents to ensure that methodological tools accommodate multiple objectives (OECD, 2020[15]). \\nSupplementing cost-benefit analysis with other methodological tools to accommodate multiple objectives \\nand uses can establish the overall societal return on investments and support the allocation of resources \\nto the best projects. A standardised approach to project appraisal and prioritisation can help address these \\n\\n\\n62    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nchallenges but should also be flexible to account for differences across sectors in terms of needs, timelines, \\nstakeholders and decision-making processes. Applying rigorous project appraisal and selection processes \\nthat take into account economic, social, and environmental costs and benefits can help with this challenge. \\nIn Italy, for example, new guidelines were introduced for the ex-ante valuation of projects, along with a new \\ninvestment scoring system that evaluates dimensions of sustainability. To support this new approach, the \\nItalian government created a Centre for Innovation and Sustainability in Infrastructure and Mobility \\n(Box 2.5). \\nBox 2.5. Greening the planning and evaluation of Italy’s infrastructure projects  \\nIn 2021, the Italian Ministry for Sustainable Infrastructure and Mobility (MIMS) introduced an innovative \\napproach to planning and evaluating projects which integrates sustainability considerations. The \\ninitiative sought to provide methodological tools to strengthen the ministry’s decision-making capacity \\nwith a focus on economic, environmental, social and governance dimensions. Moreover, the new \\napproach aligns with the requirements for funding under the Next Generation EU plan, including the \\nRecovery and Resilience Facility, and other international sustainability principles and guides, such as \\nthe EU taxonomy for sustainable activities and the Sustainable Development Goals.  \\nThe tools introduced include new guidelines for the ex-ante valuation of projects, together with related \\noperational sector-specific guidelines and a new scoring system that evaluates dimensions of \\nsustainability to help define project prioritisation. A further reform is the introduction of new guidelines \\nfor evaluating the technical and economic feasibility of projects financed through Italy’s Recovery and \\nResilience Plan. These new guidelines seek to simplify the process for investing in green and digital \\ntechnologies; ensuring compliance with energy and environmental responsibility criteria when awarding \\npublic contracts, including through the definition of minimum environmental criteria; including measures \\nto encourage the inclusion of SMEs in the construction phase; and introducing digitisation for the public \\ninvestment process. \\nTo develop the skills and expertise needed to ensure that the new approach is effective, the Centre for \\nInnovation and Sustainability in Infrastructure and Mobility was also created within MIMS. The centre \\nwill collaborate with other ministries and academia, both at the national and international level, to carry \\nout research and promote innovation in the field of infrastructure sustainability. \\nSource: (OECD, 2023[38]) \\nFollowing a common, structured format for project appraisal can also facilitate independent review and \\nprovide a transparent record of decisions. A consistent approach can be reinforced through the systematic \\npublication of ex-ante and ex-post appraisals, which enables review by external stakeholders. This can \\nalso support expanded centralised review to verify assumptions and ensure projections are realistic. In the \\nUnited Kingdom, for example, the Infrastructure and Projects Authority manages independent assurance \\nreviews of the government’s most complex and high-risk projects (Box 2.6).  \\n\\n\\n   63 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 2.6. Centralised project governance to ensure value for money in the United Kingdom  \\nStrong governance arrangements include appropriate checks and balances to ensure that there is an \\nongoing assessment of whether a project offers value for money as it evolves throughout its lifecycle. \\nLarge projects entail fiscal risks that that can affect the overall public investment programme. For this \\nreason, the United Kingdom has made central agencies responsible for the oversight of public \\ninvestment programmes part of the governance structure for major projects.  \\nThe UK Infrastructure and Projects Authority (IPA) arranges and manages independent assurance \\nreviews of major government projects each year. These reviews are mainly for the government’s most \\ncomplex and high-risk projects within the Government Major Projects Portfolio (GMPP). The IPA also \\npublishes an annual public report on the progress made on projects within the GMPP. The IPA reports \\nto the Cabinet Office and the Treasury and is led by a Chief Executive who reports jointly to the \\nChancellor of the Exchequer and the Minister for the Cabinet Office. It employs approximately 180 \\npeople in roles such as policy advisors, project delivery professionals, and project finance professionals.  \\nAssurance is an essential part of successful project delivery. The IPA has established a Major Projects \\nReview Group (MPRG) comprised of a pool of experts from which panels are put together to scrutinise \\nthe largest and most complex major government projects. It is co-chaired by the Chief Executive of the \\nCivil Service and the Second Permanent Secretary to the Treasury. The MPRG panels challenge \\nprojects on deliverability, affordability and value for money at key points in the project life cycle. The \\nMPRG aims to improve the performance of projects and programmes and advise HM Treasury ministers \\non which projects within the GMPP are ready to proceed through the next stage-gate. Projects are \\nselected for MPRG review according to the following criteria: projects with a whole life cost of over \\nGBP 1 billion; projects that are high risk and complex in their procurement and delivery of benefits; \\nprojects that set a precedent or are highly innovative; and other projects ‘of concern’ (as recommended \\nby HM Treasury or the IPA and agreed by the MPRG Chair). \\nSource: (OECD, 2020[39]; Infrastructure and Projects Authority, 2021[40]; Infrastructure and Projects Authority, 2020[41]) \\nAccording to the 2020 OECD Survey on the Governance of Infrastructure, 71% of OECD countries (22 out \\nof 31) reported conducting regular independent and impartial expert assessments (19% for all projects, \\n29% for projects above a threshold and 23% for projects of special relevance). Within the EU, the share \\nwas 63% (10 out of 16)6 (Figure 2.5). Data for Czechia are not available for this survey question, but it \\nappears that the independence and quality of project assessments varies depending on the sector and \\ninstitutional structure. For transport projects worth over CZK 1.8 billion (approximately EUR 75 million), \\nproject appraisals must include an evaluation provided by the State Fund for Transport Infrastructure. The \\nState Fund for Transport Infrastructure co-operates with external entities such as the Transport Research \\nCentre and the Institute of Construction Economics and Management at the Brno University of Technology \\nto select appropriate evaluators. Through the budgeting process, the Ministry of Finance plays a role in \\nreviewing projects worth over CZK 300 million (approximately EUR 12 million); however, a significant \\nproportion of Czech infrastructure investment is undertaken by state funds over which the Ministry of \\nFinance has more limited influence. For example, officials indicated that approximately 40% of the \\ngovernment’s infrastructure budget is approved through a small number of decisions related to transfers \\ninto state funds, with limited oversight of project selection.   \\n\\n\\n64    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 2.5. The majority of OECD countries require independent and impartial expert assessment \\nof infrastructure projects \\n \\nNote: Data for Belgium are based on the survey responses from Flanders only. In Austria, independent and impartial expert assessments are \\nconducted for projects above a certain threshold as well as for projects identified of special relevance. \\nSource: 2020 OECD Survey on the Governance of Infrastructure \\nCzechia could consider expanding the role of independent review of infrastructure investment at the \\nnational level. An independent and impartial expert assessment can test factors such as project costing, \\nfiscal sustainability, timelines, risk management and governance and help to identify flaws or gaps. \\nIndependent reviews can also provide a mechanism for monitoring and evaluating project performance \\nover time, helping to identify issues as they arise. In Norway, for example, an external quality assurance \\nprocess is compulsory for projects with an expected budget over EUR 100 million. The quality assurance \\nprocess is refined through an independent process of ex-post evaluations of completed projects. In \\nCzechia, this could be achieved by applying the approach used by the State Fund for Transport \\nInfrastructure to other sectors, or increasing the role and capacity of the Ministry of Finance. Publishing \\nindependent assessments would also increase transparency in infrastructure appraisal and selection by \\nproviding stakeholders and the wider public with access to objective evaluations of project feasibility, costs \\nand benefits. This could promote accountability and help build public trust in the investment system. \\n\\n\\n   65 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 2.7. Norway’s quality assurance process and Concept Research Programme \\nThe Norwegian quality assurance process is compulsory for land based public investment projects with \\nan expected budget of over NOK 750 million (approximately EUR 100 million). Analysis and decision \\ndocuments are prepared by ministries according to a common format issued by the Ministry of Finance \\nand reviewed by external quality assurers pre-qualified by the Ministry of Finance.  \\nFunded by the Ministry of Finance and led by the Norwegian University of Science and Technology, the \\nConcept Research Program organises ex-post evaluation of completed projects that have been through \\nthe quality assurance process. The lessons learned are seen as crucial for improving knowledge and \\npractices in the development and implementation of projects and in the quality assurance process itself. \\nResults are openly available and published in a series of scientific reports, in addition to textbooks, \\nworking papers, scientific papers in journals and conference proceedings, etc. \\nSource: (Kim, Fallov and Groom, 2020[42]) \\nImprove data quality and sharing across sectors  \\nEvidence-informed infrastructure decision making requires a broad range of data. Data on existing \\ninfrastructure and its condition can help identify areas where upgrades and maintenance may be \\nnecessary. For example, linking strategic objectives – such as increased mobility – with indicators such as \\ncongestion hotspots, traffic flows and journey time maps can help to identify areas where there is a case \\nfor investment. Traffic data can help identify areas where highway or public transit investments could \\nimprove mobility. Data can also be used to identify disparities in access to infrastructure: for example, data \\non housing affordability across regions can help identify where new affordable housing projects may be \\nneeded. Demographic data, including insights into population trends and distribution, are necessary for \\nneeds analysis and can provide insights into distributional impacts. Economic data, such as employment \\nrates and industry sector trends, can be used to evaluate the potential economic impacts of projects, while \\ndata on air quality, water resources, and land-use patterns are necessary to evaluate environmental \\nimpacts. Technical data such as construction cost indices, maintenance requirements, and asset \\nconditions are critical for developing cost estimates, assessing feasibility and prioritising. \\nGovernments with a strategic approach to the use of data across the entire public sector are better able to \\nanticipate societal trends and needs and therefore develop more effective long-term plans (OECD, \\n2019[43]). Access to accurate and reliable data is essential for improving evidence-based decision making. \\nThe OECD Recommendation on the Governance of Infrastructure encourages countries to harness digital \\ntechnologies, release open data and use data analytics to enhance infrastructure policy and decision \\nmaking (OECD, 2021[14]). Data sharing across entities and sectors can promote transparency, helping to \\nidentify common challenges and opportunities across sectors, and promote collaboration by enabling \\ndifferent sectors to share knowledge and expertise. For example, in the Netherlands, the government \\ncollects water data and makes them publicly available for planning use by a range of actors (Box 2.8). \\n\\n\\n66    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 2.8. Making water data available for infrastructure decision making in the Netherlands \\nFlooding events can cause damage and destruction to property and infrastructure. Flooding is becoming \\nincreasingly frequent with climate change and rising sea levels. As urban expansion continues, flooding \\nin these areas can become more frequent due to insufficient drainage. This requires action to lessen \\nthe risk of urban flooding for infrastructure. Flood management systems can track patterns to identify \\nareas likely to be flooded, looking at the probability that flooding will occur.  \\nGovernments can use sensors (GPS, water level, radar for thermal images) to collect data on water \\nlevels, resources, quality and water-related hazards. The data collected are transmitted to a central \\nsystem and then analysed to enable flood prevention and better water resource management. This \\nenables local authorities to identify mitigation solutions (e.g., dams and water management systems) \\nor alternative areas where the risk of flooding is lower. A water height and flood management system \\ncan enable local authorities to predict future flooding and avoid building major infrastructure in high-risk \\nareas. Local authorities can use the flood patterns to identify the probability of flooding for each area \\nand use this information to improve decision making when selecting suitable locations for future housing \\nand other infrastructure. \\nRijkswaterstaat, an executive agency of the Dutch Ministry of Infrastructure and Water Management, \\nmanages and develops the Netherlands’ main road and waterway networks. Rijkswaterstaat monitors \\nthe water level, discharge rates, wave height and flow speed using automatic measuring equipment at \\nmore than 450 locations. The data collected are made publicly available and used by water boards, \\nprovinces, municipalities, the private sector and researchers. The Rijkswaterstaat also collaborates with \\nthe Ministry of Agriculture, Nature and Food Quality and the Ministry of Defence on the Marine \\nInformation and Data Centre (IHM). Launched in 2012, the IHM makes available all government data \\non the North Sea in a single location. Rather than storing the data in a central location, the IHM functions \\nas a portal, generating references to locations where data can be accessed. The data remain stored \\nand maintained in their original location, ensuring they are current and accurate.  \\nSource: (Global Infrastructure Hub, 2020[44]; Rijkswaterstaat, n.d.[45]; Marine Information and Data Centre, n.d.[46]) \\nIn Czechia, there is limited data available to support project appraisal and prioritisation. In addition, when \\ndata are collected, the large number of stakeholders in infrastructure planning and delivery creates \\nchallenges for quality and consistency, with data managed differently across sectors. The Ministry of \\nRegional Development provides tools to municipalities to use demographic and economic data to develop \\nstrategies and prioritise projects (e.g., to forecast needs), but these tools are not currently linked to data \\non infrastructure investment, and municipalities may not always have the capacity to take advantage of \\nthe data. Officials confirmed during this study that a lack of data was a challenge for infrastructure planning \\nat the municipal level. For example, data on housing are limited or insufficient: the main source of \\ninformation on housing is the census of houses and apartments, which is carried out every 10 years, and \\nadministrative data are not leveraged to provide more current information. Asset management, including \\nthe monitoring and evaluation of infrastructure, is the responsibility of the asset owner and data on the \\ncondition of infrastructure are not shared or collected centrally. \\nThe 2022 Programme for Government recognises the importance of data and commits to expanding its \\nuse in infrastructure planning and monitoring. This includes a commitment to using data to set a \\nrecommended level of infrastructure services for municipalities (e.g., for education, medical and social \\ncare, public transport, high-speed internet) and linking requirements to funding. It also commits to ensuring \\nthat plans, the achievement of objectives and efficiency are evaluated in the preparation and \\nimplementation of infrastructure by transport investment organisations, such as the Railway Infrastructure \\n\\n\\n   67 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nAdministration and the Waterways Directorate, and evaluating their performance against European peers \\n(Government of Czechia, 2022[6]).  \\nThe Ministry of Regional Development could work with other infrastructure stakeholders to improve data \\nquality and expand data sharing for project appraisal and prioritisation (ITF, 2021[47]). This could involve \\nworking with relevant ministries, state funds, agencies, regions and municipalities to develop infrastructure \\ndata guidelines and standards. Developing common data formats that all sectors can use for collecting, \\nstoring and sharing infrastructure data, and data-sharing protocols defining how data are shared and who \\nhas access, would ensure a common approach and avoid conflicts over data ownership. The ministry could \\nalso develop and disseminate guidelines on data collection and management to help ensure data is \\naccurate and complete. \\nStrengthening the skills required for data use will be important. Collecting, managing, and using data \\neffectively requires skills and resources. The Ministry of Regional Development could invest in training and \\ncapacity building for data management and analysis to ensure stakeholders have the necessary skills to \\ncollect, store and use data effectively. This could include providing technical training and workshops, as \\nwell as access to data management tools and resources. For example, in the 2020 OECD Survey on the \\nGovernance of Infrastructure, Czechia indicated that it maintains a national unit price database for \\ninfrastructure. Making this type of database more accessible and facilitating its use by a broad range of \\nstakeholders could improve project appraisal and prioritisation. \\nThe Ministry of Regional Development could also consider establishing an accessible data-sharing \\nplatform or repository to streamline data sharing on infrastructure with stakeholders. In the housing sector, \\nthe ministry’s proposed Housing Investment Support Centres and Housing Investments Advisory Hub will \\nalready play a role in collecting and disseminating data on housing needs and projects. Over time, the \\nministry could consider playing this role for other sectors, improving access and increasing co-ordination \\nand collaboration. However, developing an integrated data platform that crosses sectors raises various \\ntechnical, organisational and regulatory challenges and would require significant investment of resources \\nand strong commitment from stakeholders to ensure the benefits could be realised (World Bank, 2020[48]).  \\nStandardise ex-post evaluations of infrastructure investments for evidence-based decision \\nmaking \\nEx-post evaluations can provide valuable insights and evidence to inform decision making. Alongside \\nassessing how successful a project has been in achieving its stated aims, ex-post evaluations can also \\nidentify any unforeseen externalities, which are particularly important for informing future projects. In \\nFrance, for example, some large projects put in place external bodies to track long-term environmental \\nand economic impacts (Box 2.9). The accuracy of future appraisals can be improved by comparing ex-\\npost outcomes with the expected outcomes identified in the appraisal of completed projects. Elements of \\nthe appraisal that may benefit from this approach include assumptions, projections and modelling \\nmethodologies. A stronger understanding of the uncertainty inherent in project appraisal can contribute to \\nbetter scenario analysis, while information on the nature and extent of systemic bias (e.g., optimism bias) \\ncan help to correct these biases in future appraisals. Finally, by systematically assessing actual outcomes \\nagainst initial claims, ex-post assessment can increase accountability (ITF, 2021[47]). \\n\\n\\n68    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 2.9. Ex-post evaluations of transport projects in France \\nIn France, ex-post evaluation of large transport projects has been mandatory since 1982. The aims are \\nto: (a) inform the public about project outcomes, especially the extent and causes of any differences \\nbetween outcomes and initial estimates; (b) account for the use of public funds by evaluating the \\neffectiveness of investments; and (c) provide feedback to the project appraisal process. \\nThe ex-post evaluation process is largely done independently of the entity responsible for the initial \\nproject appraisal. In some cases, independence is achieved by allocating responsibility to different parts \\nof the same entity. For example, the Audit and Risks Department within SNCF Réseau (the network \\nmanager) performs evaluations of rail projects. In all cases, however, evaluations are supplemented by \\nan independent opinion from L'inspection générale de l'environnement et du développement durable \\n(General Inspectorate for the Environment and Sustainable Development).  \\nSome projects adopt a permanent observatory model. Permanent observatories are external bodies \\nthat track projects over time, gathering data on projected costs, timelines and actual results. Contracts \\nfor the two most recent high-speed rail projects required the private operators to establish and finance \\npermanent observatories to measure their environmental and economic effects. \\nSource: (ITF, 2022[49]) \\nThe Ministry of Regional Development could work with other infrastructure stakeholders to standardise \\nand expand the use of ex-post evaluations to ascertain whether expected benefits were achieved and \\nwhether projects were cost-effective. This could include developing standardised, data-based approaches \\nfor conducting ex-post evaluations and ensuring evaluation results are available across sectors for \\nplanning and to inform operational decision making. This is already being done in some sectors: in the \\n2020 OECD Survey on the Governance of Infrastructure, Czechia indicated that the project appraisal \\nprocess in the transport, energy and water sectors included ex-post analysis of similar projects. Similarly, \\nCzechia’s Evaluation Library7, hosted by the National Coordination Authority, catalogues evaluation and \\nmonitoring information for projects and programmes financed by EU funds. Standardising these \\napproaches and expanding them across sectors and funding sources could improve decision making and \\ntransparency and allow for comparison and learning across sectors. \\nCzechia could also expand existing commitments to evaluate the performance of transport sector \\ninvestments and benchmark them against European peers to progressively include other priority sectors \\nover time. This could provide greater insights into the effectiveness and efficiency of past investments, \\nimprove future decision making, and help to identify areas of success and areas for improvement. It could \\nalso include establishing a system for the ongoing monitoring of asset performance during the operational \\nphase of the infrastructure lifecycle, potentially including introducing obligations for entities responsible for \\ninfrastructure to publicly report on its condition and use (OECD, 2020[11]). \\nContinuing to monitor and collect data on infrastructure performance after a project has been implemented \\ncan provide valuable inputs into decision making and allow for remedial action as required. The use of \\ntools such as key performance indicators to oversee the performance of infrastructure service delivery can \\nhelp to monitor and benchmark the performance of infrastructure in the delivery phase (OECD, 2017[1]). \\nThe effective monitoring of asset performance depends on ensuring the systematic collection, storage, \\nand management of relevant data over the entire infrastructure lifecycle. Similarly, better data can support \\ndecision making for resilience: information about past risks and potential threats as well as systematic data \\ncollection on the resilience levels of infrastructure assets are key to understanding a system’s continued \\ncapacity to withstand shocks. For example, Switzerland uses a comprehensive database (ProtectMe) to \\n\\n\\n   69 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nmonitor the aging process and vulnerabilities of existing protective infrastructure, including information on \\nthe status of maintenance and protection capacity (OECD, 2021[14]). \\nSummary of key recommendations  \\nGiven the challenges of implementing a full suite of reforms, Czech authorities could consider sequencing \\nthe recommendations made above. By grouping recommendations according to the time horizon needed \\nto implement them effectively (short term, and medium to long term), Czech authorities could allocate \\nresources to reforms in a way which would provide incremental benefits. A potential sequencing is included \\nbelow. \\nShort-term reforms \\n1. Improve the quality and sharing of data. Evidence-informed decision making on infrastructure \\ninvestment can be supported by data ranging from the condition of existing assets, the use of \\ninfrastructure (e.g., traffic and ridership data), and demographic trends and distributions. Sharing \\ndata across entities and sectors can provide access to a broader evidence base, helping to identify \\ncommon challenges and opportunities. \\n• \\nThe Ministry of Regional Development could work with relevant ministries, state funds, regions, \\nand municipalities to develop infrastructure data guidelines and standards to improve data \\nconsistency and accuracy.  \\n• \\nThe ministry could also invest in capacity building for relevant ministries, state funds, regions, and \\nmunicipalities for data management and analysis to ensure they have the necessary skills to \\ncollect, store and use data effectively. \\nMedium to long-term reforms \\n2. Introduce consistent and transparent appraisal of project costs and benefits across sectors. \\nA standard, transparent approach to project appraisal could support consistent prioritisation and \\nthe efficient use of resources across sectors. Project appraisal should consider Czechia’s \\noverarching economic, social and environmental objectives, but be flexible enough to account for \\ndifferences across sectors in terms of needs, timelines, stakeholders and decision-making \\nprocesses. \\n• \\nDevelop guidelines and methodologies for project appraisal through a joint approach with the \\nMinistry of Regional Development and other infrastructure stakeholders, to ensure sectoral \\ndifferences are reflected in a standardised approach. \\n• \\nIncrease the transparency and accountability of infrastructure investments by publishing project \\nappraisals to enable review by external stakeholders. Consider expanding the independent review \\nof project appraisals, for example by co-operating with external experts or enhancing the current \\nrole of the Ministry of Finance in project reviews. \\n3. Standardise and expand the use of ex-post evaluations of infrastructure investments. Ex-\\npost evaluations are an important accountability mechanism, determining whether expected \\nbenefits were achieved. They can also inform future decision making. A common methodology and \\nguidelines for ex-post evaluations across sectors and undertaking them systematically would \\nimprove future investment decisions and enhance accountability. \\n• \\nDevelop a standardised cross-sectoral methodology based on existing approaches for evaluating \\nprojects in the transport sector and projects financed by EU funds.  \\n• \\nExpand on existing commitments to evaluate the performance of transport sector investments and \\nbenchmark them against European peers to progressively include other priority sectors over time. \\n\\n\\n70    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n2.3 \\nInvesting in infrastructure delivery capacity  \\nEven with strong strategic planning and robust project appraisal processes in place, poor delivery can limit \\nthe benefits of infrastructure investment (OECD, 2020[35]). How infrastructure is delivered impacts value \\nfor money, risk and affordability. Choosing high-value projects in a well-integrated strategic framework is \\nof limited use if those projects are not delivered efficiently and effectively. Effective infrastructure \\nprocurement processes can also generate broader economic, environmental, and social returns and be \\nused strategically to incentivise innovation, including in the transition to low-carbon infrastructure and the \\nadoption of digital technologies (OECD, 2017[1]).  \\nInefficient infrastructure procurement can increase tendering costs, delay project implementation, reduce \\ncompetition and inhibit innovation. While the infrastructure procurement process should deliver projects in \\na way that maximises value, procurement strategies are frequently based on the habits and capacity of \\ncontracting authorities rather than on strategic choices (OECD, 2021[14]). Smaller contracting authorities in \\nparticular may lack the resources, expertise, and experience required. Capacity building, shared services, \\ncollaboration, simplified procedures and a supportive regulatory framework can all help to overcome these \\nchallenges. Tailoring procedures to the needs and capabilities of small contracting authorities and \\nproviding clear guidance and standards to support compliance are other useful actions. \\nThe capacity of the public procurement workforce is critical for efficient delivery and achieving value for \\nmoney (OECD, 2023[50]). Effective procurement requires expertise in a range of areas, including project \\nmanagement, legal and regulatory frameworks, and technical knowledge of the services and works being \\nprocured. Given the complexity of infrastructure procurement, a lack of expertise or inadequate resources \\ncan lead to poor decisions, delays and cost overruns. Infrastructure procurement can be time-consuming \\nand challenging for contracting authorities, leading to delays and inefficiencies. For this reason, the \\nOECD’s Recommendation on the Governance of Infrastructure advises adherents to ensure that the \\nprocurement workforce has the capacity to deliver value for money by providing tools to improve \\nprocurement skills and competencies (OECD, 2020[15]). Denmark’s National Building Fund provides an \\nexample of how a central institution can improve infrastructure investment by smaller bodies through \\nfinancial and technical support (see Box 2.10.). \\n\\n\\n   71 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 2.10. Denmark’s National Building Fund \\nAlmost 1 million people, approximately 17% of Denmark’s population, live in the social and affordable \\nhousing sector, composed of around 600 000 housing units. The National Building Fund, created in \\n1967, is a key pillar of Denmark’s social and affordable housing model. An independent institution \\noutside the state budget, the Building Fund is financed by a share of tenants’ rents (amounting to 2.8% \\nannually of the total acquisition cost of the property), in addition to housing associations’ contributions \\nto mortgage loans (approximately 2% of the property acquisition cost). The fund finances the expansion \\nof new social and affordable housing and the renovation of existing properties. This includes \\nimprovements to inside and outdoor areas, modernisation to improve access for elderly and disabled \\npeople, and energy improvements. Support from the fund is obtained through applications submitted \\nby the housing organisations and allocated using objective criteria.  \\nThe fund’s experience illustrates how the construction industry is central to the objective of renovating \\nsocial housing: by mobilising the private sector through public procurement, the National Building Fund \\nis able to implement a EUR 4 billion green renovation programme. \\nAlong with financial support, the fund provides the sector with expert knowledge, data, and IT tools. It \\nproduces statistics, key figures and analysis of the social housing sector. Moreover, the fund holds \\nvarious types of master data for the social housing sector. Based on the data it collects and maintains, \\nthe fund has developed various IT tools, such as an accounting database and a so-called Twin Tool \\nthat makes it easier to benchmark specific housing organisations against their peers. \\nSource: (Madsen, 2021[51]) (OECD, 2020[52]) \\nCzechia’s context and institutional structure intensify common public infrastructure procurement \\nchallenges. The infrastructure governance system is fragmented, with different entities responsible for \\ninfrastructure decision making, funding, and implementation, leading to co-ordination challenges. Many \\nentities do not have long-standing experience undertaking infrastructure investment or the resources to \\ninvest in building capacity. Small municipalities can find it difficult and expensive to prepare tenders and \\nadminister contracts in accordance with the national public procurement framework. Despite a focus on \\ngreen, social and innovation procurement at the policy level (the consideration of environmental, social \\nand innovative criteria is mandatory for all tenders), the capacity of contracting authorities to carry out \\ncomplex procurements is often limited. The overall administrative burden of public procurement and the \\nneed to comply with complex requirements is also seen as a significant barrier to accessing EU funds. The \\ngovernment has made efforts to increase market capacity through initiatives such as webinars for potential \\nsuppliers, but interest has been limited. The recent inflation (Chapter 1) has exacerbated these market \\ncapacity challenges, leading suppliers to revisit contracts due to rising input costs and, in some cases, \\nabandoning projects. Czech authorities also face challenges from contracting authorities’ weak capacity \\nand skills to develop procurement strategies and prepare tender documents. The focus of public \\nauthorities, including at the national level, is primarily on complying with procurement legislation and \\nregulations, rather than the strategic use of procurement to deliver outcomes and value for money.  \\nChoosing the wrong procurement strategy can lead to cost overruns, delays, or quality issues. The choice \\nof procurement strategy involves trade-offs between the capabilities to be retained in-house and those \\nsourced from the market, whether projects should be procured through a single or several contracts (e.g. \\nbundling lifecycle phases), and the bidder selection process (OECD, 2021[53]). Czechia has limited \\nexperience with the use of public-private partnerships (PPPs) and other non-traditional delivery models for \\nmajor infrastructure projects. PPPs and other non-traditional models are complex to design, negotiate and \\nimplement. Expanding their use will require carefully evaluating available delivery models, including \\nconsideration of value for money and the optimal allocation of financial, legal and delivery risk. \\n\\n\\n72    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBy improving delivery capacity, the Ministry of Regional Development could help to ensure that Czechia is \\nable to maximise value for money from its large planned infrastructure investments. The following sections \\npropose steps to improve infrastructure delivery capacity in Czechia by increasing support for project \\npreparation, using tools like framework agreements, developing public sector procurement capacity and \\ndeveloping a consistent, evidence-informed approach to decisions on infrastructure delivery models. While \\nmeasuring the impacts of better infrastructure delivery is challenging, one study found that improving \\ninfrastructure delivery could save 15% of total infrastructure expenditure through measures such as \\nstreamlining project delivery, increasing investment in early-stage project planning and design, and taking \\na more strategic approach to procurement (Dobbs et al., 2013[34]). Though simplified, this figure provides \\na general sense of the scale of the opportunity.  \\nIncrease support for project preparation  \\nThe Ministry of Regional Development could work with other stakeholders to build capacity and increase \\nsupport for project preparation. While some institutions, such as the Ministry of Transport, have \\nsophisticated project preparation processes in place, others are less advanced. Smaller entities in \\nparticular face challenges with project preparation. For example, the costs of project design and land \\nacquisition are not eligible for inclusion under most granting programmes, meaning that municipalities often \\nlack the resources to put forward projects for consideration. Municipalities also find it expensive and \\ntechnically challenging to contract the professional services (e.g., environmental impact assessments, \\ntechnical feasibility studies) required to apply for infrastructure investment financing. These challenges in \\nproject preparation have a particularly large impact in the housing sector, as it is municipalities that are \\nprimarily responsible for the delivery of affordable housing projects. In the case of the State Investment \\nSupport Fund, municipal projects generally need to have obtained planning permission and building \\npermits and gone through the procurement process before a grant or loan agreement is finalised. The \\ngrant or loan is only disbursed as construction work is carried out, which can create financing challenges. \\nThis approach, however, is not universal in Czechia: the State Environmental Fund has issued special \\ncalls for project preparation to provide support for large project development (including the development \\nof feasibility and cost-benefit analysis).  \\nTo improve project quality and incentivise early planning and preparation, ministries and state funds could \\nconsider including project preparation in eligible costs when developing grant programmes. Preparation \\ncosts have been estimated to range from approximately 3-5% of total project costs (Global Infrastructure \\nHub, 2019[54]), but investing in project preparation can have significant downstream benefits. Smaller \\nmunicipalities in particular could benefit from support with project design and preparation. Ministries and \\nagencies could consider the increased use of two-round calls, with the first-round funding project \\npreparation and design or reimburse preparation costs after construction approval.  \\nThe Ministry of Regional Development could also take steps to provide direct access to expertise, \\nspecialised support and advice on project preparation. Public sector organisations such as small \\nmunicipalities could be provided with expertise or direct technical assistance in areas such as, for example, \\nfinancial modelling and business case development. Specialised training could be offered in technical, \\neconomic, environmental and social analysis to support investment appraisals, as well as increased \\naccess to and training in data analytics tools. Support could also focus on preparing projects to align with \\nEU objectives and requirements, such as the application of the ‘Do No Significant Harm’ principle. For \\nexample, the Ministry of Regional Development’s proposed Housing Investments Advisory Hub could play \\na role in developing methodologies, formulating best practices, guidelines and frameworks for the effective \\npreparation of affordable housing projects. These could include areas such as site selection, financial \\nstructuring, and stakeholder engagement. The Housing Investment Support Centres could work with \\nmunicipalities to support the application of these methodologies at the local level. Box 2.11 provides \\nexamples from Ireland of initiatives and institutions working to provide both direct support and build the \\ncapacity of contracting authorities. \\n\\n\\n   73 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 2.11. Building project delivery skills in Ireland \\nThe Office of Government Procurement’s Commercial Skills Academy \\nIreland’s Office of Government Procurement (OGP), part of the Department of Public Expenditure, \\nNational Development Plan Delivery and Reform, was established in 2013 with the goal of maximising \\nvalue for money and operational efficiency through the central management of public procurement. One \\nof the OGP’s roles is co-ordination and capacity building in the public procurement system.  \\nThe OGP established the Commercial Skills Academy in 2019. Its objective is to provide public servants \\nwith an understanding of key issues, commercial skills, and best practice approaches for effective \\nproject delivery throughout the entire lifecycle of a public investment project. The Commercial Skills \\nAcademy is centrally funded by the Irish government and delivered at no cost to participants. The \\nacademy is currently focused on Ireland’s Capital Works Management Framework, which consists of a \\nsuite of best practice guidance, standard contracts and mandatory generic template documents that \\nmust be used by contracting authorities on projects which are more than 50% publicly funded. It also \\ncontains template prequalification questionnaires, instructions to tenderers, forms of tender and \\ncontracts. \\nThe Commercial Skills Academy’s offerings include: \\n• \\nA six-day training programme in using the Capital Works Management Framework, focused on \\ndecision making rather than process. Most participants are construction qualified e.g. \\n(engineers, architects) employees of organisations such as local authorities and the Department \\nof Public Works, but eligibility is generally wide and also includes housing authorities, who are \\nnot strictly public sector employees. \\n• \\nOnline self-directed training providing an introduction to procurement legislation and rules, \\nIreland’s Public Spending Code and the Capital Works Management Framework. \\n• \\nSpecialist masterclasses on key topics for the delivery of infrastructure projects such as dispute \\nresolution and contract management. Training is delivered by practitioners from the public and \\nprivate sector.  \\n• \\nThree-day training courses aimed at senior decision makers overseeing organisations \\ndelivering public-funded projects, and covering project governance and oversight, risk and cost \\nmanagement. \\n• \\nConference-style presentations on a specific theme such as green public procurement or \\nbuilding information modelling, with presenters from public and private industry.  \\nTraining sessions are also recorded and available online. The OGP also facilitates regional roundtables \\nand networks to provide opportunities for networking and co-ordination among contracting authorities. \\nAs it begins to expand beyond the structured Capital Works Management Framework to other areas of \\nprocurement, the academy is placing a greater focus on understanding the existing competencies and \\nproficiencies of the workforce.  \\nThe Housing Agency \\nIreland’s Housing Agency was established in 2012 as a centre of expertise to support housing policy \\ndevelopment, and to collaborate with partners to implement effective housing programmes. The \\nHousing Agency is a non-commercial state agency under the Department of Housing, Local \\nGovernment and Heritage and is governed by a board appointed by the minister. Its operations are \\nfunded primarily through a grant from the department.  \\n\\n\\n74    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nThe Agency’s Procurement Unit was created in 2016 and supports local authorities and approved \\nhousing bodies in Ireland with social housing construction, regeneration, infill, upgrade, and \\nprocurement projects. It has specific expertise, knowledge, and experience in the planning, design, and \\nconstruction of public housing and has worked with partners on a range of housing projects, supporting \\nthe delivery of over 3 300 homes in 2021. \\nThe agency offers technical assistance and support for all stages and sizes of public housing projects. \\nThis can include general design and procurement advice, preparing tender documents and managing \\nthe tender process for procuring consultants and works contractors in accordance with Irish and EU \\nprocurement regulations. It also provides support for project management and design, and contract \\nadministration. For example, it has established a framework agreement managed by Ireland’s Office for \\nGovernment Procurement for architect led-design teams. \\nSource: (The Housing Agency, 2022[55]; The Housing Agency, 2022[56])  \\nIncrease the use of framework agreements, particularly for procuring professional services \\nFramework agreements are umbrella agreements for the future supply of goods, services or works. They \\nestablish the terms governing contracts to be awarded by one or more contracting authorities during a \\ngiven period, including maximum price, minimum technical specifications and, where appropriate, \\nquantities (OECD, 2014[57]). For frequently purchased goods, services and works, a framework agreement \\ncan reduce administrative burdens for contracting authorities and suppliers alike, by allowing simplified \\nordering processes once the agreement is in place. If structured to allow second stage competition, where \\nmultiple suppliers under a framework agreement compete on price, they can also generate additional cost \\nsavings (OECD, 2016[58]). Framework agreements can also help address competition challenges: it can \\nbe difficult for small contracting authorities to attract bids from suppliers with the necessary expertise and \\nexperience on their own.  \\nThe Ministry of Regional Development could encourage the expanded use of procurement tools such as \\nframework agreements. It could identify initial areas of focus for framework agreements by aligning the \\ngovernment’s priorities, such as housing and the green transition, with the priorities of small contracting \\nauthorities, such as challenges with project preparation and planning. It could also work with other national \\nbodies to provide smaller contracting authorities, such as municipalities, with access to frameworks \\ndeveloped by larger contracting authorities.  \\nFramework agreements for the development of public housing projects could provide a useful test case. \\nThe proposed Housing Investment Support Centres could play a role in facilitating the development and \\nmanagement of framework agreements to enable municipalities to more easily access services for \\ndeveloping affordable housing projects. The Support Centres could work closely with municipalities to \\nidentify their specific requirements and establish framework agreements outlining the terms and \\nprocedures for municipalities to access a pool of pre-qualified service providers. By centralising the \\nprocurement process, the Support Centres would be able to streamline the selection and contracting of \\nservices, reducing the administrative burden for municipalities and ensuring consistency in quality and \\npricing.  \\nAttention should be given to the design of framework agreements to avoid regional disparities which could \\nhamper infrastructure investment objectives. As a result of the need to standardise, framework agreements \\nrun the risk of neglecting the needs of specific contracting authorities. This diversity of needs can be \\naddressed by dividing frameworks into lots. In the case of Czechia, it would be important to ensure \\nframeworks are accessible to contracting authorities across the country and that successful suppliers are \\nnot concentrated in specific urban areas. This could be accomplished by dividing frameworks into regional \\nlots. Very small contracting authorities, such as some municipalities, might also struggle to attract bids due \\nto the low value of their needs. This could be addressed by creating a low-value lot to award contracts \\n\\n\\n   75 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nbelow a certain threshold. To ensure that lots are awarded to different suppliers, contracting authorities \\ncan also limit the number of lots for which economic operators can bid or which a single economic operator \\ncan be awarded. These approaches, however, must be balanced against the risk that some lots may not \\nreceive bids or that economies of scale will be diminished (SIGMA, 2016[59]; OECD, 2014[57]). \\nDeveloping framework agreements requires an understanding of contracting authorities’ requirements, as \\nwell as the capabilities and capacity of the market. Framework agreements also require follow-up to ensure \\nthat they allow for the successful matching of needs with market capabilities. Supporting contracting \\nauthorities and suppliers while initiating framework agreements helps to create a structured environment. \\nSupport can include information events, guidance for contracting authorities and suppliers on how to use \\nthe framework, help-desk services, and training to both contracting authorities and suppliers. For example, \\nFinland has developed templates to be used by contracting authorities during the call-off stage to ensure \\nthat key procurement principles, such as fairness and transparency, are included (OECD, 2017[60]). \\nDevelop the procurement capacity of the public sector  \\nInfrastructure procurement involves complex legal, financial, technical and operational considerations that \\nrequire specialised knowledge and skills. If public sector officials lack this procurement expertise, they may \\nstruggle to deliver infrastructure investments effectively. In Czechia, public procurement is seen as a \\nsignificant barrier to accessing and efficiently using EU funds, hindering absorption and making it \\nchallenging to complete projects within programme time limits. \\nThe large number of contracting authorities in Czechia makes it challenging to build the professionalisation \\nof the procurement workforce. There are over 1 800 active contracting authorities at the central, regional \\nand local level responsible for their own public procurement, without central co-ordination. While large \\ncontracting authorities often have a specialised purchasing department, regional and local authorities often \\nlack full-time public procurement professionals (European Commission, 2020[61]). These smaller \\ncontracting authorities often need to hire consultants to undertake procurements, increasing project costs \\nand administrative overhead.  \\nThe Ministry of Regional Development could provide infrastructure-specific support to increase the \\nprofessionalism of the procurement workforce. The ministry is responsible for public procurement \\nlegislation and regulation in Czechia and has been active in professionalising public procurement through \\nthe development of training. This has included capacity building seminars and specialised training in \\nspecific areas (e.g., professional seminars for hospitals focused on the procurement of medicines and \\nmedical supplies). The ministry also co-operates with professional organisations and other relevant \\ninstitutions to develop methodological guidance on public procurement. Other national institutions also \\nprovide support. The Ministry of the Environment publishes methodological guidance for green public \\nprocurement and the Ministry of Labour and Social Affairs has published reports highlighting good practice \\non the use of social procurement in Europe and Czechia (Ministry of Labour and Social Affairs, 2017[62]; \\nMinistry of Labour and Social Affairs, 2019[63]; Ministry of the Environment, n.d.[64]). The Office for the \\nProtection of Competition has also offered seminars and training on public procurement, including an \\neducational programme for small communities focused on multi-criteria evaluation, prepared jointly with \\nthe Union of Towns and Municipalities of Czechia (European Commission, 2020[61]). \\nMore capacity is also needed in the use of strategic procurement by contracting authorities. It is important \\nfor contracting authorities to consider non-financial criteria in order to achieve strategic policy goals, \\nparticularly those related to the green transition. However, strategic procurement can be more complex, \\nrequiring specific technical and legal expertise. Small contracting authorities may struggle to ensure \\ncompliance and are often risk averse, while sometimes lacking a clear understanding of the potential \\nbenefits. A 2020 report prepared by the Union of Towns and Municipalities highlighted the following barriers \\nto the use of strategic procurement in Czechia (Union of Towns and Municipalities of Czechia, 2020[65]):  \\n\\n\\n76    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nAdministrative complexity: Strategic procurement requires a higher level of experience and \\nknowledge and there is no generic guidance or model forms that can be followed. It also requires \\ndecisions about when and how to apply different aspects of strategic procurement. \\n• \\nLack of market capacity and interest: Contracting authorities are already faced with a market \\nenvironment characterised by low interest from potential suppliers. There is a concern that \\nadditional requirements will further discourage suppliers from bidding for public contracts. They are \\nalso concerned that suppliers will not be able to meet additional performance requirements related \\nto strategic procurement. \\n• \\nHigher prices and lower quality: Contracting authorities are concerned that the requirements of \\nstrategic procurement will result in higher prices. In the area of social procurement, they are \\nreluctant to require the involvement of disadvantaged people in the labour market due to quality \\nconcerns. \\n• \\nChallenges with managing supplier performance: Contract management and evaluating supplier \\ncompliance is more complex for strategic procurement. For example, contracting authorities found \\nit more technically complex or administratively burdensome to verify whether suppliers were \\nmeeting environmental and social requirements.  \\n• \\nChallenges with compliance and control bodies: Contracting authorities are concerned that using \\nstrategic procurement imposes additional risks of non-compliance with legal and regulatory \\nrequirements. They reported that control bodies were generally not aware or supportive of strategic \\nprocurement. Contracting authorities tend to be particularly cautious in the case of procurements \\nfinanced by EU funds. \\nIn the 2020 OECD Survey on the Governance of Infrastructure, all surveyed countries reported employing \\na combination of financial and qualitative criteria to select proposals (Figure 2.6). However, less than half \\nuse lifecycle costs for awarding contracts (13 out of 30 OECD countries or 43%; 7 out of 16 EU countries \\nor 44%). While Czechia did not respond to this question in the 2020 OECD Survey, officials interviewed \\nfor this project noted an increasing emphasis on sustainable procurement, with a focus on green, social \\nand innovation factors. However, capacity challenges make more complex procurements challenging for \\nmany contracting authorities. Officials indicated that tender selection is almost always made on the basis \\nof price rather than best value, as the use of non-financial criteria requires more capacity and expertise \\nfrom contracting authorities. Recognising this challenge, the Policy Statement of the Government commits \\nto expanding methodological support for public procurement to make it easier for buyers to consider non-\\nfinancial criteria (Government of Czechia, 2022[6]). There may also be areas of good practice which could \\nform the basis for knowledge sharing: Czech officials identified the rail sector as a good practice example \\nof the use of best value in procurement.  \\n\\n\\n   77 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 2.6. Nearly all OECD countries combine financial and qualitative criteria to select proposals \\nMechanisms used by OECD countries to help identify proposals offering the best value for money, 2020 \\n \\nNote: Data for Belgium are based on the survey responses from Flanders only. \\nSource: OECD (2020), Survey on the Governance of Infrastructure. \\nProcurement capacity can be built through the use of methodological assistance tools (e.g., guidelines, \\nmanuals, standardised templates, a help desk, direct support and advice to implementing actual \\nprocurement procedures), and practical training (on-the-job training, mentoring, and job swapping). \\nExamples include: \\n• \\nProviding examples and guides to encourage innovation and the adoption of good practices in the \\nconstruction industry. For example, a Danish Housing Authority initiative is working to provide \\neasily accessible examples of cheap, sustainable construction for builders, consultants, project \\nsupervisors, contractors and manufacturers of building materials (Ministry of the Interior and \\nHousing, 2021[66]). Encouraging and facilitating the use of modular construction is also anticipated \\nto have benefits including reducing costs, accelerating build times, and providing greater cost \\ncertainty (McKinsey & Company, 2019[67]; Global Infrastructure Hub, 2020[68]).  \\n• \\nDeveloping templates and standardised contracts and tender documents to simplify the \\nprocurement process and reduce administrative burdens for contracting authorities and the private \\nsector (as in Ireland’s Capital Works Management Framework, outlined in Box 2.11.  \\n• \\nEncouraging and supporting the use of innovative tools such as building information modelling \\n(BIM). By providing a comprehensive and integrated approach to project design, construction and \\nmanagement, the use of BIM can help to improve collaboration between stakeholders throughout \\nthe infrastructure lifecycle. \\n• \\nTools such as ProcurCompEU, the European public procurement competency framework, may also \\nbe useful in identifying areas of strengths and weaknesses (Box 2.12). \\n\\n\\n78    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nThere may be a role for the Ministry of Regional Development’s proposed Housing Investments Advisory \\nHub and expert centres to develop good practices in procurement related to housing, and for regional \\ncentres to disseminate and promote methodologies. The hub and national centres could also work to \\nensure alignment and co-ordination across national institutions providing methodological support for \\nprocurement by municipalities in sectors other than housing, such as the Ministry of the Environment, \\nMinistry of Labour and Social Affairs and the Office for the Protection of Competition, as well as \\nengagement with relevant control bodies. \\nBox 2.12. ProcurCompEU: The European competency framework for public procurement \\nprofessionals \\nIn 2017, the European Commission issued a Recommendation on the professionalisation of public \\nprocurement to encourage Member States to develop public procurement professionalisation policies \\nand initiatives. The Commission supports Member States by providing guidance to practitioners, \\ntraining, technical assistance and facilitating the exchange of good practices and innovative \\napproaches. As part of this support, ProcurCompEU is a voluntary tool developed by the Commission to \\nhelp contracting authorities, public procurement authorities and training organisations to identify and \\naddress competences that require strengthening. \\nOverview of ProcurCompEU \\nProcurCompEU consists of three elements:  \\n• \\nA competency matrix which defines 30 competences (knowledge, skills and attitudes) that \\npublic procurement professionals should demonstrate in order to carry out public procurement \\nprocedures that bring value for money. The competences are grouped in two main categories: \\nprocurement-specific competences and soft competences. \\n• \\nA self-assessment tool which public procurement professionals and organisations can use to \\nassess their levels of proficiency and organisational maturity in the different competences \\nidentified in the competency matrix. \\n• \\nA training curriculum which outlines the content of training for developing the competences in \\nthe competency matrix. The training curriculum describes the standard training content and \\nlearning outcomes for 30 training modules. \\nProcurCompEU implementation case study: Slovenia \\nThe Slovenian Public Procurement Directorate’s (PPD) main tasks are public procurement policy design \\nand implementation, developing e-procurement tools and services, and providing assistance to \\ncontracting authorities and economic operators that carry out or participate in public procurement \\nprocedures. The PPD implemented ProcurCompEU as part of its professionalisation action plan. The \\nPPD developed a Slovenian-specific competency framework (including competency matrix and job \\nprofiles), self-assessment tool and training curriculum adapted from ProcurCompEU. These tools form \\npart of the training programme, called the Public Procurement Academy. The PPD takes a gradual \\napproach to the implementation of the training curriculum: it will first be voluntary, before potentially \\nbecoming mandatory, and could possibly lead to a certification. This approach will allow for the \\nadjustment and refinement of the training curriculum content or implementation process to ensure it \\nresponds to the expectations and needs of stakeholders. \\nSource: (OECD, 2023[50]; European Commission, 2020[66]; European Commission, 2020[67]) \\n\\n\\n   79 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nDevelop a consistent, evidence-based approach to deciding infrastructure delivery models  \\nPublic-private partnerships (PPPs) have become a prominent method for delivering public infrastructure \\nglobally. They can deliver value for money when the right institutional capacities and processes are in \\nplace. However, there should be no institutional, procedural or accounting bias either in favour for or \\nagainst PPPs. Instead, long-term planning and project appraisal should guide project choice independently \\nfrom decisions on how those assets are delivered (OECD, 2017[1]). The OECD Recommendation on the \\nGovernance of Infrastructure advises adherents to carefully evaluate available delivery modes against \\npreviously defined criteria based on projects’ characteristics, optimal risks allocation and the use of value \\nfor money analytical tools (OECD, 2020[15]). Given the range of choices, countries should determine their \\napproach to procurement based on a careful evaluation of the national, sectoral and project-specific \\ncontext, rather than applying one delivery strategy to all projects by default. \\nThere is a renewed interest in the use of PPPs in Czechia following a period when their use was not \\ngenerally considered at a national level. This was largely due to negative experiences with PPPs in the \\n1990s and 2000s, which led to political sensitivity and discouraged the use of these alternative financing \\nand delivery modes. A PPP Unit previously existed in the Ministry of Finance, and was responsible for \\npreparing tender documentation, undertaking feasibility studies and providing guidance and advice, but it \\nhas become inactive. There is currently one highway project being delivered as a PPP at the national level: \\nthe D4 Highway PPP project consists of the construction of approximately 32 km of new highway, and the \\noperation and maintenance of approximately 16 km of existing highway for a period of 28 years under a \\ndesign-build-finance-operate-maintain model (including approximately four years of construction). A \\nsubsequent highway project, the D35, is also being prepared for PPP delivery.  \\nThe Policy Statement of the Government commits to evaluating the PPP delivery of the D4 motorway and \\nto considering the use PPPs in other transport infrastructure projects (Government of Czechia, 2022[6]). \\nWhile there is currently no formal system at the national level for deciding on the most appropriate delivery \\nmodel, new national guidelines for the development of affordable housing through PPPs are currently being \\ndrafted. A legislative amendment is also underway which would enable the issuance of bonds to finance \\ntransport infrastructure and to implement PPPs across all transport modes (State Fund for Transport \\nInfrastructure, 2022[68]). \\nThe Ministry of Regional Development could work with the Ministry of Finance to establish a standard \\nframework for making decisions on infrastructure delivery models. This could include using specific \\nmethodologies for assessing value for money, including creating an analytical tool for comparative \\nassessment of service delivery options. Factors to be considered could include projects’ scale and \\nduration, the scope for innovation and design integration, and the assessment of relevant risk transfers \\nand financial design (OECD, 2020[35]). This type of analysis should consider aspects such as the \\ncomparative costs of financing, construction, maintenance and operations over the whole lifetime of the \\nproject; whether project risks can be clearly defined and measured; the level of market competition and \\ncapacity; the extent to which the project outputs can be clearly and completely defined ex-ante; whether \\nthe project is of sufficient size to justify PPP transaction costs; and the potential for whole-of-life benefits \\nand innovation from combining different phases in one contract (OECD, 2012[69]). This could allow the \\nadvantages and weaknesses of PPPs to be compared to traditional delivery and other forms of private \\ncapital involvement in infrastructure projects in an evidence-informed and consistent way. \\nTo help ensure that decisions are informed by evidence and to build public trust, delivery model selection \\ncould be made more transparent. This could include publishing information about PPP projects and the \\nvalue-for-money analysis and involving relevant stakeholders, such as civil society organisations, in the \\ndecision-making process. Analysis should be scaled to the complexity and size of the project. It could be \\nconducted by the entity responsible for the project and reviewed by a body with the necessary expertise, \\nsuch as the Ministry of Finance. In the 2020 OECD Survey on the Governance of Infrastructure, Czechia \\nindicated that formal bodies such as parliamentary committees and audit institutions were involved in \\n\\n\\n80    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\noverseeing infrastructure delivery, but civil society organisations and the wider public were not. The \\nOECD’s Principles for the Public Governance of Public-Private Partnerships suggest that active \\ninvolvement by non-government organisations can create transparency for problematic issues that might \\notherwise be overlooked and become serious problems if not addressed at an early stage (OECD, \\n2012[69]).   \\nA strong decision-making framework could help ensure the PPP model is applied where there is evidence \\nfor increased value for money. Economic efficiency and value for money throughout the lifecycle of the \\nasset should be central to decisions on how to mobilise private investment to deliver infrastructure. PPPs \\nare therefore only one of several alternatives or tools for infrastructure financing, and their applicability \\ndepends on individual cases. While they offer advantages such as access to private sector financing and \\nexpertise, they can be complex and require careful oversight. Given their long-term nature, particular care \\nshould be given to assessing value for money and aligning the objectives of the public sector with the profit \\nobjectives of the private partner (OECD, 2012[69]).  \\nThe 2020 OECD Survey on the Governance of Infrastructure asked countries whether the decision to \\nprocure an asset was made before the choice of delivery mode (Figure 2.7). Most surveyed countries \\nindicated that they always (11 out of 31 OECD countries or 36%; 8 out of 16 EU countries or 50%) or more \\nthan 50% of the time (11 OECD countries or 36%; 3 EU countries or 19%) decide on the procurement of \\nan asset before choosing the mode of delivery. Only 23% of OECD countries (7 out of 31) reported \\nchoosing the delivery model before deciding to procure the project more than 50% of the time.  \\nFigure 2.7. Most OECD countries usually decide to procure an asset before choosing the delivery \\nmode \\n \\nNote: Data for Belgium are based on the survey responses from Flanders only. \\nSource: 2020 OECD Survey on the Governance of Infrastructure. \\n\\n\\n   81 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nCzechia could leverage the capacity being developed in the Ministry for Transport and State Fund for \\nTransport Infrastructure through the implementation of projects like the D4 motorway to inform the future \\ndevelopment and delivery of PPPs across government. This would allow the government as a whole to \\nlearn and improve the quality of future projects, help reduce risks, and deliver infrastructure more \\neffectively. It could also help build institutional capacity across sectors and increase public confidence in \\nthe PPP model by showing that government is learning from past experiences and seeking to improve the \\nPPP process. Developing governance guidelines for the management of PPP contracts, including defining \\nthe roles and responsibilities of different stakeholders, establishing dispute resolution mechanisms and \\nundertaking ongoing monitoring and evaluation, would all be valuable.   \\nCzechia could consider reintroducing a specialised PPP Unit rather than having skills and approaches \\ndeveloped and concentrated in specific sectors such as transport and housing. Given the complexity of \\nPPPs and their infrequent use, it can be advantageous to pool critical skills in a PPP Unit that is made \\navailable to the relevant ministries and agencies (OECD, 2012[69]). The unit could serve as a resource for \\nministries, agencies and subnational governments, providing guidance and support on PPP project \\ndevelopment and implementation. Its role could also include collecting potential projects to build a PPP \\npipeline and encouraging collaboration and information sharing between stakeholders involved in PPP \\nprojects.  \\nSummary of key recommendations  \\nGiven the challenges of implementing a full suite of reforms, Czech authorities could consider sequencing \\nthe recommendations made above. By grouping recommendations according to the time horizon needed \\nto implement them effectively (short term, and medium to long term), Czech authorities could allocate \\nresources to reforms in a way which would provide incremental benefits. A potential sequencing is included \\nbelow. \\nShort-term reforms \\n1. Improve investment efficiency by increasing the use of framework agreements. For \\nfrequently purchased services and works, a framework agreement can secure the required \\nexpertise, generate savings and reduce administrative burdens for contracting authorities and \\nsuppliers. \\n• \\nThe Ministry of Regional Development could develop and manage framework agreements for \\ninfrastructure services to enable smaller contracting authorities to efficiently access planning and \\nproject development services.  \\n• \\nUse framework agreements for services related to public housing projects as a useful test case. \\nThe Ministry of Regional Development’s proposed Housing Investment Support Centres could play \\na role in facilitating the development and management of framework agreements by working \\nclosely with municipalities to identify their specific challenges and needs in this sector. \\n• \\nGive careful attention to the design of framework agreements to avoid regional disparities which \\nwould hamper infrastructure investment objectives. \\n2. Develop a consistent, evidence-informed approach to decisions on infrastructure delivery \\nmodels. There should be no institutional, procedural or accounting bias either in favour of or \\nagainst PPPs. Long-term planning and project appraisal should guide project choice independently \\nof decisions on how those assets are delivered. Given the range of choices, the approach to \\nprocurement should be based on a careful evaluation of the national, sectoral and project-specific \\ncontext. \\n\\n\\n82    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nThe Ministry of Regional Development and the Ministry of Finance could establish a standard \\nframework or analytical tool for decisions on infrastructure delivery models, including the \\ncomparative evidence-based assessment of delivery model options. \\n• \\nConsider reintroducing a PPP Unit as a resource for ministries, agencies and subnational \\ngovernments. Given the complexity of PPPs and their infrequent use, it can be advantageous to \\npool the skills and experience in a PPP Unit so that they can be made available to entities requiring \\nsuch expertise. \\nMedium to long-term reforms \\n3. Increase funding and direct support for project preparation to improve infrastructure \\ndelivery. Smaller entities face challenges in project preparation, which is a particular issue for the \\nhousing sector as many municipalities lack long-term experience in undertaking investment or the \\nresources to invest in capacity. This could be addressed by providing funding for project \\npreparation activities and providing direct support in priority sectors such as housing.  \\n• \\nMinistries and state funds could include project preparation in eligible costs when developing grant \\nprogrammes. Without the resources for project preparation, small municipalities can struggle to \\nbring forward eligible projects. \\n• \\nThe Ministry of Regional Development could provide direct access to expertise, support, and \\nadvice on housing project preparation through its proposed Housing Investment Support Centres, \\ngiven the importance of the sector in Czechia. \\n4. Develop the procurement capacity of the public sector to improve value for money in project \\ndelivery. Infrastructure procurement requires sophisticated legal, financial, technical and \\noperational expertise. The large number of contracting authorities in Czechia makes it challenging \\nto develop this expertise to deliver infrastructure projects effectively. \\n• \\nThe Ministry of Regional Development could provide infrastructure-specific support to increase the \\nprofessionalisation of the procurement workforce, with a focus on increasing the use of non-\\nfinancial criteria, including environmental criteria. \\n• \\nThe Ministry of Regional Development’s proposed Housing Investments Advisory Hub and \\nHousing Investment Support Centres would provide an opportunity to develop and directly apply \\ngood practices in the procurement of public housing. These capacity building activities could later \\nbe expanded to other sectors. \\n \\n \\n\\n\\n   83 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nNotes\\n \\n1 It is chaired by the Prime Minister and includes the ministers of the large infrastructure ministries. \\n2 https://portal.cenia.cz/eiasea/view/eia100_cr?lang=en \\n3 https://portal.cenia.cz/eiasea/view/SEA100_koncepce \\n4 https://dotaceeu.cz/cs/statistiky-a-analyzy/mapa-projektu \\n5 https://www.projektovezamery.cz/ \\n6 Figures exclude countries that reported conducting assessments on an ad hoc basis. \\n7 https://dotaceeu.cz/cs/fondy-eu/narodni-organ-pro-koordinaci/evaluace/knihovna-evaluaci \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n\\n\\n84    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\nReferences \\n \\nDemmou, L. and G. 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(2021), The Covid-19 legacy: More Resilient Procurement Strategies?, \\nhttps://www.oecd.org/gov/public-procurement/infrastructure-and-public-procurement-webinar-\\nseries-2021.htm. \\n[51] \\nMarine Information and Data Centre (n.d.), Marine Information and Data Centre, \\nhttps://www.informatiehuismarien.nl/uk/about-us/ (accessed on 5 April 2023). \\n[46] \\nMinistry of Industry and Trade (2020), The National Energy and Climate Plan of Czechia, \\nhttps://www.mpo.cz/en/energy/strategic-and-conceptual-documents/the-national-energy-and-\\nclimate-plan-of-the-czech-republic--252018/. \\n[31] \\nMinistry of Industry and Trade (2015), State Energy Policy of Czechia, \\nhttps://www.mpo.cz/assets/en/energy/state-energy-policy/2017/11/State-Energy-Policy-\\n_2015__EN.pdf. \\n[32] \\nMinistry of Labour and Social Affairs (2019), Responsible Public Procurement: European Practice, \\nhttps://sovz.cz/wp-content/uploads/2019/10/responsible-public-procurement-european-\\npractice.pdf. \\n[63] \\nMinistry of Labour and Social Affairs (2017), Socially Responsible Public Procurement in Czechia: \\nSelection of Best Practice Case Studies, https://sovz.cz/wp-\\ncontent/uploads/2017/08/sovz_case_studies_en_komplet.pdf. \\n[62] \\nMinistry of Regional Development (2021), Housing Concept of Czechia 2021+, \\n[29] \\n \\n\\n\\n86    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\nhttps://mmr.gov.cz/getmedia/30528174-7e61-421e-a058-5f39aa4f09c9/KB-2021-_komplet-\\nweb(C)_max.pdf.aspx?ext=.pdf. \\nMinistry of Regional Development (2019), Regional Development Strategy of Czechia 2021+, \\nMinistry of Regional Development, https://mmr.cz/getmedia/a9985cb6-b672-4a97-a92c-\\nc4c68bea2925/EN-III_ma_SRR-prac_doplneni-schemat-a-map_kontrola.pdf.aspx?ext=.pdf. \\n[10] \\nMinistry of Regional Development (n.d.), Strategy Database: Portal of Strategic Documents in \\nCzechia, https://www.databaze-strategie.cz/cz/info (accessed on 10 July 2023). \\n[22] \\nMinistry of the Environment (n.d.), Lean public administration, \\nhttps://www.mzp.cz/cz/setrna_verejna_sprava (accessed on 5 May  2023). \\n[64] \\nMinistry of Transport (2021), Transport Policy of Czechia for the period 2021-2027, with an \\noutlook until 2050, https://www.mdcr.cz/getattachment/Dokumenty/Strategie/Dopravni-politika-\\na-MFDI/Dopravni-politika-CR-pro-obdobi-2014-2020-s-\\nvyhled/Dopravni_Politika_CR_ENG.pdf.aspx. \\n[30] \\nMinistry of Transport (2018), Departmental Guideline for the Evaluation of Economic \\nEffectiveness of Transport Construction Projects, https://www.sfdi.cz/soubory/obrazky-\\nclanky/metodiky/2017_03_departmental-methodology-full.pdf. \\n[33] \\nOECD (2023), “Delivering environmentally sustainable and climate-resilient infrastructure”, in \\nGovernment at a Glance 2023, OECD Publishing, Paris, https://doi.org/10.1787/2387658e-en. \\n[19] \\nOECD (2023), OECD Public Governance Reviews: Czech Republic: Towards a More Modern and \\nEffective Public Administration, OECD Public Governance Reviews, OECD Publishing, Paris, \\nhttps://doi.org/10.1787/41fd9e5c-en. \\n[5] \\nOECD (2023), “Professionalising the public procurement workforce: A review of current initiatives \\nand challenges”, OECD Public Governance Policy Papers, No. 26, OECD Publishing, Paris, \\nhttps://doi.org/10.1787/e2eda150-en. \\n[50] \\nOECD (2023), Public Investment in Bulgaria: Planning and Delivering Infrastructure, OECD Public \\nGovernance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/b73ef3b4-en. \\n[13] \\nOECD (2023), “Stakeholder participation in infrastructure decision making”, in Government at a \\nGlance 2023, OECD Publishing, Paris, https://doi.org/10.1787/59c7c2b2-en. \\n[24] \\nOECD (2023), “Strengthening environmental considerations in public investment in \\nIreland: Assessment and recommendations”, OECD Public Governance Policy Papers, No. 35, \\nOECD Publishing, Paris, https://doi.org/10.1787/83b97aca-en. \\n[38] \\nOECD (2022), Survey on the Governance of Infrastructure - Part I: Ensure transparent, \\nsystematic and effective stakeholder participation. \\n[26] \\nOECD (2021), OECD Implementation Handbook for Quality Infrastructure Investment: Supporting \\na Sustainable Recovery from the COVID-19 Crisis, OECD Publishing, \\nhttps://www.oecd.org/finance/oecd-implementation-handbook-for-quality-infrastructure-\\ninvestment.htm. \\n[14] \\nOECD (2021), “Procurement strategy in major infrastructure projects: Piloting a new approach in \\nNorway”, OECD Public Governance Policy Papers, No. 06, OECD Publishing, Paris, \\n[53] \\n \\n\\n\\n   87 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\nhttps://doi.org/10.1787/38996343-en. \\nOECD (2020), “Infrastructure Governance Review of Argentina”, OECD Journal on Budgeting, \\nhttps://doi.org/10.1787/f2574b7b-en. \\n[39] \\nOECD (2020), OECD Compendium of Policy Good Practices for Quality Infrastructure Investment, \\nOECD Publishing, http://, www.oecd.org/finance/oecd-compendium-of-policy-good-practices-\\nforquality-infrastructure-investment.htm. \\n[35] \\nOECD (2020), Policy Actions for Affordable Housing in Latvia, \\nhttps://issuu.com/oecd.publishing/docs/latvia_housing_report_web-1. \\n[52] \\nOECD (2020), Recommendation of the Council on the Governance of Infrastructure, \\nhttps://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0460. \\n[15] \\nOECD (2020), Supporting Better Decision-Making in Transport Infrastructure in Spain \\n: Infrastructure Governance Review, OECD Publishing, Paris, \\nhttps://doi.org/10.1787/310e365e-en. \\n[11] \\nOECD (2020), Survey on the Governance of Infrastructure, \\nhttps://qdd.oecd.org/subject.aspx?Subject=GOV_INFRA. \\n[23] \\nOECD (2019), The Path to Becoming a Data-Driven Public Sector, OECD Digital Government \\nStudies, OECD Publishing, Paris, https://doi.org/10.1787/059814a7-en. \\n[43] \\nOECD (2017), Getting Infrastructure Right: A framework for better governance, OECD Publishing, \\nhttps://doi.org/10.1787/9789264272453-en. \\n[1] \\nOECD (2017), Recommendation of the Council on Open Government, \\nhttps://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0438. \\n[25] \\nOECD (2017), “Strategic practices for the effective use of framework agreements in Chile”, in \\nPublic Procurement in Chile: Policy Options for Efficient and Inclusive Framework Agreements, \\nOECD Publishing, Paris, https://doi.org/10.1787/9789264275188-6-en. \\n[60] \\nOECD (2017), The Governance of Land Use in the Czech Republic: The Case of Prague, OECD \\nRegional Development Studies, OECD Publishing, Paris, \\nhttps://doi.org/10.1787/9789264281936-en. \\n[12] \\nOECD (2016), The Korean Public Procurement Service: Innovating for Effectiveness, OECD \\nPublic Governance Reviews, OECD Publishing, Paris, \\nhttps://doi.org/10.1787/9789264249431-en. \\n[58] \\nOECD (2014), Manual for Framework Agreements, https://www.oecd.org/gov/ethics/manual-\\nframework-agreements.pdf. \\n[57] \\nOECD (2012), Recommendation of the Council on Principles for Public Governance of Public-\\nPrivate Partnerships, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0392. \\n[69] \\nOECD (n.d.), Ireland: National Development Plan 2021-2030, https://infrastructure-\\ntoolkit.oecd.org/wp-content/uploads/Ireland_NDP.pdf. \\n[27] \\nOffice of Projects Victoria (n.d.), Victorian Major Projects Pipeline, \\n[17] \\n \\n\\n\\n88    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\nhttp://www.opv.vic.gov.au/Pipeline (accessed on 17 April 2023). \\nRijkswaterstaat (n.d.), Rijkswaterstaat Publication Platform, https://open.rws.nl/ (accessed on \\n5 April 2023). \\n[45] \\nRuiz Rivadeneira, A. and P. Mcmaster (2023), “Mapping institutional arrangements for \\ninfrastructure governance in OECD countries”, OECD Working Papers on Public Governance, \\nNo. 62, OECD Publishing, Paris, https://doi.org/10.1787/31825d0d-en. \\n[21] \\nSchwartz, G. et al. (eds.) (2020), Well Spent, International Monetary Fund, Washington, D.C., \\nhttps://doi.org/10.5089/9781513511818.071. \\n[3] \\nSIGMA (2016), Division of Contracts into Lots, OECD Publishing, \\nhttps://www.sigmaweb.org/publications/public-procurement-policy-brief-36-200117.pdf. \\n[59] \\nState Fund for Transport Infrastructure (2022), Budget of the State Fund for Transport \\nInfrastructure for 2023 and the medium-term outlook for 2024 and 2025, \\nhttps://www.sfdi.cz/soubory/obrazky-clanky/rozpocet/2023_rozpocet_text-rozpoctu.pdf. \\n[68] \\nThe Housing Agency (2022), Annual Report 2021, \\nhttps://www.housingagency.ie/sites/default/files/2023-01/The%20Housing%20Agency%20-\\n%202021%20Annual%20Report%20English.pdf. \\n[56] \\nThe Housing Agency (2022), Strategic Plan 2022-2024, \\nhttps://www.housingagency.ie/sites/default/files/2022-\\n01/Housing%20Agency%20Strategic%20Plan%202022-2024%20online.pdf. \\n[55] \\nUnion of Towns and Municipalities of Czechia (2020), Examples of Good Practice in Voluntary \\nAssociations of Municipalities. \\n[65] \\nWorld Bank (2021), Infrastructure Governance Assessment Framework, \\nhttps://thedocs.worldbank.org/en/doc/96550c14d62154355b6edc367d4d7f33-\\n0080012021/infrastructure-governance-assessment-framework-december-2020. \\n[36] \\nWorld Bank (2020), Infratech Value Drivers, World Bank, \\nhttps://openknowledge.worldbank.org/entities/publication/675dc4d5-56fb-535d-9c32-\\nd6d2b17e0dd0. \\n[48] \\n \\n \\n \\n\\n\\n   89 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nThis chapter analyses the challenges in the Czechia infrastructure \\ngovernance system at the subnational level and makes recommendations \\nto address them. After providing an overview of the main features and \\nchallenges of subnational infrastructure in Czechia, it focuses on ways to \\nimplement a place-based approach to infrastructure planning and to build \\nstrong and fruitful partnerships across governments. It also looks at the \\nimportance of strengthening inter-municipal co-operation and increasing \\nsubnational administrative capacity to improve the quality and efficiency of \\ninfrastructure investment. Finally, the chapter examines how to increase the \\nfunding and financing capacity of Czech subnational governments to meet \\ninfrastructure investment needs. \\n \\n3 Improving subnational \\ninfrastructure investment  \\n\\n\\n90    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nSummary of recommendations  \\nGiven the challenges of implementing a full suite of reforms simultaneously, Czech authorities could consider sequencing concrete actions under \\nbroader recommendations. By grouping actions according to the time horizon (short term, and medium to long term) needed to implement them \\neffectively, Czech authorities could allocate resources to reforms in a way which would provide incremental benefits. However, it should be noted that \\nthe concrete actions listed below, irrespective of their time horizon, are complementary and interconnected. \\nTable 3.1. Summary of recommendations and concrete actions to support their effective implementation \\n \\nShort term \\nMedium to long term \\nSubnational level recommendation 1: Implement a place-based approach to infrastructure planning among levels of government \\nConcrete actions to support \\nthe implementation of \\nrecommendation 1 \\n \\n \\n1.1. Foster effective co-ordination across sectors and levels of \\ngovernment to enable place-based infrastructure planning. \\nThere are several venues that Czechia can explore. Regardless of \\nthe platform, it is crucial to involve both decision-makers (e.g., \\nministers) and technical infrastructure planners in the dialogue.    \\n1.2. Support regions to achieve more integrated and forward-\\nlooking infrastructure planning. Regions play a critical role in \\nplace-based infrastructure planning, both in co-ordinating sectoral \\ninfrastructure in the regions and co-ordinating local infrastructure \\nplanning beyond administrative jurisdictions – this significant role \\nshould be further recognised in the multi-level infrastructure \\nplanning system. \\n1.3. Promote high-quality joint municipal infrastructure planning, \\nespecially at the scale of functional areas (e.g., micro-\\nregions) to maximise local investment outcomes. Czechia \\ncould provide financial and non-financial incentives as well as \\ntargeted capacity building activities in this regard.  \\nSubnational level recommendation 2: Establish strong and fruitful partnerships across levels of government \\nConcrete actions to support \\nthe implementation of \\nrecommendation 2 \\n2.1. Establish an overarching co-ordination platform in which \\nnational and subnational actors could align the planning, \\nprioritisation, and implementation of infrastructure \\ninvestment projects. A co-ordination platform needs to bring \\n2.2. Develop formal contractual agreements across levels of \\ngovernment to align objectives for efficient and resilient \\ninfrastructure investments and make national and \\nsubnational governments real partners. Contracts may help \\n\\n\\n   91 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\nShort term \\nMedium to long term \\ntogether at a minimum representatives from the Ministry of \\nRegional Development, Ministry of Transport, Ministry of the \\nEnvironment and the Ministry of Finance as well as the different \\nassociation of municipalities, including representatives from \\nPrague and the 13 regions. \\nCzechia identify common targets, set clear and transparent \\nobjectives, share information, and make credible engagements. \\n2.3. Strengthen stakeholder engagement at all levels of \\ngovernment to better assess investment needs, the \\nenvironmental and social sustainability as well as the social \\nacceptability of infrastructure projects, among other benefits. \\nSubnational level recommendation 3: Reinforce inter-municipal co-operation \\nConcrete actions to support \\nthe implementation of \\nrecommendation 3 \\n3.1. Reinforce co-operation across Czech municipalities \\nthroughout the investment cycle to enhance the quality and \\neffectiveness of infrastructure. To address high administrative \\nfragmentation at the local level, it is crucial to reach a relevant \\nscale and the adequate capacities to invest in infrastructure. \\n3.2. Target and encourage inter-municipal co-operation for \\ninfrastructure investments at the functional scale. In urban \\nand rural areas, investments are best planned when seen from the \\nperspective of functional areas with networked villages, towns and \\nmore dispersed areas as economic relations and flows of goods \\nand people do not stop at the administrative border. \\nSubnational level recommendation 4: Enhance subnational administrative capacities for quality infrastructure investment \\nConcrete actions to support \\nthe implementation of \\nrecommendation 4 \\n4.1. Diagnose capacity gaps in all type of regions and \\nmunicipalities. In order to properly target assistance and capacity \\nbuilding at the subnational level, it is crucial to have a clear picture \\nof which capacities are missing and where. \\n4.2. Strengthen national and regional support and assistance to \\nplan, prepare and implement infrastructure investments at the \\nlocal level. The national and regional levels – which often have \\nhigher capacities than small municipalities – together with the \\nassociations of municipalities, play a key role in supporting, \\nadvising and providing municipalities with specific knowledge and \\nskills. \\n4.3. Embed a cross-sectoral and multi-level perspective into \\ncapacity-building activities. One the most important barriers for \\n \\n\\n\\n92    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\nShort term \\nMedium to long term \\nquality place-based infrastructure is the siloed approach to \\ninfrastructure at all levels of government. \\n4.4. Provide special resources and tools for regions and \\nmunicipalities to better prepare and procure infrastructure \\nprojects. One of the major bottlenecks for quality infrastructure at \\nthe subnational levels is at the preparation phase. \\n4.5. Leverage the role of national and regional governments and \\nthe associations of municipalities to build capacities at the \\nlocal level. In line with the current efforts to better prepare local \\nstaff workforce, it is important to provide co-ordinated capacity \\nbuilding activities to create institutional capacities within municipal \\nadministrations to better plan, prepare and deliver infrastructure \\nprojects. \\nSubnational level recommendation 5: Reinforce funding and financing sources for subnational infrastructure investment \\nConcrete actions to support \\nthe implementation of \\nrecommendation 4 \\n5.1. Address funding gaps to support quality subnational \\ninfrastructure by regions and municipalities. There are \\ndifferent complementary avenues for this.  \\n5.2. Adopt innovative financing instruments to boost subnational \\ninfrastructure investment. Mobilising finance is essential to help \\nsubnational governments meet the high up-front costs of \\ninfrastructure investment and to spread those costs across the \\nfuture beneficiaries of an investment. \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n\\n\\n   93 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nIntroduction \\nRegions and local governments play a key role in making our societies more resilient and sustainable. It \\nis they who are confronted with, and have to manage, the health, economic, and environmental challenges \\nthat often arise locally or have an impact on local populations and communities. COVID-19 and the energy \\ncrisis, for example, have shown that much of the infrastructure affected  falls under the responsibility of \\nsubnational government, including health care (hospitals, primary care health centres, etc.), social \\nservices, education (primary and secondary schools, higher education), public transport, roads, social \\nhousing, utility networks (water, waste, energy, etc.), and ICT infrastructure (OECD, 2021[1]). Across all \\nOECD countries, subnational governments define and execute key infrastructure investments in strategic \\nsectors such as energy, transport, water and telecommunication infrastructure, and also in access to \\nquality health and education services (OECD, 2022[2]). In OECD countries on average, subnational \\ngovernments are responsible for 57% of total public investment; in Czechia the share is 46%.  \\nAt the same time, it is now more urgent than ever to invest strategically in place-based infrastructure to \\nbridge territorial disparities and tackle the big challenges of climate change, demographic trends, and \\ndigitalisation, among others. Megatrends and shocks create different public investment needs, challenges \\nand opportunities across regions. This is also true for Czechia, where regional differences are stark: in \\n2021, the population density ranged from 66.9 inhabitants/km2 in South Bohemia to 2 752.8 \\ninhabitants/km2 in the Prague region (OECD, 2022[3]). The regional GDP per capita for Prague was 3.6 \\ntimes higher than in Karlovy Vary region, and twice as high as the average regional GDP per capita (OECD, \\n2022[4]). Disparities are also evident in infrastructure provision. Some regions are not sufficiently connected \\nto the backbone transport infrastructure (road and rail) (e.g., the Karlovy Vary, South Bohemian and \\nLiberec regions). Some regions are under-served by public transport, and in others there is generally poor \\naccess to public and commercial services (e.g., highspeed internet access) (Ministry of Regional \\nDevelopment, 2019[5]). \\nInvestment therefore needs to be place-based and tailored to the needs and realities of different localities \\nand regions. However, designing and implementing place-based infrastructure investment in Czechia is \\nparticularly challenging, as regions and municipalities need to deliver while navigating a complex \\nadministrative structure. As described in Chapter 1, the Czech multi-level governance system is complex, \\nwith challenges including the large number of small municipalities; the different types of municipalities with \\ndifferent responsibilities; the absence of mechanisms to co-ordinate investment across levels of \\ngovernment; and siloed approaches to investment. Other critical issues are linked to the capacities of \\nregional and local governments to plan and deliver infrastructure. This all puts pressure on the efficiency \\nof the public administration and the capacity of regions and municipalities to deliver quality infrastructure.  \\nAdequate multi-level governance mechanisms that allow for place-based infrastructure will be crucial for \\nCzechia to maximise the returns on infrastructure investment, invest in a smarter way and put resilience \\nand environmental objectives at the core of infrastructure investment across all levels of government. Such \\nmechanisms need to ensure proper co-ordination, both vertically within levels of government and \\nhorizontally across sectors and jurisdictions. The OECD Recommendation on Effective Public Investment \\nAcross Levels of Government – an OECD legal instrument with 40 adherents – provides guidance on all \\nthe challenges outlined above (Box 3.1).  \\n \\n \\n  \\n\\n\\n94    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFine tuning multi-level governance and adopting a place-based approach to infrastructure is particularly \\nurgent for making the most of EU funds for investment. Over 2014-2020, Cohesion Policy funding \\naccounted for 40% of total public investment in Czechia. Over 2021-2027, Czechia will invest EUR 26 \\nbillion under the Cohesion Policy (for details, see Chapter 1). Nearly a quarter of these funds will be used \\nto support integrated regional development, especially regional connectivity, urban and regional \\ninfrastructure, local education infrastructure, etc. The new Just Transition Mechanism (EUR 2 billion) will \\nalso have a strong territorial dimension, targeting the Karlovy Vary, Moravian-Silesian and Ústí regions \\n(European Commission, 2023[6]; Ministry of Regional Development, 2023[7]; Ministry of Environment, \\n2023[8]). Much of the implementation of the Czech Recovery and Resilience Plan (RRP), supported by \\nEUR 7 billion in grants, rests in the hands of Czech regions, cities and towns. With physical infrastructure \\nBox 3.1. The OECD Recommendation on Effective Public Investment across Levels of Government \\nIn 2014, the OECD Recommendation on Effective Public Investment Across Levels of Government was \\nendorsed by the OECD Regional Development Policy Committee (RDPC) and adopted by the OECD \\nCouncil. The recommendation aims to help countries assess the strengths and weaknesses of their public \\ninvestment governance capacity for regional development across all levels of government. It serves as a \\nguide to setting priorities for improving the co-ordination mechanisms and capacities of subnational \\ngovernments in the management of public investment. \\nThe recommendation sets out 12 principles grouped into 3 pillars of policy recommendations that represent \\n3 systematic challenges to efficiently managing public investment at both the national and subnational \\nlevels. These 12 principles cannot be seen in isolation: they offer a whole-of-government approach that \\naddresses the roles of different levels of government in the design and implementation of a critical and \\nshared responsibility. All the principles are complementary and there is no hierarchy among them. They \\nare also intended to be used in conjunction with other OECD policy guidance and tools. \\nFigure 3.1. Effective multi-level public investment governance rests on three pillars and 12 \\nprinciples \\n \\nSource: OECD (2019), Effective Public Investment across Levels of Government: Implementing the OECD Principles, OECD, Paris, \\nhttps://www.oecd.org/effective-public-investment-toolkit/OECD_Public_Investment_Implementation_Brochure_2019.pdf  \\n\\n\\n   95 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nand green transition being at the core of the plan’s 26 components, the main building block of the Czech \\nRRP is investment geared towards cross-cutting policy issues, such as energy efficiency through \\nresidential and public building renovation (EUR1.4 billion); sustainable mobility through improving railway \\ninfrastructure, and promoting electric charging stations and cycle pathways (EUR 1.1 billion); as well as \\nthe circular economy through upgrading recycling infrastructure (EUR 141 million) (European Commission, \\nn.d.[9]) (European Commission, 2021[10]). The recovery plan is a unique opportunity for regions and \\nmunicipalities to adopt a place-based approach to infrastructure while investing in quality infrastructure, \\naddressing long-term priorities for sustainability and resilience, and achieving more balanced development \\nacross the country. \\nThis chapter begins with an overview of subnational infrastructure investment in Czechia, including an \\nassessment of territorial inequalities and the various needs and challenges facing the Czech regions, \\nincluding administrative fragmentation (section 3.2). Section 3.3 focuses on implementing a place-based \\napproach to infrastructure planning, in particular on how to improve strategic place-based infrastructure \\nplanning across levels of government to ensure that infrastructure responds to local needs and is planned \\nat the right scale. After providing some insights into how to improve the way in which national and \\nsubnational levels co-ordinate on infrastructure issues (section 3.4), the chapter focuses on how to \\nstrengthen inter-municipal co-operation for investment, recognising that this is one of the most prominent \\nchallenges for subnational infrastructure (section 3.5). Finally, the chapter focuses on administrative and \\nfiscal capacities of regions and municipalities – and ways to strengthen them to ensure quality \\ninfrastructure (section 3.6 and 3.7).  \\n3.1 An overview of subnational infrastructure investment in Czechia \\nRegions and municipalities play a central role in public infrastructure  \\nSubnational governments in Czechia are key providers of economic and social infrastructure. They have \\nbroad responsibilities for economic infrastructure (transport, energy/electricity, water and sanitation, \\ntelecommunication, waste) and social infrastructure (health, aged care, education, community, social \\nhousing, social protection, and emergency services), which in many cases are shared with the national \\ngovernment. Regions and municipalities differ in their areas of responsibility. Municipalities are responsible \\nfor primary schools and nurseries; social services, including housing and water infrastructure; local roads \\nand health centres and small hospitals, among others. Regions are responsible for hospitals, secondary \\nschools and second-class roads. A detailed breakdown of the infrastructure roles and responsibilities \\nbetween municipalities and regions is shown in Table 1.1 in Chapter 1. In 2021, subnational government \\ninvestment, including regions and municipalities, represented 43.7% of total public investment, below the \\nOECD average for unitary countries, which was 48% (Figure 3.2). \\n\\n\\n96    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 3.2. Subnational public investment as a percentage of total public investment, 2021  \\n \\nNote: OECD38: weighted average for all OECD countries; OECD29: weighted average for unitary countries ; OECD9: weighted average for \\nfederal countries 1 Data from IMF Government Finance Statistics: https://data.imf.org/. \\nSource: (OECD, 2023[11]), Subnational Governments in OECD Countries: Key data. https://www.oecd.org/regional/multi-level-\\ngovernance/NUANCIER%202023-3.pdf  \\nCapital expenditure at the regional level started to increase slightly after the de facto establishment of \\nautonomous regions in 2000, although municipalities remain the principal investors. Between 2010 and \\n2020, regional capital expenditure per capita grew from CZK 2 404 to CZK 4 152 – a 72.6% increase \\n(Figure 3.3). The same trend can be seen at the municipal level – over the last 10 years, municipal public \\ninvestment has grown by 50%. The municipal level remains the primary subnational government investor, \\naccounting for 64.3% of subnational government investment in 2020, while regions only account for 35.7%. \\nIn contrast, while the City of Prague – which has a unique dual status as both a region and a municipality \\n– remains the most important investor in the country, public investment in the city has decreased by almost \\n36% over the last 10 years. It is also worth noting that municipal investment per capita in small \\nmunicipalities (below 500 inhabitants) is very low, representing less than half of investment per capita in \\nmedium-sized municipalities (5 000-10 000 inhabitants). The low levels of investment in small \\nmunicipalities compared to medium or large cities is largely due to a lack of skills and administrative \\ncapacity to deal with complex investment projects (OECD/UCLG, 2022[12]).  \\n \\n\\n\\n   97 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 3.3. Evolution of regional and municipal capital expenditure in Czechia, 2010-2020 \\n \\nSource: Ministry of Finance Monitor data portal, https://monitor.statnipokladna.cz/; Czech statistical office.  \\nQuality and effective infrastructure investment is needed to address important regional \\ndisparities   \\nCzechia faces important territorial inequalities that have increased over the last 20 years. Regional income \\ninequality, as measured by the Theil index at the small region level (TL3 level), has increased overall since \\n2000 (Figure 3.4). This tendency also holds true for 15 out of 27 OECD countries with available data. \\nRegional inequality has plateaued at relatively high levels after decreasing slightly from its peak in the \\naftermath of the 2008 global financial crisis. Importantly, regional inequalities in Czechia have increased \\nfaster than GDP per capita growth. One of the explanatory factors behind the increasing regional inequality \\nis regional productivity (OECD, 2023[13]).. As can be seen in (Figure 3.4), Czechia experienced an increase \\nin the Theil index of GDP per capita over 2000-2020. Inequality reached its maximum in 2008. It means \\nthan over the last 20 years, while labour productivity has increased overall, it grew much more in high-\\nproductivity regions than in low-productivity regions. The Top 20%/Mean ratio was 0.054 higher in 2020 \\ncompared to 2000, indicating increased polarisation. The Bottom 20%/Mean ratio was 0.036 lower in the \\nsame period, indicating bottom divergence. (OECD, 2023[14]). \\n\\n\\n98    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 3.4. Trends in GDP per capital inequality indicators, TL3 OECD regions, 2000-2020 \\nGDP per capita growth/regional inequality trajectories based on GDP per capita at the TL3 level, 2000-2020. \\nIndexed to 2000 (2000=1) \\n \\nNote: Top/bottom calculated as population equivalent (top/bottom regions with at least 20% of the population). The interpretation of top/bottom \\n20% GDP per capita is that 20% of the population in the country holds 20% of the value. Top 20%/Mean calculated as mean GDP per capita in \\ntop 20% regions over mean TL3 GDP per capita in a given year. Bottom 20%/Mean calculated as mean TL3 GDP per capita in bottom 20% \\nregions over mean TL3 GDP per capita in a given year. To improve data consistency, input series are aggregated when TL3 regions are part of \\nthe same FUA. To improve time series, TL3 missing values have been estimated based on the evolution at higher geographic level. The figures \\nare normalized, with values in the year 2000 set to 1. \\nSource: (OECD, 2023[13]), OECD Regional Outlook 2023: The Longstanding Geography of Inequalities. https://doi.org/10.1787/92cd40a0-en \\nThe capacity of regions and municipalities to invest also differs across the country. Regional public \\ninvestment varies strongly – from less than CZK 2 000 per capita in the Zlín Region to almost CZK 6 400 \\nper capita in the Hradec Králové Region. The City of Prague is an outlier, with over CZK 10 000 in capital \\nexpenditure per capita (Figure 3.5), despite having decreased. Regional investment per capita is only \\nabove the country average in four other regions:  Pilsen, Vysočina, Pardubice and Hradec Králové \\n(Figure 3.6). In practical terms this variation means that the availability, accessibility and quality of existing \\ninfrastructure – including transport, energy, education and health infrastructure – also varies across \\nregions.  \\n \\n \\n \\n \\n\\n\\n   99 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 3.5. Capital expenditure varies significantly across Czech regions \\nRegional capital expenditure per capita, 2020 \\n \\nSource: Czech statistical office. \\n\\n\\n100    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nFigure 3.6. In most regions, per-capita capital expenditure is below average \\nRegional capital expenditure per capita, 2020  \\n \\nSource: Czech statistical office. \\nThe efforts needed to address the twin transition, attain EU targets and achieve the objectives of the Czech \\nRecovery and Resilience Plan also vary across Czechia’s regions. While in the majority of large regions \\nper capita greenhouse gas emissions are below the OECD average of 11.5 tCO2e, the Central Bohemian \\nRegion, Moravia-Silesia and Northwest all have per capita emissions that are above the OECD average \\n(OECD, 2021[15]). The Moravia-Silesia and Northwest Bohemia regions also lag behind the rest of the \\ncountry in terms of productivity, unemployment rate, educational outcomes, share of people at risk of \\npoverty and life expectancy (European Commission, 2021[10]). These regions, along with Prague, Central \\nBohemian and the Northeast Region, also rely largely on coal. As highlighted by the EC, the situation in \\nthe Northwest Region is particularly challenging as living standards have diverged from the rest of the \\ncountry over the last two decades (European Commission, 2021[10]).  \\nThis means that not only are there significant disparities in existing infrastructure quality, but also that \\nCzech regions will have different transition pathways with different future infrastructure needs and \\ninvestment capacity. If Czechia aims to reduce total GHG emissions by 14% by 2030 compared to 2005 \\n(Government of Czech Republic, 2019[16]), targeted and place-based infrastructure investments by regions \\nand municipalities will be needed. As recognised by the RRP, regional and local governments need to \\ninvest in renewable energy, local energy community networks as well as in a modern and attractive public \\ntransport network. This includes, for example, investing in active mobility infrastructure such as bike lanes \\nand a clear strategy to further develop zero/low emission vehicles (European Commission, 2021[10]). It is \\nthus crucial to design and implement place-based and regionally-balanced infrastructure investments that \\n\\n\\n   101 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nnot only ensure the alignment between subnational, national and global objectives, but that also address \\nclimate, digital and resilience objectives.  \\nAdministrative fragmentation is a key challenge  \\nCzechia is one of the most fragmented OECD countries, both at the local and regional levels. It has one \\nof the highest number of municipalities of all OECD countries, and the smallest (Box 3.2). As we saw in \\nChapter 1 (Section 1.1), in 2020, the average municipal size in Czechia was 1 710 inhabitants, well below \\nthe OECD average of 10 250 and the EU average of 5 960 (Figure 1.2, Chapter 1). In 2023, 96% of \\nmunicipalities had fewer than 5 000 inhabitants and 89% had fewer than 2 000 inhabitants. The average \\nmunicipal area is also the lowest in the OECD: on average, Czech municipalities have an average area of \\n13 km2, compared to 234 km2 across the OECD. Regions are also small by international standards. Only \\n3 of the 14 regions are large enough to qualify as NUTS 21 regions for EU regional funding purposes \\n(Prague, Central Bohemian and Moravian-Silesian regions). The remaining 11 regions are NUTS 3 regions \\nwhich, for statistical purposes, are grouped to form 5 additional NUTS 2 regions (OECD, 2020[17]) (OECD, \\n2023[18]). The average size of Czech regions is 2.5 times smaller than the average size of the EU28 \\nNUTS 2 regions in terms of inhabitants, and 4 times smaller in terms of area (Ministry of the Interior of the \\nCzech Republic, 2018[19]).  \\nThe high number of small municipalities represents one of the greatest challenges to infrastructure \\ninvestment. It undermines the capacity of Czech regions and local governments to design and implement \\nquality and efficient infrastructure investments at the right scale. Large municipalities, particularly those \\nthat have more delegated competences and more staff, can tap into a more diverse range of professional \\nskills. Meanwhile small municipalities face severe difficulties in attracting, hiring or retaining adequate skills \\nfor public investment. In the housing sector, for example, one of the reasons for the low level of investment \\nin new social housing is that a large share (71%) of all municipally-owned land belongs to municipalities \\nthat have less than 1 000 inhabitants (OECD, 2021[20]). Such small municipalities might not have the \\ncapacity needed to provide affordable housing on their land. When municipalities do intend to develop \\nsocial housing, they are faced with several obstacles, the most important being the shortage of funds (both \\nfrom their own financial resources and from the state) (OECD, 2021[20]). In such a context, inter-municipal \\nco-operation is largely the only option for running quality investment projects. \\nBox 3.2. Czechia’s highly fragmented territorial organisation  \\nCzechia’s administrative fragmentation is partly due to a law passed in the early 1990s that enabled \\nmunicipalities to split. In the 1990s, and contrary to many OECD countries where mergers have been \\nthe rule, municipal fragmentation in Czechia increased sharply – from 4 100 municipalities in 1990 to \\n6 230 in 1994. In 2000, the rising fragmentation ended with the 2000 Act on Municipalities, which \\nintroduced a requirement of having at least 1 000 inhabitants to create a new municipality and includes \\nan option for voluntary municipal mergers. However, it did not offer any concrete incentive for \\nmunicipalities to do so. To minimise the effects of municipal fragmentation, the 2000 Act on \\nMunicipalities also promotes inter-municipal co-operation through public contracts for performing \\ncertain functions, and voluntary municipal associations. \\nSource: (OECD, 2023[18]) \\n\\n\\n102    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n3.2 Implementing a place-based approach to infrastructure planning \\nCzechia has substantial potential to integrate a place-based approach to infrastructure planning across all \\nlevels of government but needs to overcome its deeply rooted sectoral silos and limited territorial dimension \\nin infrastructure planning. Czechia already has a place-based Regional Development Strategy (Ministry of \\nRegional Development, 2019[21]), well-developed inter-governmental dialogue platforms, and a mature \\nmulti-level spatial planning system, all solid foundations for place-based infrastructure planning. Even so, \\ninfrastructure planning is still predominately led by individual sectors, without effective co-ordination or \\nbeing anchored to the regional development strategy. This results in weak strategic prioritisation of \\ninfrastructure across all levels of government, and ineffective investment. Overcoming these obstacles will \\nrequire long-term institutional reforms to drive changes in the country’s infrastructure planning system and \\nculture.  \\nAnother obstacle to place-based infrastructure planning is Czechia’s high territorial fragmentation, as \\noutlined above. This hinders the achievement of economies of scale and undermines capacity in local \\ninfrastructure planning, resulting in significant gaps in planning quality (e.g., a weak evidence base, lack \\nof prioritisation, etc.). While some supra-local investment planning does take place – such as Sustainable \\nUrban Development Strategies and Community-led Local Development (CLLD) strategies and plans –  \\njoint municipal infrastructure planning based on socio-economic linkages across jurisdictions is far from \\nbeing common practice in Czechia. The question is how to consolidate existing knowledge and systems \\nto build institutional capacity for place-based infrastructure planning.  \\nAlign place-based infrastructure planning across government levels \\nCzechia has three pillars that together guide infrastructure planning at all levels (Table 3.2): regional \\ndevelopment policy, spatial development policy, and sectoral policies (transport, waste, water \\nmanagement, etc.). Each pillar includes several planning documents at the national, regional, supra-local \\nand local levels. The spatial planning system is the only legally hierarchical system among levels of \\ngovernment – higher level documents contain binding decisions that must be considered in lower-level \\ndocuments -, underpinned by a widespread network of planning offices (ESPON, 2021[22]). \\nTable 3.2. Three policy pillars guide multi-level infrastructure planning system in Czechia  \\n \\nRegional development policy  \\nSpatial development policy  \\nSectoral policies  \\nRelevant \\nlaw/regulation \\nAct on Regional Development Support  \\nAct on Spatial Planning and Building \\nRules (“Building Act”) \\nSectoral planning regulations (e.g., \\ntransport, water, etc.) \\nNational  \\nRegional Development Strategy 21+; \\nRural Development Concept; Smart Cities \\nConcept  \\nSpatial Development Policy  \\nSectoral strategic documents (e.g. \\nTransport Policy 2021-27 with an \\noutlook to 2050; National River Basin \\nManagement Plans, etc.) \\n \\nRegional  \\nDevelopment Strategy of the Region; \\nRegional Action Plan \\nTerritorial Development Principles  \\nSectoral strategic documents \\nSupra-local \\nSustainable Urban Development Strategy \\n(SUD); Community-led Local \\nDevelopment (CLLD) Strategy; Integrated \\nTerritorial Development Plans  \\n \\n \\nLocal  \\nLocal development \\nstrategy/programme/plan \\nLocal Territorial Plan; Regulatory \\nPlan  \\nSectoral plans (mostly in cities) \\nSource: Authors, based on (Ministry of Regional Development, 2022[23]; Ministry of Regional Development, 2021[24]). \\nWithin regional development policy, Czechia, like many other OECD countries, has developed or \\nstrengthened multiple mechanisms to better co-ordinate investment strategies for regional development \\n\\n\\n   103 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n(Figure 3.7). These include an integrated national investment strategy with a territorial dimension, \\npermanent and ad hoc inter-ministerial committees for territorial development issues, and territorial \\nproofing requirements, as fostered by the OECD Recommendation on Effective Public Investment across \\nLevels of Government (OECD, 2014[25]). The Regional Development Strategy 21+, for example, serves as \\nan integrated national strategy to guide public investment in regions and municipalities (Box 3.3). The \\nNational Standing Conference and the 13 Regional Standing Conferences are regular dialogue platforms \\nfor national and subnational actors to exchange on investment needs and priorities in the territories \\n(Ministry of Regional Development, 2023[26]).  \\nFigure 3.7. Czechia has several mechanisms to co-ordinate regional investment strategies \\nQuestion: “At the national/federal level, has your country developed or strengthened any of these mechanisms as a \\nmeans to better co-ordinate public investments strategies for regional development?” \\n \\nNote: Results from the 2018 monitoring survey of the OECD Recommendation on Effective Public Investment across levels of Government. \\nN=27 \\nSource: (OECD, 2019[27]), Effective Multi-level Public Investment: OECD principles in action. https://www.oecd.org/effective-public-investment-\\ntoolkit/Full_report_Effective_Public_Investment.pdf. \\n23\\n20\\n19\\n12\\n1\\n0\\n1\\n2\\n3\\n4\\n5\\n6\\n7\\n8\\n9\\n10\\n11\\n12\\n13\\n14\\n15\\n16\\n17\\n18\\n19\\n20\\n21\\n22\\n23\\n24\\n25\\nIntegrated national\\ninvestment strategy with\\nterritorial dimension\\nPermanent inter-\\nministerial committee\\nlinked to territorial\\ndevelopment issues\\nAd-hoc cross-sectoral co-\\nordination platform / Inter-\\nministerial committee\\nTerritorial “proofing” \\nrequirement (i.e. assess \\nsectoral policies with a \\nterritorial lens)\\nOther\\nAUS\\nCAN\\nCHE\\nCHL\\nCOL\\nCZE\\nDEU\\nDNK\\nEST\\nFIN\\nGBR\\nHUN\\nISR\\nITA\\nKOR\\nLAT\\nLUX\\nMEX\\nMOR\\nNLD\\nPOL\\nPRT\\nSWE\\nAUS\\nAUT\\nBEL\\nCAN\\nCHE\\nCHL\\nCOL\\nCZE\\nFIN\\nHUN\\nISR\\nITA\\nKOR\\nLAT\\nMEX\\nMOR\\nNLD\\nPOL\\nPRT\\nTUR\\nAUS\\nAUT\\nBEL\\nCAN\\nCHL\\nCOL\\nCZE\\nDEU\\nEST\\nFIN\\nGBR\\nLAT\\nLUX\\nMEX\\nMOR\\nNLD\\nPRT\\nSVK\\nTUR\\nAUS\\nCAN\\nCHL\\nCZE\\nEST\\nHUN\\nISR\\nITA\\nLAT\\nNLD\\nPOL\\nSWE\\nCZE\\n\\n\\n104    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 3.3. Czechia has regional and spatial development policies \\nThe Regional Development Strategy 21+ (RDS 21+) defines five different types of territories in \\nCzechia based on their potential and specific needs: metropolis, agglomeration, regional centre, \\nstructurally affected region, and economically and socially vulnerable area. Through these, it seeks to \\noffer tailored support for the development of the country’s regions. For example, for metropolises it \\nprioritises a more integrated public transport system, enhanced urban mobility, and affordable housing, \\nwhile for agglomerations priorities include accessibility to education infrastructure and affordable \\nhousing, especially for vulnerable groups and those outside segregated and excluded localities. The \\nRDS 21+ also includes a thematic focus on national subsidy schemes and other long-term instruments \\nthat will help address regional disparities. It also aims to mainstream the territorial dimension in sectoral \\npolicies.   \\nThe Spatial Development Policy of Czechia (4th edition) sets national priorities for sustainable \\ndevelopment as a framework for regional and local spatial planning. It defines development areas, \\ndevelopment axes and specific areas where balance between environment quality, social cohesion and \\nthe economy is distorted. It also assigns specific tasks for national and regional authorities, as well \\narea-specific requirements to consider the territorial impact of large infrastructure projects (new \\nmotorways, roads, etc.). For example, for each motorway section, there are explicit criteria and \\nconditions to guide decision making and planning, such as connecting with existing roads to certain \\ncities to better serve the region, ensuring connections with bordering countries, giving priority to \\ntransport flows in certain areas, or minimising the impact on the environment, and so on. In Czechia, it \\nis binding to consider requirements in all planning documents and during the issuing of planning \\npermissions. The spatial development policy also has a mandate to co-ordinate any plans for changes \\nin transport and technical infrastructure in the territory.  \\nSource: (Ministry of Regional Development, 2019[5]; Ministry of Regional Development, 2021[24]) \\nDespite these opportunities, the fragmentation and lack of co-ordination in the infrastructure planning \\nsystem are fundamental obstacles to implementing a place-based approach to infrastructure investment. \\nThis challenge is multifaceted: \\n1. Lack of systematic co-ordination across sectoral infrastructure planning. While some \\nsectoral infrastructure planners consult other relevant planning sectors to ensure policy synergies \\nand alignment, this depends on the practices of individual line ministries. Overall, the Czech public \\nadministration system operates under a well rooted siloed approach (OECD, 2023[18]). There is a \\nlow awareness among infrastructure planners about the wider context of their investment decisions \\nand the possible externalities for other fields. Most officials representing different institutions and \\nlevels tend to take a ‘zero-sum game’ approach to interactions with others, instead of seeking for \\n‘win-win’ solutions. This tendency to go beyond one’s own institutional remit hinders active co-\\nordination (ESPON, 2021[22]), including the much-needed dialogue among different planners and \\nstakeholders on the strategic objectives of infrastructure investment, the pursuit of criteria to \\nprioritise and select them, and the seizing of potential complementarities across infrastructure \\nsectors.  \\n2. Infrastructure planning that is not anchored to regional development priorities and \\nobjectives even when it has strong territorial impact. According to stakeholders, the Ministry \\nof Regional Development provides comments, feedback and methodological advice to sectoral \\ninfrastructure planners on the territorial dimension of sectoral infrastructure investment. There are \\nad hoc cases where infrastructure planners in line ministries consult with the Ministry of Regional \\nDevelopment, typically when considering the territorial aspect is a funding requirement (e.g., for \\n\\n\\n   105 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nEU funds), but this does not happen systematically. There is no incentive, mandate, or any effective \\nmechanism to make sure that the infrastructure planning process or prioritisation criteria properly \\ntake into account regional development policies. The RDS 21+ also identifies the lack of clear \\ndefinitions or methodology to support infrastructure planners in addressing the territorial dimension \\nin planning.  \\n3. A spatial planning process that does not proactively co-ordinate infrastructure investments, \\nand is not connected with regional policy. Spatial planning in Czechia is heavily influenced by \\nsectoral policy, which appears to address the impact of sectoral infrastructure investment plans \\nrather than co-ordinate them. This applies to all levels – for example, it is not unheard for sectoral \\ndepartments in local authorities to simply request to transfer a decided infrastructure investment \\nproject to the Local Territorial Plan. Additionally, regional and spatial policy in Czechia operate at \\nthe national, regional and local levels in parallel, without many links or much cross-influence. For \\nexample, spatial plans are not updated in synchronisation with regional development strategies \\nand programmes (ESPON, 2021[22]). Therefore, the strategic and development perspective of \\ninfrastructure investment (e.g., advancing regional development goals) is often not considered in \\nspatial planning.   \\n4. Lack of systematic, effective and regular dialogue between national infrastructure planners \\nand subnational governments. The approach to consulting and engaging with subnational actors \\nmay vary across line ministries and is often passive and one-way (e.g., asking for written \\ncomments). For example, line ministries may ask for written comments from the Unions of \\nMunicipalities and Towns, Associations of Regions and other subnational government associations \\nin infrastructure planning. They also occasionally consult subnational governments on planning \\nmatters, including through participating in the National Standing Conferences. Given the \\nfragmented and sector-driven system, subnational government representatives indicated that they \\ndo not always have the capacity or time to provide detailed and constructive inputs to all the \\ninfrastructure planning documents. Subnational stakeholders also identified, in some cases, the \\nlack of clarity and frequent changes in national policies, which hinders their implementation of \\nnational infrastructure investment, and/or subnational infrastructure planning. \\nThere is a need for a dialogue platform spanning sector and subnational governments to regularly \\nexchange infrastructure investment needs at all levels and to reach consensus on priorities and key \\nprinciples in place-based infrastructure planning. There are several venues that Czechia could explore. \\nFirst, Czechia has been planning to develop a Regional Policy Committee for inter-ministerial co-\\nordination. This committee has the potential to serve as a platform for ensuring synergies across sectors \\nin infrastructure planning and prioritising infrastructure investment in order to advance regional \\ndevelopment goals. Second, as highlighted in Chapter 2, Czechia could make greater use of the Council \\non Public Investment. The council’s agenda and mandate could include a focus on strengthening the place-\\nbased approach to infrastructure planning. Third, the National and Regional Standing Conferences could \\nbe a venue for the Ministry of Regional Development to co-ordinate periodically with line ministries, regions \\nand municipalities through dedicated discussions on strategic infrastructure planning. Inter-ministerial co-\\nordination models developed in Sweden and Italy could also offer inspiration to Czechia (Box 3.4). The \\nItalian example in particular offers concrete measures for building inter-ministerial partnerships and \\nengaging effectively with subnational governments.  \\nBox 3.4. Examples of cross-sectoral fora for co-ordinating place-based investment  \\nSweden’s Forum for Sustainable Regional Development  \\nIn Sweden, it is the job of regional development policymakers to convince other ministries that they \\nshould put on their “territorial lenses” when planning and designing sector policies. The Forum for \\nSustainable Regional Development 2022-2030 is one important co-ordination platform. It is positioned \\n\\n\\n106    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nas part of the implementation of the National Strategy for Sustainable Regional Development throughout \\nSweden 2021-2030. The forum is chaired by the Secretary of State for Regional Development. It is \\ndivided into two groups: one promotes dialogue between national and regional politicians, and the other \\nfosters dialogue between national and regional civil servants (at director level). Sweden has also \\ncreated policy labs; for example, to explore concrete policy approaches to rural development. In \\naddition, Sweden relies on involving state agencies – including public servants/operational staff and \\ndecision makers – in regional matters. This is because these agencies support the implementation of \\nregional development policy by different sectors while taking into account regional specificities that \\ninfluence the achievement of sectoral aims.  \\nItaly’s inter-ministerial committee to co-ordinate infrastructure in deprived areas  \\nItaly has 20 regions and 7 904 municipalities, and an average municipal size of 7 535 inhabitants. Over \\nhalf of municipalities are located in “inner areas”. These areas far from large and medium-sized urban \\ncentres have experienced demographic decline and land abandonment, their essential infrastructure \\nand services – education, health, and mobility – are relatively low quality and opportunities for economic \\nactivities and jobs are limited. To counteract marginalisation and demographic decline within these inner \\nareas and unlock their development potential, Italy developed the National Strategy for Inner Areas for \\nthe 2014-20 programming period. Within the framework of this strategy, the national government \\ndefined a set of integrated projects and their expected outcomes through an inter-ministerial committee \\ncreated to align objectives, adapt sectoral policies to territorial specific needs and match different \\nsources of financing.  \\nPartnership among various line ministries is key to the design and implementation of this place-based \\nstrategy. Its implementation is financed by allocations from multiple operational programmes, as well \\nas national funds and other public/private funds. An ad hoc Technical Committee was created to govern \\nthe strategy, co-ordinated by the Cohesion Policy Department at the Presidency of the Council of \\nMinisters and consisting of representatives from the ministries of education, health, agriculture, \\ntransport, etc. The Technical Committee, together with subnational government representatives \\n(regions and autonomous provinces), was responsible for selecting inner areas to be funded under the \\nstrategy. Seventy-two inner areas were selected, covering over 1 000 municipalities. The main criteria \\nfor selection included their distance from infrastructure and services, demographic trends, as well as \\nlocal authorities’ capacity to implement projects. There were two selections phases:  \\n1. Desk research, which assessed the various proposals submitted by the reference regions \\n(quantitative assessment). The assessment included demography, availability and \\naccessibility to various infrastructure and services (e.g., digital, health, schools, among \\nothers).  \\n2. Field missions, which were essentially focus group discussions for each submitted inner area \\n(qualitative assessment). They were organised by the Technical Committee in collaboration \\nwith regional and local territories. These focus groups followed a standard methodology \\ncovering four sessions – local development, healthcare, education, and transport. Each \\nsession typically included one expert from the relevant ministry, as well as regional and local \\nactors such as education and health facility managers, infrastructure users, businesses, local \\nassociations, etc.  \\nThe selected inner areas then prepare their individual investment strategies, which will be submitted to \\nthe Department of Cohesion Policy for approval. Once approved, a Framework Programme Agreement \\nwill be signed by the relevant national, regional and local authorities to secure the implementation of \\nthe inner area strategy. The agreement includes detailed financial commitments from different parties, \\nas well as objectives and expected outcomes, etc.   \\nSource: (OECD/UCLG, 2022[28]) \\n\\n\\n   107 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nSupport regions to adopt more strategic and forward-looking infrastructure planning  \\nInfrastructure planning in Czechia tends to focus on individual investments rather than be driven by a \\nstrategic and long-term vision, which increases its vulnerability. During the OECD interviews for this report, \\nstakeholders highlighted two weaknesses of infrastructure planning at both national and subnational level:  \\n1. Strategic plans are not used effectively to prioritise and select infrastructure investment projects, \\nor to guide design and implementation. Instead, they are used to draw on funds for investment \\nprojects.  \\n4. Infrastructure planning is not forward-looking or driven by any long-term vision. For example, \\ninfrastructure planners only start to think about embedding resilience measures into infrastructure \\ninvestments when there are floods or other climate-related crises. \\nThis piecemeal approach and lack of resilience planning often increases costs, including recovering the \\ncosts and renovating or upgrading existing infrastructure; these could have been avoided if a forward-\\nlooking perspective had been incorporated into infrastructure planning. Czechia has already seen a notable \\nincrease in the number of days of heavy rainfall, while droughts have also become more frequent and \\nlonger in duration (International Energy Agency, 2022[29]). For example, the Southwest region of the \\ncountry has a relatively high share of population exposed to floods (OECD, 2022[30]). Building resilience \\ninto infrastructure requires a more strategic and stronger territorial dimension as well as technical expertise \\nin projection and foresight. Equally critical is understanding the territorial dimension and engaging regional \\nand local stakeholders in infrastructure planning to gain buy-in to the vision and the need to build more \\nresilient and future-proof infrastructure. \\nCzech regions have relatively well-developed systems, and experience, in strategic planning, including for \\ninfrastructure investment (e.g., education, regional transport, etc.). The 14 regions are responsible for \\ncreating the development strategies (or programmes) for their regions and ensuring implementation. These \\nstrategies are expected to identify the regions’ development objectives and priorities and co-ordinate \\nsectoral policies and investment. Regions are also responsible for defining the Territorial Development \\nPrinciples which regulate and co-ordinate infrastructure of regional importance and guide local land-use \\nand spatial planning. Regions also develop sectoral strategies (Table 3.2). In particular, as an instrument \\nto implement the RDS 21+, Regional Standing Conferences develop and approve Regional Action Plans \\n(RAPs). The aim of RAPs is to enhance the integrated and efficient use of EU funds, and they cover topics \\nsuch as regional transport, secondary education, health care and social services infrastructure, among \\nothers. They support the allocation of Integrated Regional Operational Programmes funds at the regional \\nlevel based on assessment of regional needs (e.g., the total length of Class II roads in the region, numbers \\nof students at secondary schools, etc.) \\nHowever, sectoral fragmentation in infrastructure planning trickles down to the regional level, hindering the \\neffectiveness of integrated and long-term regional infrastructure planning. On average, Czech regions have \\nto cope with 25 strategic documents, excluding implementation plans and supporting documents (Ministry \\nof Regional Development, 2022[23]). The extent to which these strategies guide and influence infrastructure \\ninvestment in the region vary. For example, development plans for water supply and sewage, floods, roads \\nand connectivity, and transport services are of significant importance for infrastructure. Yet these sectoral \\ninfrastructure plans have different timelines, are updated separately, and there is no mechanism to co-\\nordinate across sectors in order to capture investment synergies. Although each region has a regional \\ndevelopment strategy and the Territorial Development Principles which serve as the umbrella framework, \\nit is not yet common practice to use them to reconcile and co-ordinate sectoral interest or prioritise \\ninfrastructure investment for the region. In addition, the 14 regional development strategies often have a \\ntime horizon of three to seven years. Only two regions have a strategy in place with a horizon of more than \\nten years (and one of them is from 2009-2020, which has not been updated) (Ministry of Regional \\nDevelopment, 2022[23]). Consequently, the regional development strategic documents appear to \\n\\n\\n108    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\naccommodate and react to sectoral infrastructure investments, rather than defining the vision and guiding \\ninfrastructure decisions. \\nStakeholders also noted that in some cases the lack of clarity and frequent change of national polices and \\nguidance create difficulties for effective and sustainable regional infrastructure planning. The information \\nprovided by line ministries to regions is not always clear and sometimes open to interpretation. In some \\ncases, the high staff turnover in line ministries leads to inconsistency in policy messages. Regions are \\noften required to adapt to the changes without sufficient discussion or preparation. Political changes at \\nboth the national and regional level also introduce instability into infrastructure investment. Strategic \\nplanning is rarely used to guide and prioritise infrastructure investment; instead infrastructure programmes \\nand projects driven by political priorities and agenda prevail.  \\nLocal infrastructure strategies are used as a pipeline to draw on funding, but are not always realistic. Some \\nstakeholders stated that strategic infrastructure planning is not yet valued in many local public \\nadministrations in Czechia. Strategic documents are prepared as an inventory of pipeline projects and as \\na reference to support funding applications.  While this is logical, local infrastructure planning is unlikely to \\nbe based on robust need assessment or stakeholder inputs. For example, some local development \\nstrategies include initiatives such as fairs and parks, which may be too ambitious considering the localities’ \\nassets, population, or resources. Others emphasise fashionable industries (e.g., cycling tourism, high-tech \\nfields, etc.), without reflecting on the background, needs or assets of the given place. In some other cases, \\nstrategies are linked to the election cycle and serve as short-term political programmes. Strategic planning \\nis viewed as a formal “tick-the-box” exercise rather than a meaningful process to better pursue and \\nadvance local development objectives. Another outstanding challenge is stakeholder engagement in \\ninfrastructure investment prioritisation. Active local participation and leadership are needed to secure \\nownership of strategies and their smooth implementation.  \\nAlong with increasing co-operation, there is a need for continuous capacity building on strategic \\ninfrastructure planning for local authorities. The Ministry of Regional Development has been providing \\nsubstantial methodological support to municipalities in planning. There are several options that Czechia \\ncould consider in building local infrastructure planning capacity in a more targeted and effective fashion: \\n• \\nStrengthen the focus on organisational arrangements to support more effective stakeholder \\nengagement in local infrastructure planning. Given that strategic capacity is context-based and \\nevolves over time, institutionalisation is particularly important for new organisational arrangements \\nlike networking platforms, joint working groups, new bodies created for strategy implementation, \\netc. The Centre for Advisory Support targeting Areas of Strategic Intervention could be one \\nexample, as their advisory support has a specific focus on partnerships and engagement \\n(Box 3.16).  \\n• \\nPromote peer learning and knowledge sharing – not only among municipalities, but also targeting \\nLAGs or micro-regions. For small municipalities in particular, there is potential for the national \\ngovernment to support train-the-trainer programmes. Local consulting companies, universities, and \\nother stakeholders that work closely with municipalities in infrastructure planning could be engaged \\nin these networks of knowledge sharing. The “Small Towns in Germany” could be an inspiration, \\nmobilising several formats and activities to promote exchange (Box 3.16).  \\n• \\nDeliver capacity building programmes that are better targeted to different types of territories and \\nmunicipalities. The high number and diversity of Czech municipalities mean there is no one-size-\\nfits-all solution to building local infrastructure planning capacity. Instead of providing templates and \\nstandardised training, the government could consider carrying out surveys and focus group \\nconsultations with representatives of municipalities and micro-regions/LAGs to identify their \\ncapacity needs in infrastructure planning specifically, and use the results to design capacity \\nbuilding programmes that address the most common challenges. An OECD project with the \\nBulgarian and Greek national Manging Authorities to build beneficiary capacity could be an \\n\\n\\n   109 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nexample to follow. In Bulgaria, an online survey was conducted to understand the main capacity \\ngaps of beneficiaries and their preferred forms of support from the national level, with a special \\nfocus on the planning and use of ITIs. The survey received over 280 responses and resulted in an \\naction plan for beneficiary support. In Greece, a similar survey was carried out to help identify the \\ntopics and modules that were most pertinent for beneficiary needs so as to design a series of \\nknowledge-sharing workshops. The survey received over 310 responses from beneficiaries and \\nthe first knowledge-sharing workshop attracted nearly 100 participants. \\n• \\nEncourage cooperation between regions would also lead to more territorially-oriented infrastructure \\ndevelopment. Planning infrastructure across regions would help better pursuing place-based \\ninfrastructure investment while also making sure that big infrastructure projects reach relevant \\nscale, specially when it comes to transport and connectivity. There are several countries that are \\nmoving in this direction. Chile, for example, has defined “macro-regions” that join four or five \\nadministrative regions to plan infrastructure for a territory with similar characteristics, \\nacknowledging that the potential of infrastructure investment can be more fully exploited if territorial \\nsynergies exist. These macro regions might share a common identity, productive structures, and \\ngeographic and development challenges. \\nCzechia would benefit from more direct and regular dialogue between regions and national \\ninfrastructure planners – not only to understand needs, but also to reach consensus on \\ninfrastructure prioritisation and provide clearer guidance and direction to regions on planning and \\nprioritising investment. While regions should be responsible for their own development goals and \\npriorities, a clear understanding of national policies and frameworks can help them generate plans \\nthat align with national agendas. There are many ways to construct and facilitate this dialogue. For \\nexample, the Ministry of Regional Development can facilitate thematic meetings between regions \\nand national infrastructure planners from line ministries to discuss regional infrastructure priorities. \\nIreland offers an advanced example of a well-developed multi-level infrastructure planning system \\nunder the National Planning Framework which supports cross-sectoral regional planning (Box 3.5). \\nRegional roundtables like those in the United Kingdom offer another way of engaging with regions, \\nwhich might be closer to Czechia’s institutional context (e.g., Regional Standing Conference). The \\nkey strength of the UK’s initiative is its focus on long-term strategic planning and strengthening \\nregional and local infrastructure planning (Box 3.5). In the long term, such dialogue could \\npotentially lead to a set of principles co-designed by national infrastructure planners and \\nsubnational governments to help plan and prioritise infrastructure investment. This is the case for \\nthe Infrastructure Decision-Making Principles in Australia, which are used for both national and \\nsubnational governments.  \\nBox 3.5. Enable strategic regional planning \\nIreland’s National Development Plan 2021-2030 (NDP) and National Planning Framework 2040 \\ntogether serve as the investment plan for the country. They provide the structure for the Regional Spatial \\nand Economic Strategies (RSES) prepared by the regional assemblies. These RSESs inform decisions \\nrelated to regional public infrastructure investment aligned with the NDP, and guide local city and county \\nplanning, economic policy and investment. The RSESs take a cross-sector approach that combines a \\nspatial strategy, an economic strategy and a climate strategy. Each strategy is prepared within a \\nregional co-ordination framework to gather input from local authorities and other relevant stakeholders, \\nincluding the Department of Housing, Planning and Local Government, the Department of Public \\nExpenditure National Development Plan Delivery and Reform  \\nIn the United Kingdom, the National Infrastructure Commission is responsible for long-term strategic \\ninfrastructure planning through the 30-year National Infrastructure Assessment. Fact-finding tours to \\nregions (“regional roundtables”) are carried out to collect evidence and insights for the latest interim \\n\\n\\n110    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nAmong local authorities, especially small ones, building strategic capacity for infrastructure planning is a \\nconsiderable challenge given their already stretched human resources and financial resource constraints. \\nIn OECD and EU countries, worrying gaps in local strategic capacity include a lack of focus in identifying \\ndevelopment needs and problems, insufficient justification of objectives and their intervention logic and the \\nneed for better thematic integration. This need for better focus and thematic integration applies particularly \\nto countries such as Czechia, which have less experience in integrated approaches, high Cohesion Policy \\nbudgets, or where the introduction of territorial tools has prompted policy experimentation. \\nWith support, regions could play a more active role in co-ordinating local infrastructure planning, in \\nparticular to capture socio-economic linkages within functional areas. The role of regions in co-ordinating \\nlocal infrastructure planning is currently very limited. Within spatial planning for example, even with the \\nlegally hierarchical system, regions can only intervene in local planning when it comes to infrastructure of \\nregional importance. Territorial Development Principles must not infringe upon the planning powers of self-\\ngoverned municipalities. This condition limits the regions’ influence over, for example, cross-municipal co-\\nordination, especially for bigger infrastructure projects or projects that need to target populations across \\nmultiple municipalities (ESPON, 2021[22]). Additionally, Territorial Development Principles and regional \\ninfrastructure planning overall do not typically look at functional areas and are often not sufficient to support \\neconomic, social or environment links across municipalities, especially between urban centres and \\nsurrounding municipalities.  \\nImprove data for more strategic infrastructure planning \\nAbundant territorial data could be better used to support regional infrastructure planning and to co-ordinate \\nlocal planning. According to a recent study, spatial planning authorities collect and regularly update data \\non territory, but the data models vary among regions.  Other public authorities also collect geographical \\ndata on, for example, the environment, health, and transport services. Data are thus often fragmented, \\nincompatible and sometimes unshared, in particular with spatial planners (ESPON, 2021[22]). In addition, \\nstakeholders indicate that national planning authorities usually only collect data for municipalities with \\nextended power, yet regions are well positioned to collect and analyse more granular and local-level data. \\nMore importantly, there is a need to strengthen regions’ capacity in using integrated data to forecast \\ninfrastructure needs. Such information can not only be used to reconcile sectoral interests and to prioritise \\ninfrastructure in the region, but also to showcase the socio-economic linkages across local administrative \\nunits within the region. The Milano-Bologna “regional imaginary” project could provide food for thought for \\nCzechia (Box 3.6). The national government could consider creating a task force to support regions in \\nenhancing infrastructure planning by developing integrated datasets and providing technical support, \\nmobilising existing resources and platforms such as the regional information services.2 \\nStakeholders identified local-level data gaps as one of the barriers to high-quality local infrastructure \\nplanning and prioritisation. Indicators and data are critical for municipalities to understand local needs and \\ndevelopment trends, set objectives and prioritise, and select and monitor infrastructure investment. \\nHowever, many municipalities, especially the small ones, do not have the capacity and expertise to identify \\nAssessment report. The commission discusses various investment issues with regional and local \\nstakeholders, with a focus on fostering resilience through investment in some regions, including \\nenhancing flood mitigation measures and preparing for future weather extremes. The importance of  \\nadapting regional and local strategies to a changing context, such as the COVID-19 pandemic, is also \\nhighlighted. The commission recently launched a partnership programme for cities and city regions \\nacross the country to share knowledge and expertise and to help local leaders develop long-term \\nstrategies that link transport, housing, and job opportunities. \\nSource: (OECD, 2020[31]). (National Infrastructure Commission, 2022[32]; 2022[33]). \\n\\n\\n   111 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nthe indicators, or collect and analyse the data needed to set objectives and priorities for infrastructure \\nplanning. Higher levels of government (national and/or regional) need to address these local data gaps. \\nThis can be achieved by developing municipal level data, providing manuals and catalogues on the various \\ndatabases and sources, as well as offering training to local planners in using data for infrastructure \\nplanning.  \\nBox 3.6. A metropolitan-regional “imaginary” to support infrastructure planning in the Milano-\\nBologna urban region \\nItaly’s Milano-Bologna urban region, as a functional area, has a relatively complex territory composition: \\nit encompasses the two metropolitan cities of Milan and Bologna, as well as the provinces of Piacenza \\nand Pavia. There is no common governance framework that is sufficient to co-ordinate infrastructure \\ninvestment to tackle the scope of the various socio-economic challenges within this urban region. A \\ncommon narrative in strategic planning for infrastructure and other investments is also lacking.  \\nESPON, an EU funded programme that delivers quality expertise to public authorities responsible for \\ndesigning territorial policies, carried out in 2002-2021 a project to support this urban region to develop \\na common narrative, or “imaginary”. This included an overview and mapping of all existing co-operation \\ninitiatives and functional complementarities within the urban region. A case study on selected \\ninfrastructure (e.g., connectivity) was carried out, providing an overview of the main challenges and \\nopportunities. Based on this, a step-by-step strategy to implement the relevant spatial integration \\nscenario was produced, following the priorities identified and including the use of relevant tools. A visual \\nplatform was generated that maps “needs-based spatial imaginaries”. The map compiles data such as \\npopulation density, numbers of households served by high-speed internet connection, level of \\nperipherality, housing dispersion, number of shares in public utilities per municipality, among others. \\nThis project visualises the socio-economic linkages, and most importantly, the investment needs within \\nthe urban region across municipal jurisdictions.  \\nSource: (ESPON, 2021[34]; ESPON, 2021[35]) \\nSummary of key recommendations  \\nGiven the challenges of implementing a full suite of reforms, Czech authorities could consider sequencing \\nthe recommendations made above. By grouping recommendations according to the time horizon needed \\nto implement them effectively (short term, and medium to long term), Czech authorities could allocate \\nresources to reforms in a way which would provide incremental benefits. A potential sequencing is included \\nbelow. \\nShort-term reforms \\n1. Foster effective co-ordination across sectors and among different levels of government to \\nenable place-based infrastructure planning. There are several possible co-ordination venues \\nthat Czechia can explore, as indicated below. Regardless of the platform, it is crucial to involve \\nboth decision makers (e.g., ministers) and technical infrastructure planners in the dialogue.    \\n• \\nOperationalise the Regional Policy Committee proposed by the Ministry of Regional Development, \\nwith a focus on ensuring synergies across sectors in infrastructure planning and prioritising \\ninfrastructure investment to advance regional development goals.  \\n• \\nExplore further the use of the Council on Public Investment to strengthen the place-based approach \\nto infrastructure planning. \\n\\n\\n112    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nEngage periodically with infrastructure planners in line ministries to co-ordinate with regions and \\nmunicipalities through the National and Regional Standing Conferences. \\n2. Support regions to achieve more strategic and forward-looking infrastructure planning. \\nRegions play a critical role in place-based infrastructure planning, both in co-ordinating sectoral \\ninfrastructure in the regions and co-ordinating local infrastructure planning beyond administrative \\njurisdictions – this significant role should be further recognised in the multi-level infrastructure \\nplanning system. The national government can also provide technical support to fully materialise \\nthe potential of regions in infrastructure planning. \\n• \\nLaunch a series of thematic meetings or workshops involving regions and infrastructure planners \\nin line ministries to discuss regional infrastructure priorities. The Ministry of Regional Development \\ncould facilitate the discussion between regional representatives and national infrastructure \\nplanners. Discussions could be based on the framework provided in RDS 21+ (the five types of \\nterritories and their infrastructure needs and priorities in each region) and the Spatial Development \\nPolicy (concrete measures in infrastructure planning to address the needs and issues in specific \\nareas). \\n• \\nDevelop a common set of principles or a framework to help both national and subnational \\ngovernments to plan and prioritise infrastructure investment. These should be co-designed by \\ninfrastructure planners at all levels and supported by regular regional-national dialogue. \\n• \\nCreate a task force to help regions build an integrated database of infrastructure needs, especially \\nto capture infrastructure needs that cross local administrative units. The Ministry of Regional \\nDevelopment has various economic, social, environmental data structured around administrative \\nunits (regions, districts, municipalities) across the country. Building on this, Czechia could consider \\nconvening a task force made up of the Ministry of Regional Development, Czech Statistical Office, \\nregional representatives, academia, line ministries (as advisors or on an ad hoc basis), etc. to help \\nregions build similar database to capture, visualise, and analyse infrastructure needs in their \\nregion, especially highlighting the linkages/common needs beyond administrative jurisdictions.  \\nMedium to long-term reforms \\n1. Promote high-quality joint municipal infrastructure planning, especially at the scale of \\nfunctional areas (e.g., micro-regions) to maximise local investment outcomes. Czechia could \\nprovide financial and non-financial incentives as well as targeted capacity building activities to \\nsupport this.  \\n• \\nProvide financial and non-financial incentives to encourage municipalities within a functional area \\nto jointly plan infrastructure investments. For example, the national government could make joint \\nmunicipal infrastructure planning based on functional areas a condition to unlock additional funding \\nin some national funding schemes, or as one of the criteria in project selection/prioritisation for \\nnational funding.  \\n• \\nMap and identify data gaps at the local and micro-regional level and enhance the availability of \\ninfrastructure-related data for joint planning. This action could be undertaken in tandem with the \\naction on creating an integrated database on infrastructure needs for regions. \\n• \\nStart a pilot action to provide hands-on support to a group of municipalities to develop an \\ninfrastructure investment strategy, with a special focus on fostering data-sharing, agreement and \\npartnership-building between large urban cities and small municipalities in the process (for \\nexample, agglomerations that plan to use ITIs). The lessons learned from the pilot should be then \\ndisseminated to other municipalities.  \\n• \\nDevelop a continuous information campaign and capacity-building programmes to support \\nmunicipalities to carry out joint infrastructure planning. These can include workshops and seminars \\nthat involve experts and local authorities from other countries to share experiences.  \\n\\n\\n   113 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nExplore the possibility of creating an institutional structure at the functional area level (for example, \\nmicro-region councils or committees comprising local authority representatives and other non-\\npublic local stakeholders) responsible for infrastructure planning, in order to move away from \\nstandalone local plans for each municipality. \\n3.3  Establishing strong, fruitful partnerships across government \\nAligning and co-ordinating actions across levels of government is essential for quality and inclusive public \\ninfrastructure investment. In all countries, not just Czechia, national and subnational governments share \\nresponsibilities on infrastructure investment. This means that co-ordination is essential to align investment \\nobjectives, address local needs and achieve long-term policy objectives. Aligned policy objectives favour \\ninvestments that address the multi-dimensional challenges of climate change, urbanisation, and \\ndemographic pressures, among others. Co-ordination is also necessary to identify investment \\nopportunities and bottlenecks, minimise the risk of investments working at cross-purposes, ensure \\nadequate resources and capacity to undertake investments, and create trust among actors at different \\nlevels of government. As highlighted by the OECD Recommendation on Effective Public Investment Across \\nLevels of Government (Box 3.1), the impact of public investment depends to a significant extent on how \\ngovernments manage this shared competency across levels of government (OECD, 2021[1]).  \\nAt the same time, co-ordinated action when setting priorities and implementing investments is essential to \\nharness the comparative advantages of both national and subnational governments. Subnational \\nauthorities tend to have an advantage in determining local needs, identifying which and where actions work \\nbest, and their greater accountability may contribute to a more efficient management of the investment \\nprocess (OECD, 2022[36]). National governments, arguably, are better placed to take into account \\neconomy-wide spillovers and returns to scale. They also tend to have adequate technical capabilities for \\naccurate cost benefit analysis, which are often missing at the local level (OECD, 2022[36]). \\nBuild on important steps to improve co-ordination across levels of government  \\nCo-ordinating investment priorities across levels of government is particularly challenging in Czechia, due \\nto the absence of a legal or institutional framework and the high degree of territorial fragmentation. The \\nCOVID-19 pandemic underlined the difficulties that the country faces when it comes to co-ordination \\nbetween national and subnational policymakers. A study of local government strategies during the COVID-\\n19 crisis, for example, revealed that a complicated and bureaucratic administrative setting did not allow \\nkey decision makers at the national and local levels to quickly share information and take informed \\ndecisions to devise the optimal response in a short period of time (Plaček, Špaček and Ochrana, 2020[37]). \\nWhen it comes to specific investment projects or service delivery, there is no legal framework or dedicated \\nmechanism for different levels of government to co-ordinate or co-operate (OECD, 2023[18]). In some cases \\n– especially for EU-funded investments – all levels of government co-ordinate investment projects when it \\nis required to obtain funding. At the same time, it is extremely difficult to effectively co-ordinate the more \\nthan 6 000 municipalities that are responsible for infrastructure investment. An institutional setting that \\nfacilitates dialogue between national, regional and local representatives is thus of outmost importance.  \\nCzechia has gradually strengthened co-ordination between national and subnational levels for a range of \\npurposes through various mechanisms or initiatives that co-ordinate priorities among these levels:  \\n• \\nThe national and regional standing conferences gather subnational stakeholders to prepare action \\nplans that form the basis of the calls for tender for EU financed investment. Regional standing \\nconferences generally discuss the substance of calls for EU funding programmes, aligning their \\ntimetables and communicating regional proposals for investment to the national level through the \\nNational Standing Conference. The regional standing conferences also prepare documents for \\n\\n\\n114    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nmanaging authorities upon request, co-ordinate activities within their territory and prepare the \\nannual report on the implementation of the regional action plan. There are also various working \\ngroups under the conferences for specific subjects. Various stakeholders highlight that since their \\ncreation, these conferences have been successful in co-ordinating EU-funded investment.  \\n• \\nThe Ministry of Regional Development has also been active in ensuring proper co-ordination. For \\nexample, it actively collected inputs from and co-ordinates with regions for the design and \\nimplementation of the Regional Development Strategy 21+. While this process has been effective \\nin ensuring that national policies reflect the development needs of regions and municipalities, it is \\nnot designed to co-ordinate infrastructure investment.  \\n• \\nThe planned Government Committee on Regional Policy is another initiative that could further \\nstrengthen co-operation between the national and subnational levels. As specified in more detail \\nbelow, for this committee to accomplish its objectives, investment policy should be at the core of \\nits mandate.  \\nHowever, there is still much room to improve how national and subnational governments work together \\ntowards the same objectives. Other than the mechanisms mentioned above, most initiatives or platforms \\nin Czechia are either siloed or focus only partially on investment projects. And while the standing \\nconferences offer potential for co-ordinating investments financed through EU funding programmes, their \\nfocus is not on co-ordinating overall investment priorities across all sectors (OECD, 2023[18]). For \\ninfrastructure investment sometimes it is the regulatory process itself that requires some sort of co-\\nordination to happen. For example, the construction of a regional-level road requires each municipal \\ngovernment to issue a permit for the section located in their municipality.  \\nTo address these issues, OECD countries have resorted to a range of tools to strengthen the coherence \\nof infrastructure investment among levels of government (Box 3.7). These include co-financing \\narrangements, contracts, formal consultation processes, national agencies or representatives working with \\nsubnational areas, and regular inter-governmental dialogue. A 2018 OECD survey shows that the vast \\nmajority of countries surveyed (24 out of 27 countries) have at least one of these mechanisms in place to \\nco-ordinate across levels of government, especially co-financing arrangements and/or regional \\ndevelopment strategies/programmes (OECD, 2019[123]). If well-designed, by limiting the potential for \\nexcessive procedures and red tape, these tools can help to better clarify responsibilities across levels of \\ngovernment, and thereby facilitate the effective implementation of investment (OECD, 2021[1]) \\nBox 3.7. Mechanisms to ensure inter-governmental co-ordination in OECD countries  \\nIn the Netherlands, the Multi-Year Plan for Infrastructure, Spatial Planning and Transport (MIRT) is an \\ninvestment programme set up by the Ministry of Infrastructure and Water Management, with the aim of \\nimproving investment coherence for several areas: spatial planning, economic development, mobility, \\nand liveability. The MIRT is organised into “regional agendas” where co-operation among national, \\nprovincial, and municipal governments and third-sector actors can take place. Any Dutch Ministry and \\nsubnational public entities can participate in this programme. Each submitted project will pass through \\nan MIRT Consultation Committee guided by those regional agendas and be finalised in a collective \\nagreement. \\nIn 2019, Korea introduced the balanced national development project, which includes a Regional \\nDevelopment Investment Agreement (RDIA) to enhance co-ordination and co-operation across levels \\nof government and promote large-scale projects in the regions. These agreements help local \\ngovernments – including municipalities and metropolitan authorities – establish multi-year regional \\ndevelopment plans with corresponding financial support. RDIAs are based on four principles:  \\n1. The “principle of co-operation” stipulates that all parties maintain a co-operative relationship.  \\n\\n\\n   115 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nMobilise a range of tools for collaboration and co-operation  \\nThe recent OECD Public Governance Review of Czechia highlighted the lack of an overarching cross-\\nsectoral and multi-level platform to facilitate and institutionalise dialogue among levels of governments \\n(OECD, 2023[18]). Such a platform would allow national and subnational actors to align the planning, \\nprioritisation, and implementation of infrastructure investment projects. There are several options for \\nCzechia to either create or reactivate a body to oversee and co-ordinate infrastructure investment across \\nthe country, whilst ensuring it contributes to regional development priorities. In all cases, a co-ordination \\nplatform needs to bring together, at a minimum, representatives from the Ministry of Regional \\nDevelopment, Ministry of Transport, Ministry of the Environment and the Ministry of Finance, as well as \\nthe different association of municipalities, including representatives from Prague and the 13 regions (see \\nChapter 2). \\nSince their establishment, the OECD advised expanding the role and scope of the national and regional \\nstanding conferences for EU-funded projects to all significant investment projects, cutting across ministries \\nand levels of government (OECD, 2016[39]). Czechia could leverage the experience of the conference \\nmembers to make sure infrastructure investments are co-ordinated among ministries and levels of \\ngovernment at both national and regional levels. In particular, it would be important to give a prominent \\nrole to the regional standing conferences – through a dedicated working group in each of the conferences \\n– to further discuss and decide on infrastructure investments within their territory as they have easier and \\nmore direct interaction with municipalities. If this alternative is pursued, it will be crucial to clearly define \\nthe regional conferences’ role, responsibilities and decision-making capacity so they can contribute \\neffectively to national and subnational regional development objectives.  \\nThere is an opportunity to give the Government Committee on Regional Policy a leading role in co-\\nordinating infrastructure investment and linking it with regional development priorities. As infrastructure \\ninvestment is the backbone of regional development policy, if this committee seeks to enforce the \\nimplementation of the regional development policy across the country, it might be the right body to co-\\nordinate all sectoral investments across levels of government and take advantage of the political \\nmomentum of regional development policy. For this to work, however, not only should the MRD sit on the \\nCommittee, but also relevant sectors that have an impact on regional development and infrastructure as \\nmentioned above.  \\nFormal contractual agreements across levels of government may also help align objectives for efficient \\nand resilient infrastructure investments. OECD countries are increasingly resorting to contractual \\narrangements to strengthen partnerships among levels of government. Contracts may have a range of \\n5. The “principle of autonomy” guarantees local governments maximum autonomy to choose \\nprojects.  \\n6. The “principle of strategy” ensures all parties agree that the project is strategic.  \\n7. The “principle of specificity” means that the size, cost, duration, and method of financing are all \\nspecified.  \\nThese projects are jointly promoted and funded by all levels of government for specific regions. The \\nratio of co-funding by local governments varies depending on their financial situation. Additionally, the \\nBalanced Committee – which includes representatives from ministries, the consultation body of the \\nLocal Autonomy Act, and a central administrative agency — and the Ministry of Land, Infrastructure and \\nTransport may operate a support team if requested by the relevant ministries and local governments. \\nResearch on institutional improvement may also be provided.  \\nSource: (OECD, 2022[38]) \\n\\n\\n116    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nbenefits, including promoting dialogue and learning amongst the different actors involved. They are \\neffective instruments for identifying common targets, setting clear and transparent objectives, sharing \\ninformation and making credible engagements. While serving different objectives, contracts might help to \\nensure that national policies and regional and local priorities align and “synergetically” contribute to national \\ndevelopment targets (OECD, 2017[40]). Contracts can be adapted to the needs of different regions and city \\ntypes. The key point is to specify the regional development priorities to be addressed by contracts and the \\ninfrastructure projects included in them, which can be supported by a careful assessment of the needs and \\nopportunities in each place. \\nIn the United Kingdom, the Netherlands and France, for example, city deals and other contracts between \\nlevels of governments have been implemented to support development and sustainability objectives. \\nFrance, for example, which has similar challenges to Czechia in terms of local administrative \\nfragmentation, has a strong history of contractual arrangements dating back to the 1980s. Recently, France \\nhas adopted so-called  recovery and ecological transition contracts (contrats de relance et de transition \\nécologique, CRTE) for inter-municipal co-operation bodies for the 2020-2026 period to territorialise the \\nobjectives of the ecological transition (Box 3.8). In Czechia this type of arrangement may help in aligning \\ngreen objectives while also building capacities and encouraging infrastructure investments at the relevant \\nscale.  \\nBox 3.8. OECD examples of the use of contracts to align government levels  \\nChile’s Programming Contracts (Convenios de programación - CP) are formal binding agreements \\nbetween one or more regional governments and one or more national ministries, specifying measures \\nand procedures to be undertaken in investment projects of common interest over a specified period of \\ntime. The steps for creating a CP are: 1) identification of projects; 2) signing of a protocol of purpose \\nthat initiates negotiations between the parties while defining the objectives and areas of intervention \\nand the resources that each institution will contribute; 3) deciding on investments that will be included \\nin the agreement, that have a technical recommendation from the National Public Investment System \\n(SNI); 4) drafting the programming contract and negotiation (technical); and 5) presenting the \\nagreement to the regional council for approval and signature. After the approval and execution of the \\nagreement, a monitoring and evaluation stage follows during which a technical team with \\nrepresentatives from all parties involved is supposed to monitor its execution. Projects are carried out \\nusing the resources of both line ministries and regional governments. These agreements can also \\ninclude other public or private national, regional or local institutions. The participants in a CP do not \\nreceive additional or complementary resources; they must re-allocate existing funds to invest in the \\nproject established in the CP, and the Budget Directorate (of the Ministry of Finance) has to approve \\nthe CPs before their implementation. These agreements offer a useful legal framework for co-ordinating \\nregional and national priorities and responsibilities. They have been mostly used for shared planning \\nand financing of large infrastructure projects.  \\nFrance has a long history of contractual arrangements linked to the decentralisation of specific tasks \\nto regions, departments and, to some extent, municipalities. State-region contracts, launched in 1984, \\ninitially aimed at building regional capacity through a long process of negotiation between subnational \\ngovernments and the central government’s deconcentrated bodies. These contracts established the \\nobjectives, implementation and funding modalities for specific tasks. They can also have implications \\nfor financial transfers from the central level to subnational levels. France is now in its sixth generation \\nof state-region contracts, and through this process, regions have developed extended capacities and \\nresponsibilities for economic development, employment and vocational training, including larger \\nbudgets and the involvement of new actors (e.g. academics, civil society). In 2020, France introduced \\nRecovery and Ecological Transition Contracts for inter-municipal co-operation bodies (Contrat de \\n\\n\\n   117 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nTo pursue the contractual path, Czechia could pilot some contracts between national ministries, regions, \\nand municipalities for specific infrastructure investments that pursue the objectives of the Regional \\nDevelopment Strategy 21+ and the National Investment Plan 2020-2050, while encouraging co-operation \\nacross municipalities. Such an approach could be used to ensure collaboration at the micro-regional level \\nin areas that are not covered by Integrated Territorial Investment (ITI) instruments and CLLD. Pilot \\ncontracts could target the housing sector – a top priority for the current administration – to ensure that \\nhousing policy not only involves the Ministry of Regional Development, but also the Ministry of Transport, \\nthe Ministry of Environment, the Ministry of Education and the Ministry of Health, together with regions and \\nmunicipalities that are in charge of ensuring the basic infrastructure and services in their communities. \\nIndeed, improving housing affordability in Czechia implies a concerted effort from a range of sectors and \\nlevels of government to ensure not only that people’s ability to rent or buy housing is improved, but also \\nthat households are able to afford to live in their accommodation. Cheaper housing far away from a city \\ncentre may lead to a long commute with high fuel costs, increasing the overall cost of housing and \\ndecreasing well-being (OECD, 2021[20]). The advantage of a pilot action is that the national government \\nrelance et de transition écologique - CRTE). These contracts last until 2026 and provide a framework \\nfor the territorialisation and co-ordination of a range of public policies that, as a whole, contribute to the \\nchallenges of territorial cohesion and the ecological transition. The priorities of the contract are defined \\nlocally and agreed upon with the state. Inter-municipal cooperation bodies can access funding for the \\nprojects covered by the contracts from a variety of sources, including the Local Investment Support \\nGrant (DSIL), EU funds, state government ministries involved in the contract, and the private sector.  \\nSince 2013, Iceland has used successive five-year contracts between its regions and the national \\ngovernment to ensure the financing and implementation of regional-level plans. For example, the \\nNorthwest Region has signed three consecutive contracts with the Ministry of Transport and local \\nauthorities and the Ministry of Education and Culture to support implementation of its regional plan, \\nwhich emphasises regional development, innovation, culture, environmental issues, education and \\npopulation. These contracts ensure funding against clear and measurable success indicators \\nestablished by the region. The Northwest Region’s experience is that this approach has helped increase  \\ncentral government’s trust in the region. Trust has also increased on the part of the region, as has its \\ncapacity. Over time, the region has had to abide by fewer rules, has seen its allowance for administrative \\ncosts increase, and constraints removed on the distribution of funding between priority projects and \\ncompetitive funds. In addition, more autonomy has been granted to the region in appointing \\nrepresentatives to Competitive Fund Distribution Committees. There is also the option now for other \\nministries to be part of the contract.  \\nSince 2010, the United Kingdom has developed a comprehensive policy on devolution and local \\neconomic growth. Government interventions to support economic growth are being pursued at different \\nscales (cities, functional urban areas, regions, pan-regions) to ensure all parts of the country benefit \\nfrom sustainable economic growth. “Devolution deals” build on previous “city deals” to cover city \\nregions, as well as local authorities in both urban and rural areas, to improve policy co-ordination \\nbetween cities and their regions. Devolution deals mostly involve the devolution of powers and \\ngovernance changes (an elected city region mayor). They are agreements (contracts of usually ten \\nyears or more) signed between the government and “combined authorities” at the city-region level and \\nare bottom-up proposals focused on leveraging investment for locally determined priorities.  In England, \\nkey devolved policy areas include consolidated transport budgets, single place-based funding pots, \\nlong-term investment funds to support jobs and growth, greater local control of unemployment \\nprogrammes and piloting of business rates (property tax) retention.  \\nSource: (OECD, 2017[41]) (OECD, 2022[42]) (OECD, 2017[40]) \\n\\n\\n118    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\ncan provide hands-on support and identify lessons learnt from the process, which can then be scaled up \\nto other sectors or municipalities. \\nEngage with the private sector and civil society  \\nA range of stakeholders, including the private sector, NGOs and citizens, can have a great influence on \\nmany aspects of an infrastructure project. This is highlighted in the OECD Recommendation on Effective \\nPublic Investment across Levels of Government. Large infrastructure projects are often highly politicised \\nand susceptible of being undermined by a lack of consensus. Stakeholder consultation is of key importance \\nto build consensus and ensure transparency around how the project meets the needs of directly affected \\ncitizens and society at large. Engaging stakeholders from the early stages of the investment cycle, and \\nlater, during feedback and evaluation, can enhance the quality of investment from an environmental, \\neconomic, and social perspective. It also helps build support for investment choices, while also preventing \\nthe risk of capture by specific interest groups (OECD, 2014[25]). Well-managed participation may also help \\nto limit corruption, capture, and mismanagement, in particular for big and complex infrastructure projects. \\nInformation on public investment plans, expenditure and results should be exposed to some level of public \\nscrutiny to promote transparency, accountability and trust. Consultation processes should be inclusive, \\nopen and transparent, and promote transparency and integrity (OECD, 2022[38]). In this sense, early \\nstakeholder engagement can be a two-way virtuous circle enabling better policy and investment outputs \\nand outcomes in the long term (OECD, 2019[43]).   \\nOECD countries are increasingly adopting mechanisms to involve stakeholders from the early stages of \\nthe investment process. This is particularly true when it comes to private sector involvement. The 2018 \\nmonitoring survey reveals that more than half of surveyed countries have established mechanisms to \\nengage private sector representatives – often Chambers of Commerce –  in identifying priorities for public \\ninvestment. At the local level – especially in cities – stakeholder engagement for project prioritisation seems \\nto be gaining ground. Proof of this is an increase in participatory budgeting at the local level that get citizens \\ninvolved in a municipality’s budgetary allocation and its investment priorities. Stakeholder advisory groups, \\ncitizen assemblies, open houses, workshops with residents and surveys are some of the main channels \\nfor obtaining citizen feedback on investment projects or urban (re)development projects. This type of \\nparticipatory practice may contribute to improving information flows between government and citizens. It \\nalso enhances accountability as it stimulates frequent citizen checks on policy makers and politicians \\n(OECD, 2019[27]).  \\nWhile there are some good practices in Czech regions and municipalities to involve stakeholders in \\ndecision-making processes, there are still major shortcomings. The recent OECD Public Governance \\nReview of Czechia (OECD, 2023[18]) pointed to the lack of a participatory culture in the country, which \\ntranslates into low engagement by stakeholders at the local level when it comes to planning. An analysis \\nby the Ministry of the Interior identified that interest groups are often invited to provide comments and \\nfeedback at some stage in the planning or project design process, but their involvement tends to be \\nreduced in later phases. There are also local governments that tend to assess development needs and set \\npriorities without consulting local interest groups at all (Ministry of the Interior of the Czech Republic, \\n2020[44]) (OECD, 2023[18]). Indeed, stakeholder engagement can be costly for regions and municipalities \\nas it requires funding and time – these processes can thus be perceived as an additional burden that \\nsubnational governments – especially small municipalities – may not be able to support (De Barbieri, \\n2018[45]). It is thus necessary to provide incentives, tools and technical assistance for subnational \\ngovernments to engage stakeholders more actively in the infrastructure investment cycle.  \\nStakeholder participation could be improved by promoting a standardised approach across ministries, \\nagencies and state funds that could be applied and targeted to regions and municipalities. Chapter 2 states \\nthat providing central guidance which is actionable and specific to infrastructure could ensure that \\nparticipation practices are applied systematically, improving their effectiveness. Such guidance for \\n\\n\\n   119 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nsubnational governments should be developed in partnership with the associations of regions and \\nmunicipalities so that they address effectively the challenges they face to implement these processes – \\nwhich might be different from the national-level challenges. For example, in accordance with the \\nrecommendations of the OECD Public Governance Review, this guidance could include a checklist with \\nactionable practices to help municipalities organise stakeholder engagement activities, accompanied by \\nconcrete examples of those practices. The Ministry of Regional Development and the associations of \\nregions and municipalities could take the lead in identifying good practice in stakeholder engagement at \\nthe local level so as to start creating an engagement culture at the subnational level. A study of stakeholder \\nengagement in municipalities in the Slovak Republic identifies opportunities for creating a methodological \\nframework for local governments to adopt fit-for-purpose tools for stakeholder engagement in local \\nstrategic planning (OECD, 2023[18]). A similar study in Czechia could be led by the Ministry of Regional \\nDevelopment and could explore the challenges and ways forward to tailor support to different municipalities \\nin helping them to engage effectively with stakeholders.  \\nSubnational governments also need to map out different groups of stakeholders in their jurisdiction (as \\nsuggested in Chapter 2 for the national level). The guidelines could also outline how to conduct this \\nmapping, as well as including a simple “decision-making tree” to help regions and municipalities choose \\nappropriate channels and instruments for engaging with stakeholders for different purposes \\n(e.g. identifying needs, priorities and opportunities for investment; discussing specific infrastructure \\nprojects in the pipeline, etc.) (OECD, 2023[18]). In any case, it is important to consider that these guidelines \\nwill differ according to whether they are developed for big cities or regions, or small municipalities. Ideally, \\ntools to support small rural municipalities should differ from those used by large cities, as they likely face \\ndifferent challenges and needs and have different capacities to engage stakeholders. \\nRegions and big cities can play a key role in integrating stakeholders’ views in the investment cycle. \\nStakeholders targeted by the national and subnational levels are different. Given citizens’ closer proximity \\nto regions, together with greater capacity of regions than small municipalities, regions can ensure that the \\nviews of a range of stakeholders are considered effectively. In the Netherlands, for example, many urban \\nregions have set up “Economic Boards”, which consist of a triple-helix co-operation between subnational \\ngovernments, knowledge institutes (e.g. universities), and the private sector to identify investment \\nopportunities that can spur development in the regions (OECD, 2022[38]). At the regional level, the Czech \\nregional standing conferences might take on such a role through a dedicated working group that discusses \\nand decides infrastructure investments (see above).  \\nSummary of key recommendations  \\nGiven the challenges of implementing a full suite of reforms, Czech authorities could consider sequencing \\nthe recommendations made above. By grouping recommendations according to the time horizon needed \\nto implement them effectively (short term, and medium to long term), Czech authorities could allocate \\nresources to reforms in a way which would provide incremental benefits. A potential sequencing is included \\nbelow. \\nShort-term reforms \\n1. \\nEstablish an overarching co-ordination platform to allow national and subnational actors \\nto align the prioritisation, and implementation of infrastructure investment projects. \\nWhichever model is chosen, it will need to bring together, at a minimum, representatives from the \\nMinistry of Regional Development, Ministry of Transport, Ministry of the Environment and the \\nMinistry of Finance, as well as the various associations of municipalities, including representatives \\nfrom Prague and the 13 regions. Some options include:  \\n• \\nCreate a new body that gathers together all sectors contributing to regional development, as well \\nas regional and local representatives, and led by the Ministry of Regional Development.  It could \\n\\n\\n120    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\ninclude a working group focusing specifically on infrastructure investment based on the advisory \\ngroup created by the Ministry of Regional Development to supervise this OECD review (see \\nChapter 2).  \\n• \\nReactivate and expand the scope and representation of subnational governments in the Council \\nfor Public Investment. \\n• \\nExpand the role and scope of the national and regional standing conferences for EU-funded \\nprojects to all significant investment projects cutting across ministries and levels of government. \\nClearly define the regional conferences’ role and decision-making capacity while ensuring they can \\ncontribute effectively to national and subnational regional development objectives.  \\n• \\nMandate the Government Committee on Regional Policy to co-ordinate infrastructure investment \\nand link it with regional development priorities cutting across all relevant sectors and levels of \\ngovernment.  \\nMedium to long-term reforms \\n2. \\nDevelop formal contractual agreements across levels of government to align objectives for \\nefficient and resilient infrastructure investment and create real partnerships between \\nnational and subnational governments. Contracts may help Czechia identify common targets, \\nset clear and transparent objectives, share information, and make credible engagements. \\nContracts need to be adapted to the needs of different regions and city types so that they help to \\nensure that national policies and regional and local priorities align and “synergetically” contribute \\nto national development targets. A phased approach could be taken: \\n• \\nPilot some contracts for specific infrastructure investments that pursue the objectives of the \\nRegional Development Strategy 21+ and the National Investment Plan 2020-2050. The housing \\nsector could be targeted.  \\n• \\nEstablish contracts with a group of municipalities at the micro-regional level to encourage inter-\\nmunicipal co-operation in areas that are not covered by Integrated Territorial Investment (ITI) \\ninstrument and CLLD. \\n3. \\nStrengthen stakeholder engagement at all levels of government to better assess investment \\nneeds, environmental and social sustainability, as well as the social acceptability of \\ninfrastructure projects. This engagement needs to happen from the very beginning of the \\ninfrastructure cycle, once an investment need or gap is identified. Czechia could adopt a series of \\ncomplementary measures to improve stakeholder participation: \\n• \\nTarget guidance developed at the national level to regions and municipalities. Such guidance for \\nsubnational governments should be developed in partnership with the associations of regions and \\nmunicipalities so that they address subnational challenges effectively.  \\n• \\nEnsure guidance is simple and clear to ensure subnational governments can make proper use of \\nit. It could include:  \\no \\nA checklist with actionable practices to help municipalities organise stakeholder engagement \\nactivities, accompanied by concrete examples of good practices identified by the Ministry of \\nRegional Development and the associations of regions and municipalities.  \\no \\nGuidance on how to map out different groups of stakeholders in regions and cities.  \\no \\nA simple “decision-making tree” to help regions and municipalities choose appropriate \\nchannels and instruments for engaging with stakeholders for different purposes (e.g. identifying \\nneeds, priorities and opportunities for investment, discussion on specific infrastructure projects \\nin the pipeline, etc.) \\n\\n\\n   121 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nIntegrate key stakeholders in the discussions held by regional permanent conferences or any other \\nplatform that promotes dialogue across levels of government at the regional level. The Czech \\nregional standing conferences might take on this role through a dedicated working group that \\ndiscusses and decides on infrastructure investments. \\n3.4  Reinforcing inter-municipal co-operation  \\nAs economic relations and flows of goods and people do not stop at an administrative border, investments \\nare best planned at the scale of functional areas made up of networked villages, towns and more dispersed \\nareas (OECD, 2020[46]). This is particularly true when it comes to an efficient green transition; authorities \\nmust consider land use and transport at a scale that considers central cities and suburbs together (Box \\n3.9). In Prague, for example, the lack of a functional approach to public transport planning meant there \\nwere no public transport options connecting the city and outlying areas, leading to increased car ownership \\nand traffic (OECD, 2018[47]).  \\nMunicipal infrastructure planning in Czechia is characterised by territorial fragmentation. The majority of \\nmunicipalities are too small to have sufficient human and financial capacity to carry out integrated and \\nrobust infrastructure planning. Additionally, individual municipal infrastructure planning without co-\\nordinating with neighbouring municipalities is likely to lose out on economies of scale in infrastructure \\ninvestment, leading to low efficiency in the use of public resources. The national government could play a \\nmore active role in providing targeted incentives and tools to promote joint municipal infrastructure \\nplanning. At the same time, joint planning alone cannot address all the existing gaps in municipal \\ninfrastructure planning (e.g., weak data and evidence base, lack of clear and robust investment \\nprioritisation criteria, etc.). In fact, joint municipal infrastructure planning requires new capacities – in joint \\ndata collection and compilation, in stakeholder engagement processes, and setting up the governance \\nmechanisms for joint strategising, among others. Along with offering incentives for joint planning, the \\nnational government therefore needs to ensure effective capacity building to allow municipalities to \\nleverage joint planning to close planning gaps. \\nCzechia is striving for a stronger focus on functional areas for infrastructure planning, which does not fit \\nwithin one jurisdiction only. The catchment areas of education and health care services, for example, often \\ncross local boundaries. Mobility flows also often go beyond the boundaries of local administrations in \\nCzechia, given its many small municipalities. Inter-municipal co-operation can help to ensure that \\ninfrastructure investments occur at the scale of these “functional areas” and can promote efficiency by \\nreaping the benefits of economies of scale and by enhancing policy synergies among jurisdictions. Inter-\\nmunicipal co-operation may be particularly useful for small municipalities with insufficient public resources \\nto deliver quality public goods to their citizens efficiently and to derive economies of scale through their \\nown investment projects. Cross-jurisdiction co-ordination can be encouraged through financial and non-\\nfinancial incentives and agreements between jurisdictions.  \\nInter-municipal co-operation in Czechia has been a longstanding concern. Given the high administrative \\nfragmentation at the local level, several OECD analyses have already pointed to the need to strengthen \\ninter-municipal co-operation across the country, especially at the functional scale. More flexibility and \\nstronger incentives for such co-ordination from the national and regional levels are needed to ensure that \\nmunicipalities have the right incentives in place and the knowledge to act. \\n \\n \\n\\n\\n122    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nMake existing municipal co-operation more long term and stable \\nCzech municipalities are increasingly co-operating to overcome administrative fragmentation, but usually \\njust for single-purpose projects. The increase in inter-municipal co-operation in Czechia is due to a vast \\nlegislative framework that enables formal and voluntary co-operation among neighbouring municipalities, \\nin particular for autonomous competences. Voluntary associations of municipalities (VAMs) are the most \\nbasic and common form of inter-municipal co-operation (Box 3.10). As reported in various OECD studies, \\nVAMs vary in nature, purpose and membership, but the majority are one-off single-purpose associations \\noften related to infrastructure and public service delivery in transportation or sewerage (OECD, 2016[39]) \\n(OECD, 2020[17]) (OECD, 2023[18]). VAMs often rely on external, temporary sources of financing, such as \\nfrom the state budget or EU funds, rather than funding provided by member municipalities or their own \\nrevenues from service provision (OECD, 2020[17]). They also receive funds from their members, but mayors \\nare reluctant to raise membership fees to ensure adequate and stable financing (OECD, 2020[17]) (OECD, \\n2023[18]). However, it is not common for VAMs to carry out joint infrastructure investment planning – i.e., \\ndeveloping cross-jurisdiction strategies either for sectoral or overall infrastructure investment. \\nInter-municipal co-operation can occur through the use of contracts set up by small municipalities to \\ndelegate some services that they are required to provide, typically to a municipality with extended powers \\nBox 3.9. Inter-municipal co-operation for joint infrastructure projects \\nIn the Netherlands, the Hague Metropolitan Area (MRDH) brings together 23 municipalities to work \\ntowards a sustainable region with clean, quiet and energy-efficient transport. The current package \\ncontains a total of 26 measures, and each is carried out by an average of seven municipalities. The \\ncommunities take on between 3 and 25 measures aimed at reducing CO₂ emissions. The MRDH picks \\nup 14 measures based on its core tasks and supplements them with 2 new measures. A number of \\nmeasures are being taken on by a larger group of municipalities, such as creating Metropolitan cycle \\nroutes (20 municipalities) and the expansion of charging infrastructure (18 municipalities).  \\nIn France, inter-municipal co-operation bodies with own-source taxes (établissements de co-operation \\nintercommmunale à fiscalité propre - EPCI) are playing an increasing role as local public investors as  \\nthey are in charge, of water and waste management, transport, and infrastructure among others. While \\nin 1993, their investment expenditure amounted to 8% of municipal investment, they now account for \\n25%. The 1 254 EPCI (grouping all 35 000 French municipalities) include 21 métropoles (including the \\nthree largest metropolitan areas, Paris, Lyon, and Aix-Marseille-Provence).  EPCIs assume limited, \\nspecialised and exclusive powers transferred to them by member communes. They are governed by \\ndelegates of municipal councils and must be approved by the state to exist legally. To encourage \\nmunicipalities to form an EPCI, the national government provides a basic grant plus an “inter-\\nmunicipality grant” to preclude competition on tax rates among participating municipalities. EPCIs draw \\non budgetary contributions from member communes and/or their own tax revenues.  \\nA law amended in 2020 in Lithuania reinforces the territorial concept of the functional area for \\nimplementing regional policy. This was preceded by a 2017 White Paper that defined the functional \\narea, or functional region, as a system of economic development, worker migration, and urban-rural \\npartnerships using common infrastructure, transport and service networks that go beyond \\nadministrative boundaries. Regional policymakers are now required to consider functional areas, as \\nopposed simply to municipal administrative boundaries, when formulating regional development or \\nmulti-regional development plans.  \\nSource: (OECD, 2021[48]) (OECD, forthcoming[49]) \\n\\n\\n   123 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n– the so-called municipalities with extended area of competence (ORP). The ORPs are obliged to have a \\nzoning plan (unlike smaller municipalities) that typically covers the area of smaller municipalities \\nsurrounding them. They also typically co-ordinate all the municipalities and stakeholders within their \\ncompetence area. There are 205 municipalities of this type in Czechia.  \\nCo-operation across municipalities also happens through the Shared Service Centres (CSSs), a project \\nimplemented by the Union of Towns and Municipalities. CSSs are established to undertake public \\nprocurement, especially responsible procurement, which not only considers the most economically \\nadvantageous alternative, but also the impact on employment, social affairs and the environment. The \\nUnion of Towns and Municipalities has recently released a report containing good practice examples to \\nencourage their implementation across the country. According to the association, CSSs’ most important \\nachievement is knowledge sharing. \\nLocal Action Groups (LAGs), established to deliver rural development policies under the EU \\nLEADER/Community Led Local Development Strategy (CLLD), are also a popular form of inter-municipal \\nco-operation. LAGs cover a wide area and share of the population in Czechia, spanning over 90% of the \\ncountry’s territory and 94% of all municipalities (Saradín and Zapletalová, 2022 [17]). Some evidence \\nsuggest that LAGs have been increasingly adopted for “soft” projects on education, employment and \\nenvironment, in contrast to the “hard” infrastructure projects which were the main focus of the first LAGs in \\nthe country (Saradín and Zapletalová, 2022 [17]). LAGs can access European Structural and Investment \\nfunds such as the ERDF, ESF, Cohesion Fund, EAFRD and EMFF. There are several examples of \\nsuccessful LAGs (Box 3.11) and in some cases this success seems to rest on their participatory approach \\n– which has had a positive impact on democracy at the local level. In the 2014-2020 programming period, \\n178 CLLD strategies were funded. Urban municipalities can also develop Sustainable Urban Development \\nBox 3.10.  Czechia’s Voluntary Associations of Municipalities  \\nVAMs vary in nature, purpose and membership. They may be established as joint stock companies \\n(which can invest in another body alongside private companies) or public bodies. They can have a \\nsingle purpose (e.g. an investment project) or offer the ongoing provision of a service (e.g. waste \\nremoval). Funding can come from members, user charges or grants, or they can be established without \\nfunding.  \\nThe number of VAMs has been growing steadily since 1990, with significant growth around 2000 \\nfollowing the adoption of the Law on Municipalities (128/2000) that banned other forms of inter-\\nmunicipal co-operation (Box 3.2). In 2022, there were 702 VAMs registered in the country, but some of \\nthem do not perform any activities. \\nA new draft amendment to the Law on Municipalities is under discussion. This amendment would create \\na new, larger form of VAM: the Community of Municipalities. A Community of Municipalities should \\nideally join together the majority of municipalities with “extended powers”, or ORPs (Type III) from the \\nsame administrative district. The objective is to strengthen inter-municipal co-operation at the scale of \\na “micro-region”, to ensure co-ordination of public services (e.g. social services), joint delivery of \\nadministrative activities and territorial strategic development, including strategic and spatial planning. \\nAccording to the draft law, the status of Community of Municipalities can be acquired if the union groups \\nat least 20 municipalities or at least three-fifths of all municipalities from the administrative district, if \\nfewer than 30 municipalities belong to this administrative district. Member municipalities should together \\ninclude at least 60% of the population of the administrative district. A municipality can be a member of \\nonly one Community of Municipalities. The draft law envisages only voluntary membership at this stage. \\nSource: (OECD, 2016[39]) (OECD, 2020[17]) (OECD, 2023[18]) \\n\\n\\n124    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nStrategies for the use of the Integrated Territorial Investment (ITI) instrument. These groups, however, do \\nnot necessarily have a focus on joint infrastructure planning. The scope of the LAGs also remains unclear, \\nincluding the extent to which they correspond to functional areas for investment.   \\nWhile municipalities can be part of several VAMs, they can only belong to a single LAG. Often, LAGs and \\nVAMs do not have the same partnering municipalities. This, coupled with the fact that VAMs work under \\nthe supervision of the Ministry of the Interior, carrying out only autonomous competences, while LAGs fall \\nunder the Ministry of Regional Development, undermine the synergies and coherence of both forms of co-\\noperation.  \\nThere is still substantial scope to strengthen inter-municipal co-operation further in Czechia, especially in \\nsectors like spatial planning and housing, where it remains very limited. An OECD survey conducted in \\n2021 showed, for example, that only 30% of surveyed municipalities had a dedicated housing strategy and \\nonly 11% co-ordinated their housing policy with surrounding municipalities (OECD, 2021[20]). Moving from \\nsingle purpose and one-off co-operative arrangements towards long-term and stable inter-municipal co-\\noperation throughout the whole investment cycle is necessary to foster quality infrastructure in the entire \\ncountry. Joint action for investments – especially for physical infrastructure – makes it possible to reach a \\nrelevant scale and enhance synergies among policies of neighbouring (or otherwise linked) subnational \\ngovernments. Reaching an efficient scale and viability for infrastructure investment can make private \\ninvolvement more attractive and may also allow municipalities or regions to have a better chance of \\nreceiving the aid from national/supra-national organisations.  \\nSeveral OECD countries have taken this approach. In the United States, for example, the Pennsylvania \\nDepartment of Transportation aggregated the construction and maintenance of a few hundred small \\nbridges into a single PPP project under its old bridge rehabilitation programme. With the average cost of \\nan individual bridge as low as approximately USD 2 million, these did not make for a viable single PPP \\nproject. In the UK, the Partnerships for Church of England Schools was created to bundle several small \\nBox 3.11. Local Action Groups in Czechia \\nLocal Action Group of Mezilesí \\nThe Local Action Group Mezilesí was founded in 2005 with the aim of supporting environmental, \\neconomic and social development of the Mezilesí region. It comprises five municipalities, as well as \\nrepresentatives from non-government organisations, business sectors and citizens.  Mezilesí is a rural \\nregion and the members of the LAG are mostly small municipalities with around 500 citizens.  \\nBesides implementing the CLLD, the LAG Mezilesí also supports municipalities in preparing projects \\nfinanced by EU funds, focusing its efforts on sustainable development, energy efficiency, waste \\nmanagement and green energy.  At the heart of the LAG is the municipality of Kněžice, which is  \\nCzechia’s first village to be independent in heat and electricity through the Kněžice Bioenergy Centre. \\nOne of the key pillars of the LAG is in fact the experience of Kněžice; the LAG itself serves as a peer-\\nlearning forum.  \\nThe Bioenergy Centre has triggered an energy-saving attitude aimed at reducing greenhouse gas \\nemissions in neighbouring towns. Mayors of the five municipalities signed the European Covenant of \\nMayors for the submission of a Sustainable Energy Action Plan (SEAP), with the view to cutting carbon \\ndioxide emissions in their territory by more than 20% while attaining the same percentage of energy \\nsavings and renewable energy sources. The LAG’s municipalities have also joined the project “Towards \\n100% RES rural communities”.  \\nSource: (European Development Agency, n.d.[50]) \\n\\n\\n   125 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nschools with a new built capital cost of around GBP 2 million into “geographically coherent” groups in order \\nto facilitate the procurement of the private partner (OECD, 2019[51]).  \\nIntroduce concrete incentives for inter-municipal co-operation  \\nOffering financial incentives could help to strengthen inter-municipal co-operation. Co-ordinating \\ninvestments is difficult, even when actors recognise the need for it. It can be hampered by transaction \\ncosts, competitive pressures, resource constraints, differing priorities, and fears that the distribution of \\ncosts or benefits from co-operation will be one-sided (OECD, 2022[36]). This is probably why in the EU, \\nfewer than 40% of municipalities co-ordinate with peers when planning infrastructure projects (European \\nInvestment Bank, 2021[52]). Some recent evidence from Czechia points in this direction, showing that large \\nCzech municipalities do not consider inter-municipal co-operation to be cost-effective (Bakoš et al., \\n2021[53]). Establishing financial incentives for municipalities to co-operate from the planning phase onwards \\nmay help overcome these costs, especially when co-operative arrangements involve the participation of a \\nlarge number of small municipalities (OECD, 2023[18]).  \\nAn OECD survey conducted in 2019 revealed that 16 out of 27 surveyed countries had put in place specific \\nincentives to foster co-operation across municipalities (OECD, 2019[51]). Financial incentives might include \\nspecial grants for municipalities that join in shared efforts, special tax regimes for associations of \\nmunicipalities, additional funds for joint public investment proposals, or bonus grants for municipalities that \\ngenerate savings through co-operation (OECD, 2019[54]). For instance, France offers special grants and a \\nspecial tax regime in some cases; other countries, like Estonia and Norway, provide additional funds for \\njoint public investments. Slovenia introduced a financial incentive in 2005 to encourage inter-municipal co-\\noperation by reimbursing 50% of staff costs of joint management bodies – which led to a notable rise in \\nthe number of such entities. In Galicia, Spain, investment projects that involve several municipalities get \\npriority for regional funds (Mizell and Allain-Dupré, 2013[55]; OECD, 2019[56]). Poland is also gradually \\nmoving in this direction by providing additional funding for municipalities in a functional area that prepare \\na joint strategic plan (OECD, 2021[57]). These incentives may also help overcome political costs linked to \\nco-operation and the sustainability of an association or agreement that usually depends on the political will \\nof the mayor or local administration (OECD, 2023[18]). \\nBox 3.12. Financial incentives for inter-municipal co-operation in OECD countries \\nIn France, a highly fragmented country, law no. 92-125 of February 1992 promoted inter-municipal co-\\noperation schemes as integrated territorial projects with own-source taxation powers (EPCI à fiscalité \\npropre). EPCIs can take various forms, such as “communities of communes,” “communities of cities” or \\n“agglomeration communities.” In 2014, the law NOTRe simplified this complex system by setting up a \\nminimum threshold for inter-municipal cooperation (15 000 inhabitants instead of 5 000), resulting in a \\ndecrease in the number of IMC structures with own-source tax from 2 456 in 2013 to 1 255 in 2022. \\nEPCIs assume limited, specialised and exclusive powers transferred to them by member communes. \\nThey are governed by delegates of municipal councils and must be approved by the state to exist \\nlegally. To encourage municipalities to form an EPCI, the national government provides a basic grant \\nplus an “inter-municipality grant” to preclude competition on tax rates among participating municipalities. \\nEPCIs draw on budgetary contributions from member communes and/or their own tax revenues. They \\nare in charge of water and waste management, transport and infrastructure, among others.  \\nIn Slovenia, inter-municipal co-operation has risen in recent years, especially for projects that require \\na large number of users. In 2005, amendments to the Financing of Municipalities Act provided financial \\nincentives for joint municipal administration by offering national co-financing arrangements: 50% of the \\njoint management bodies’ staff costs are reimbursed by the national government in the next fiscal \\nperiod. The result has been an increase in municipal participation in such entities, from 9 joint \\n\\n\\n126    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nCzechia could capitalise further on its existing structures by providing targeted incentives to promote joint \\ninfrastructure planning that looks beyond the focus on EU-funded investment to consider functional areas. \\nFor example, the national government could make joint municipal infrastructure planning based on \\nfunctional areas a condition to unlock additional funding in some national funding schemes, or as one of \\nthe criteria in project selection/prioritisation for national funding. This is the approach taken by the Swiss \\nagglomeration programme (Box 3.13). The idea is to encourage groups of municipalities to outline a clear \\nvision and plan for infrastructure investment, with concrete criteria for selecting investment projects that \\ncould capture the functional linkages across municipalities and bring development benefits to the area. \\nThe national government could also provide technical support (e.g., experts, advisory services) for \\nmunicipalities that would like to carry out joint infrastructure planning. At the same time, many municipalities \\ndo have a strong interest to plan and deliver infrastructure within their jurisdictions, but some potentially \\nconsider neighbouring municipalities as competitors for funding. This challenge is not unique to Czechia, \\nbut experience shows that with the right incentives and mechanisms, a co-operative culture could be \\nfostered in the long-term. The national government has planned support to LAGs for investment planning \\nand project preparation, including providing guidelines and methodological support. The LAGs and CLLD \\ncould be a good start and could be helped towards shifting the mind-set of municipalities, as in the example \\nof the Brandenburg initiative in Germany (Box 3.13).  \\nmanagement bodies in 2005 to 42 today, covering 177 municipalities. Their most common tasks are \\ninspection (waste management, roads, space, etc.), municipal warden service, infrastructure planning \\nand internal audit.  \\nThe region of Galicia in Spain has many small municipalities with limited institutional capacity and \\nspread out geographically, which increases the cost of providing public services. The regional \\ngovernment has taken steps to encourage economies of scale. It provides financial incentives for \\nvoluntary (“soft”) inter-municipal co-ordination arrangements. Investment projects that involve several \\nmunicipalities get priority for regional funds. Such inter-municipal agreements tend to be popular in the \\nwater sector. Local co-operation is also being encouraged in the urban mobility plan for public transport, \\ninvolving the seven largest cities in the region. The regional government has also imposed a “hard” co-\\nordination arrangement by creating the Metropolitan Area of Vigo, an association of 14 municipalities. \\nAlthough the metropolitan area was defined by the regional government, it was based on a history of \\n“light co-operation” among 12 municipalities (out of 14). Voluntary municipal mergers may be \\nencouraged in the future. \\nSource:  (OECD, 2020[58]; OECD, 2023[18]) \\n\\n\\n   127 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nCollaboration on infrastructure investment can also be encouraged by providing technical support to plan, \\ndesign, prioritise, procure, implement and maintain infrastructure. Small municipalities in Czechia often \\nlack this capacity. In this context, peer learning, pooling expertise and exchanging experiences becomes \\ncrucial. Some OECD countries have opted to encourage collaboration by providing consulting and \\ntechnical assistance, promoting information sharing, or providing specific guidelines on how to manage \\nsuch collaboration. Arrangements to solve capacity issues have been prevalent among the Nordic \\ncountries (Denmark, Finland, Norway and Sweden), but they have also been practised in Chile, France, \\nBox 3.13. Providing incentives for local strategic planning at the right scale \\nThe Swiss federal agglomeration programmes  \\nThe Swiss federal agglomeration programmes, funded and administered through the Federal Road and \\nAgglomeration Traffic Fund, provide competitive grants for public and individual transport infrastructure \\nin agglomerations. The Federal Fund contributes 30-50% of the funding to the selected investment \\nprojects and higher quality projects can receive a higher share of grants.  \\nThe funding programme is designed to incentivise co-ordination and co-operation among local \\nauthorities. As a condition to access the grants, local authorities need to plan and implement projects \\nin a co-ordinated way to address local needs. They need to harmonise their transport, urban \\ndevelopment and land-use plans and develop their agglomeration programmes jointly across \\nadministrative units. Some local authorities have developed model projects precisely to build \\ncollaboration and create an agglomeration programme to access the fund. In 2015, the canton of Uri \\nand eight municipalities in the Lower Reuss Valley jointly developed an agglomeration plan for the \\nfederal programme. The plan outlined the goals and strategies for the Lower Reuss Valley’s future \\ndevelopment with respect to housing, landscape and transport. Around 40 agglomerations across the \\ncountry have participated in this programme. \\n“Strengthen our strengths” strategy in Brandenburg, Germany  \\nThe reunification of Germany required transforming the east German socialist planning economy and \\nintegrating it into the west German market-oriented capitalist one. The country struggled to achieve \\nconvergence in infrastructure development, competitiveness and employment levels, with the social \\nsecurity system serving as a key stabiliser. In 2004-2005, Brandenburg revisited its territorial \\ndevelopment approach, and launched a strategy centred on the key strengths of 15 core regional growth \\nareas, empowering them to “strengthen our strengths”. It was implemented via an open access and \\n“competitive” funding programme designed to encourage the active development of project proposals \\nthat built on an area’s inherent growth potential. Under this strategy, Brandenburg’s municipalities with \\nover 25 000 inhabitants were invited to send proposals for growth that built on their unique assets and \\nadvantages. This “competition” encouraged towns to collaborate in putting forward proposals. The \\nprocess for formulating the proposals was important as it required talking to various sectors in the public \\nadministration, businesses, education institutes and universities. This changed the mentality of regional \\nand local officials from one of asking for direct support from the State Chancellery to one that actively \\nexplored what they needed and identifying potential areas for growth. In addition, in Brandenburg, as \\nin many other countries and regions, there is risk that the investment scale becomes smaller and smaller \\nwithout co-operation. To address this, the Chancellery focuses on projects in which local protagonists \\nin the regions can co-operate for regional development, striking a balance between a bottom-up and \\ntop-down approach in investment.  \\nSource: OECD (2020[31]);  \\n\\n\\n128    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nItaly and Spain, among others. Regions might play a key role by organising peer learning, offering technical \\nsupport, and acting as political facilitators. As has been highlighted by the recent OECD Public Governance \\nReview of Czechia (OECD, 2023[18]), the development of a clear toolbox or guidelines on how to jointly \\nplan and implement infrastructure investments should accompany this process. Capacity-building \\nprocesses might particularly focus on infrastructure strategic planning at the micro-regional level, either by \\npeer learning or through external experts who can support municipalities, for example in assessing need, \\nprioritising and procuring infrastructure projects. Section 3.6 below discusses subnational capacity building \\nin more detail. \\nThe OECD Public Governance Review also suggests that to strengthen inter-municipal co-operation, \\nCzechia could identify a specific set of tasks that should be performed by a group of municipalities, \\nmandating inter-municipal co-operation over a legally defined set of public services. This could be \\nextended to strategic infrastructure investments that contribute, for example, to the implementation of the \\nrecovery and resilience plan, or to achieve the green and digital transition objectives. This would need to \\nbe accompanied by appropriate financing mechanisms to properly prepare and execute the investment in \\njoint infrastructure.  \\nThe success of joint municipal infrastructure planning relies on the political buy-in from municipalities and \\nlocal communities, especially to generate support for long-term reforms. Joint municipal infrastructure \\nplanning needs to be fostered through a bottom-up approach. Citizens, local communities, and \\nmunicipalities need to understand the value of such co-operation, i.e. that it could help advance their local \\nagenda while also supporting regional development and the country. One study pointed out that the \\ninfrastructure and spatial planning culture in Czechia at both national and subnational level strongly relies \\non experts in architecture and urban design, without sufficient attention to collective intelligence and \\nbottom-up stakeholder inputs to address cross-cutting development issues such as climate change, \\nsustainable development, social inclusion, etc. (Maier, 2020[59]; ESPON, 2021[22]).  \\nSummary of key recommendations \\nGiven the challenges of implementing a full suite of reforms, Czech authorities could consider sequencing \\nthe recommendations made above. By grouping recommendations according to the time horizon needed \\nto implement them effectively (short term, and medium to long term), Czech authorities could allocate \\nresources to reforms in a way which would provide incremental benefits. A potential sequencing is included \\nbelow. \\nShort-term reforms \\n1. \\nReinforce co-operation across Czech municipalities throughout the investment cycle. To \\naddress high administrative fragmentation at the local level, Czechia needs to move from single \\npurpose and one-off co-operative arrangements towards long-term and stable inter-municipal co-\\noperation across sectors and throughout the whole investment cycle. The following \\ncomplementary actions could be taken: \\n• \\nIntroduce financial incentives for municipalities to co-operate from the planning phase onwards. \\nFinancial incentives could include special grants for municipalities that join efforts, special tax \\nregimes for associations of municipalities, additional funds for joint public investment proposals, or \\nbonus grants for municipalities that generate savings through co-operation. \\n• \\nStrengthen the administrative capacities of Voluntary Associations of Municipalities (VAMs). \\nProvide systemic financial support so that VAMs have sufficient personnel and administrative \\ncapacities to implement investment activities. Encourage inter-municipal co-operation by providing \\nconsulting and technical assistance (e.g. on needs assessment, prioritising, and procuring \\n\\n\\n   129 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\ninfrastructure projects), promoting information sharing, and developing specific guidelines on how \\nto manage such collaboration.   \\n• \\nIdentify key infrastructure investments that should be conducted by a group of municipalities, such \\nas those that contribute to the implementation of the recovery and resilience plan, or to the green \\nand digital transition. Financial incentives (e.g. specific transfers, funding or financing for joint \\ninfrastructure) could be directed towards these specific projects to ensure that the group of \\nmunicipalities can properly prepare and execute them.  \\nMedium to long-term reforms \\n1. \\nTarget and encourage inter-municipal co-operation for infrastructure investments at the \\nfunctional scale. In urban and rural areas alike, investments are best planned at the scale of \\nfunctional areas of networked villages, towns and more dispersed areas, as economic relations \\nand flows of goods and people do not stop at the administrative border. For this to happen, it is \\ncrucial to develop data on functional areas to produce a more accurate picture of actual \\ncircumstances than administrative areas. \\n3.5 Enhancing subnational administrative capacity for quality infrastructure \\nEffective and quality infrastructure investment requires substantial institutional capacity. Smaller \\nsubnational governments often lack the broad range of skills needed to identify, plan, finance, construct \\nand manage quality infrastructure. They can also face significant capacity challenges in public procurement \\nand may rely on external support to undertake large or specialised investment projects (OECD, 2022[2]). \\nThis is not only the case in Czechia, but also across OECD countries. In 2015, 65% of the subnational \\ngovernments surveyed in a joint OECD-Committee of the Regions survey reported that the capacity to \\ndesign adequate infrastructure strategies is lacking in their city/region (OECD-CoR, 2015[60]). In 2020, a \\nsurvey by the European Investment Bank showed that one-third of EU municipalities highlighted the lack \\nof technical capacity as a major obstacle for infrastructure investment (European Investment Bank, \\n2021[52]). Alongside regulatory red tape, lack of technical capacity was also highlighted as holding back \\ninvestment in green and climate change-related infrastructure (European Investment Bank, 2021[52]).  \\nBox 3.14 lists some of the priority areas for subnational government capacity building. \\nBox 3.14. Institutional capacities at the subnational level for quality infrastructure investment \\nEffective and quality subnational infrastructure investment requires substantial institutional capacity, \\nincluding staff with appropriate skills and fit-for-purpose processes and systems. \\nAmong other areas, subnational governments usually require greater capacity in:  \\n• \\nStrategic planning: to support the identification of long-term regional and local development \\npriorities that guide infrastructure investments and other complementary policy actions (such as \\nland use changes) in line with regional and local development strategies. \\n• \\nProject planning and appraisal: to help ensure specific infrastructure investments are well \\ndefined, efficiently prioritised, provide value for money and contribute to regional and/or local \\ndevelopment objectives. A useful tool can be online project preparation and monitoring \\nplatforms established by multilateral development banks to help national and subnational \\ngovernments prepare quality infrastructure investment projects. \\n• \\nPublic financial management: to budget and manage life-cycle investment costs, align budget \\nframeworks, monitor and account for financing flows, account for risks and contingent liabilities \\n\\n\\n130    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nPrioritise capacity building at the regional and local levels  \\nCzech subnational governments often lack the capacity to plan, prepare, procure and deliver infrastructure \\nprojects. This is one of the major infrastructure bottlenecks in Czechia. Several OECD reports, including \\nthe OECD Economic Survey 2020 (OECD, 2020[17]) and the OECD Public Governance Review (OECD, \\n2023[18]), have noted that strengthening municipal administrative capacity is a key priority for Czechia. This \\nis particularly true when it comes to public investment – a task that requires a certain level of expertise. \\nSmall municipalities cannot always ensure sufficient and qualified staffing (Ministry of the Interior of the \\nCzech Republic, 2018[61]), and it is also difficult for them to retain staff. In some cases, when an employee \\nleaves who has gained experience in planning, prioritising or procuring they “take away” all their knowledge \\nin managing investment projects. This trend is aggravated by population shrinking and ageing. This is in \\nstark contrast with administrations in the big cities, which have a more stable structure and specialisation \\nof tasks; even with a high turnover rate, they manage to build institutional knowledge and train new \\nemployees (OECD, 2023[18]).  \\nThe capacity gap is even more acute when it comes to future challenges like improving green and digital \\ninfrastructure in regions and municipalities. These challenges require innovative public procurement \\napproaches such as green public procurement to ensure that contractors meet certain requirements (i.e. \\nstandards relating to energy efficiency, carbon emissions or water use). Green public procurement can \\nhelp align purchasing decisions with wider subnational government objectives (OECD, 2022[38]). To \\nachieve this, subnational governments require a mix of technical and specialist knowledge together with a \\nbroad range of professional competences. \\nCzechia has set capacity building as a key priority. The country has undertaken a series of initiatives that \\naim at bridging the capacity gap in regions and municipalities (Box 3.15). The Czech public administration’s \\nreform agenda (Client-oriented Public Administration 2030), for example, sets an ambitious medium to \\nlong-term vision for the future and positions varied learning and development opportunities as a key part \\nof building skills, particularly relating to analytical capability (OECD, 2023[18]). One of the objectives of this \\nagenda is precisely to improve the knowledge and skills of local self-government officials, as well as elected \\nrepresentatives of self-governing units. However, as of today, training for the local public workforce – led \\nby the Ministry of the Interior – is mostly focused on the administrative aspects of officials’ tasks.  \\nIn parallel to the training efforts led by the Ministry of the Interior, the Ministry of Regional Development \\nhas also taken a proactive role in supporting municipalities as part of the regional development policy. The \\nministry has created a web-based application that supports municipalities in designing their municipal \\ndevelopment strategies and/or programmes, offering practical tools to develop them (e.g., statistical data, \\ntemplates and samples of supporting documents and studies, e-learning courses, handbooks for \\nmunicipalities, etc.). All municipal development strategies are published on the website to encourage peer-\\nlearning as a way of building strategic planning capacity among municipalities (OECD, 2023[18]). The MRD \\nhas also been active in professionalising public procurement. The Office for the Protection of Competition, \\nfor example, has offered seminars and training on public procurement, including an educational \\nand undertake auditing processes. For example, the World Bank and other partners have \\nlaunched the City Creditworthiness Initiative to build the public finance management capacity \\nof cities, aiming to enhance their creditworthiness. \\n• \\nPublic procurement: to clearly articulate and prioritise the objectives of procurement to private \\nconstructors and assess options against value-for-money criteria and other objectives. \\n• \\nMonitoring and evaluation: to conduct regular and rigorous ex-post evaluation and use \\nmonitoring and evaluation information to enhance decision making. \\nSource: (OECD, 2022[38]) \\n\\n\\n   131 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nprogramme for small communities focused on multi-criteria evaluation with the Union of Towns and \\nMunicipalities of Czechia (European Commission, 2020[62]) (see Chapter 2).  \\nAs part of its implementation of the National Recovery Plan, Czechia is planning to put a strong emphasis \\non capacity building for investment. Under Component 4.1 (see Box 3.15), and through an amendment to \\nits recovery plan, Czechia aims at preparing regional investors for the transition to a green and digital \\neconomy through training activities, methodological co-ordination and financial assistance for preparing \\nprojects to meet the objectives of a green or digital Europe, as well as to increase the efficiency of public \\ninvestment, to strengthen investment readiness or absorption capacity and to increase the share of PPP \\nprojects in Czechia. Another key component of the National Recovery Plan is the creation of Regional \\nHousing Investment Support Centres, which will bring expert support for municipal rental housing \\ninvestment. These centres will disseminate investment know-how at both the regional and local levels \\nthrough methodological support, linking municipalities with local experts, co-ordinating local housing \\npolicies and supporting the preparation of projects intended for support by national financial instruments. \\nBox 3.15. Building Czechia’s subnational public workforce capacity  \\nThe role of the Ministry of the Interior \\nThe Ministry of the Interior has formal responsibility for learning and development in local self-\\ngovernments even though it is not the employer of local self-government officials. The ministry defines \\nminimum standards for special training largely focused on the administrative aspects of officials’ tasks. \\nSenior officials are required to take mandatory training on management and human resource issues \\nwithin two years of their appointment. Aside from some ad hoc initiatives, broader competences – ‘soft \\nskills’ – are not currently a sustained focus of most learning content. The ministry also prepares the \\nentry exam taken by all new subnational public employees, as set out in the forthcoming amendment \\nto the Act on Officials of Territorial self-governing units. In the future, officials will have to pass a general \\nentrance exam, as well as a separate exam (“special professional competence exam”) to be taken \\nwithin 18 months of taking up duty in order to exercise delegated powers.  \\nA forthcoming amendment to the Act on Officials of Territorial Self-governing Units proposes changes \\nto the training system to improve access to training by simplifying the accreditation system for training \\nprogrammes, and through tighter quality controls by reducing the number of accredited training \\ninstitutions. \\nThe role of CzechInvest \\nCzech Invest is an Investment and Business Development Agency subordinated to the Ministry of \\nIndustry and Trade of Czechia that supports business and investment. The agency helps to attract \\nforeign direct investment and develop domestic companies through its services and development \\nprogrammes. CzechInvest also promotes Czechia abroad and acts as an intermediary between the EU \\nand small and medium-sized enterprises in implementing Structural Funds in Czechia. As part of its \\nactivities, CzechInvest works through its 13 regional offices to detect investment needs in the regions, \\nincluding developing industrial zones, brownfield sites or any project that offers opportunities for working \\nwith the private sector. To make the investment ecosystem work better, CzechInvest supports \\nmunicipalities in project preparation and funding options.   \\nCzechia’s Recovery and Resilience Plan  \\nComponent 4.1 of the National Recovery and Resilience Plann developed by the Ministry of Regional \\nDevelopmentn focuses on systemic support to the public administration to increase the readiness and \\nefficiency of public investment in Czech regions in view of the EU's green and digital economy and \\n\\n\\n132    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nAcross the OECD, national and subnational governments have implemented initiatives to build capabilities \\nat the subnational level for planning, designing and delivering infrastructure investment projects (Box 3.16). \\nAccording to the OECD monitoring survey, 17 out of 27 surveyed countries have developed a specific \\nstrategy to strengthen subnational capabilities to design and manage public investment strategies and/or \\nprojects (OECD, 2019[51]). Providing technical assistance is another common form of capacity building for \\nsubnational governments. Some countries also use digital platforms (e.g., e-learning) with the aim to \\nnarrow the capacity gaps across regions and localities and facilitate peer learning. Other mechanisms \\ninclude incentives for subnational government to pool expertise for infrastructure planning and \\nimplementation (OECD, 2019[51]) and to build investment capacity, for example for PPPs (discussed below) \\nand climate finance. National associations of municipalities are very effective as capacity-building and \\nknowledge-sharing platforms, and for disseminating good practice and benchmarking local and \\ninternational experiences. \\nFor training to be successful and targeted to the actual needs of subnational governments, the Ministry of \\nRegional Development should work together with regional governments and the associations of \\nmunicipalities to identify needs, and define the scope, targeted audience and content of such training. \\nTraining can be targeted to a group of regions or municipalities facing similar challenges, or can be focused \\non specific issues such as technical, economic, environmental issues, or social analysis to support \\ninvestment appraisal. Capacity building should take place regularly, in a structured manner, so that \\nknowledge is retained at the institutional level in spite of the turnover of government officials.  \\nInter-municipal co-operation is also crucial to pool expertise across local governments and promote peer-\\nlearning.  One of the greatest opportunities for gaining added value of inter-municipal co-operation \\nschemes is for small or less prepared municipalities to learn from bigger or better prepared ones. In \\nCzechia, the VAMs do not only help to reach the right scale for investment, they also offer economies of \\nscale for sharing knowledge and skills for project preparation and management. Encouraging cities to \\npartner with small municipalities will be crucial for this (see above). In this respect, the Shared Service \\nCentres (CSS) might be a good practice to pursue (see Section 3.5). The Regional Centres – in co-\\nordination with associations of municipalities – could also act as hubs to gather good practice across \\nmunicipalities and organise peer-learning exchange among local authorities to tackle specific and common \\nissues within the region. The planned Regional Centres could also facilitate training, as in Poland, for \\nexample (Box 3.16).  \\nhousing affordability objectives. The main goal is to strengthen the capacity of public administrations to \\nprepare and implement investment programmes financed by public funds, including EU funds.  \\nAs part of the component, Czechia has established a new national advisory centre and eight Regional \\nHousing Investment Support Centres (RCs) under the State Fund for Investment Support. The RCs aim \\nat supporting the implementation of housing investment in regions and municipalities by disseminating \\nknow-how and providing methodological and professional support.  The Unit for Housing Investment \\nSupport within the RCs will be responsible for the management and methodological guidance of the \\nRCs and will act as the secretariat of the Housing Investments Advisory Hub (HIAH) (see chapter 2). \\nSource: (OECD, 2023[18]) \\n\\n\\n   133 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nBox 3.16. OECD country experiences in building subnational investment capacity  \\nChile’s National Investment System offers specialised training courses for national and subnational \\nofficials in formulating and evaluating public investment projects. It has a dedicated module on field \\ntraining and regional workshops for entities in charge of preparing investment initiatives (i.e., mainly \\nmunicipalities and other public services at the local level). The objective is to develop the appropriate \\ncompetencies of subnational civil servants in the design and preparation of investment projects, as well \\nas in the methodologies of social evaluation. Training sessions take place in the municipalities and are \\norganised by investment analysts from the Regional Office of the Ministry of Social Development in \\neach region.  \\nIn Germany, the initiative “Small Towns in Germany” is a package of programmes and activities for \\nsmall town development, aiming to strengthen their functionality. It targets over 2 100 towns across \\nGermany, mostly in peripheral areas. In 2019, as part of this initiative, the Federal Ministry for Housing, \\nUrban Development and Building launched a pilot called “Small Town Academy”, which offers a \\npurpose-built platform for networking, exchange of experiences and advanced training on urban \\ndevelopment. A pilot phase (between 2019-2022) was used to define suitable content and formats, \\nwhich led to the final launch of the platform in 2023. The planned activities include advice from experts \\nwho come to the municipality and forge creative strategies (mobile coaching teams), or tandems among \\nmayors who exchange views on a common topic in urban development over the long term. These \\nactivities will generate model projects that test different urban planning and project management \\nmethods, and will lead to a collection of learning and exchange modules. \\nIn Poland, to support the implementation of the National Strategy for Regional Development 2030 \\n(NSRD 2030), the Ministry of Development Funds and Regional Policy launched a pilot project to create \\nthe Centre for Advisory Support (Centrum Wsparcia Doradczego, CWD), aiming to strengthen the \\ninstitutional capacity of local authorities to participate in strategic development activities, including \\nplanning, designing and managing infrastructure projects in 894 Areas of Strategic Intervention (ASIs). \\nThe CWD aims at building capacity and strengthening the territorial approach to investment, i.e., helping \\nbuild cross-jurisdiction partnerships with other ASI communes and with non-public socio-economic \\npartners, such as civil society organisations, in order to tackle local development challenges and create \\ncompetitive advantages. \\nIn Scotland (UK), the Scottish Government has established the Scottish Futures Trust (SFT) as a \\ncentre of expertise to improve the efficiency and effectiveness of infrastructure investment in Scotland. \\nThe SFT has launched “Hub” programmes to improve the planning, procurement and delivery of smaller \\npublic infrastructure projects (primarily education and health). This programme was tailored to meet the \\nspecific needs of five designated hub territories across Scotland. It also provides an opportunity to share \\nskills and experience across public entities at all levels (education and health boards, local authorities, \\netc.), enabling knowledge transfer and increasing public investment efficiency. In addition to this \\nprogramme, the SFT also carries out independent expert reviews of various stages of local investment \\nprojects, using their expertise to support knowledge sharing among local authorities. It has also \\ndeveloped a step-by-step guide on place-based decision making for all levels of government to plan \\nand deliver investment. \\nSource:  (Malik-Kapler, 2021, Unpublished[63]; European Commission Joint Research Centre, 2022[64])  (European Commission Joint \\nResearch Centre, 2022[64]); https://www.kleinstadtakademie.de/. \\n\\n\\n134    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nStrengthen national and regional support for infrastructure investments at the local level \\nThe national and regional levels need to actively support municipalities to overcome capacity challenges \\nresulting from Czechia’s fragmented local administration. Often support to help small municipalities \\nprepare investment projects might be preferable to training, which might not be targeted to the specific and \\nvaried needs of municipalities, or not be truly beneficial as municipal employees do not have sufficient \\nresources or time to participate, and high turnover rates mean the knowledge may be quickly lost.  \\nIn this sense, the two initiatives that Czechia is planning to establish as part of the National Recovery Plan \\n- the National Advisory Centre and the Regional Housing Investment Support Centres - are fundamental, \\nif well managed and co-ordinated. The National Advisory Centre aims at supporting regions and \\nmunicipalities with project preparation, especially for projects that support the green and digital transitions. \\nThis centre will use standardised tools and methodologies for public investment, including PPPs, building \\ninformation modelling (BIM) projects, and setting long-term standards. While this centre will not necessarily \\nonly provide support to housing investments, the plan is for at least the first call for projects to focus on \\nthis sector. In parallel, the Regional Housing Investment Support Centres are to be established in eight \\nregions to provide expert support to municipalities for rental housing investments through the dissemination \\nof investment know-how, methodological support, and liaising with local experts. For the efficient \\nimplementation of these institutions, some preliminary issues might be considered: \\n• \\nEstablish concrete mechanisms and communication channels to ensure that the national and \\nregional centres take a cross-sectoral perspective. The Ministry of Regional Development might \\nconsider piloting both institutions over 2024-2026. While their special focus is on the housing \\nsector, it is important to recognise that at the territorial level, housing cannot be seen in isolation. \\nPlanned rental housing investments need to be accompanied by other sectorial investments: \\ntransport, roads and connectivity, education, water and sanitation, health facilities etc.. Both the \\nnational and regional centres need to put this cross-sectoral perspective up-front when selecting \\nand supporting project preparation. The Ministry of Regional Development needs to establish \\nconcrete mechanisms and communication channels to ensure that the national and regional \\ncentres have this cross-sectoral perspective.  \\n• \\nAvoid duplication of tasks by the national and regional centres and instead create \\ncomplementarities and synergies in the support they provide. This will require daily co-ordination, \\nstarting from setting the criteria for selecting projects to receive support from both centres and how \\nthey target the support. While support can be focused on appraisal and project preparation, it is \\nalso important to provide expertise and technical assistance in areas such as financial modelling \\nand business case development. \\nThere are also some online platforms to support project preparation and management that provide easy-\\nto-use documents. They usually provide a comprehensive map of all aspects to consider for the preparation \\nof sustainable infrastructure projects and model documents. For example, multilateral development banks \\nhave developed SOURCE to provide a complete range of documents to support infrastructure planning \\nand investment processes (OECD, 2022[38]). In the same spirit, municipalities would also strongly benefit \\nfrom accessing framework agreements established at the national level with larger contracting authorities. \\nFor frequently purchased goods, services and works, a framework agreement can reduce administrative \\nburdens for contracting authorities and suppliers by allowing simplified ordering processes once the \\nagreement is in place (see Chapter 2). \\nWith the renewed interest in the use of PPPs, especially for affordable housing, special support for cities \\nand municipalities will be essential. Czechia is currently developing national guidelines for the development \\nof affordable housing through PPPs (see Chapter 2). PPPs are not risk-free and require careful \\nconsideration and implementation by subnational governments. Maximising their benefits and minimising \\ntheir downsides requires substantial public sector capacity, especially at the subnational government level. \\nA PPP Unit at the national level with dedicated and technically sound expert teams (in-house and/or \\n\\n\\n   135 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\ncontracted) can strengthen subnational governments’ capacity in undertaking PPPs. Most PPP Units are \\nnational, but some countries also have PPP Units at the subnational level. Although their specific role \\nvaries, PPP Units tend to perform a combination of five main functions: policy formulation and co-\\nordination, gate keeping and quality control, technical assistance, education and capacity development, \\nand PPP promotion (OECD, 2022[38]). \\nRegions and municipalities could also benefit from framework agreements and resources such as grants \\nfor project design and preparation (e.g. environmental impact assessments, technical feasibility studies). \\nChapter 2 provides some examples of how support from the Ministry of the Environment and the State \\nEnvironmental Fund could be enhanced, by considering two-round calls, with the first-round funding project \\npreparation and design or reimburse preparation costs after construction approval.  \\nSummary of key recommendations \\nGiven the challenges of implementing a full suite of reforms, Czech authorities could consider sequencing \\nthe recommendations made above. By grouping recommendations according to the time horizon needed \\nto implement them effectively (short term, and medium to long term), Czech authorities could allocate \\nresources to reforms in a way which would provide incremental benefits. A potential sequencing is included \\nbelow. \\nShort-term reforms \\n1. \\nIdentify capacity gaps in all types of regions and municipalities. In order to properly target \\nassistance and capacity building at the subnational level, it is crucial to have a clear picture of \\nwhich capacities are missing and where. With a proper diagnosis, assistance and capacity building \\ncan be better targeted and tailored to a group a regions or municipalities in a systemic and \\nsustainable way, rather than offering technical assistance or building capacity on a case-by-case \\nbasis. This will involve two complementary and parallel measures: \\n• \\nDevelop a comprehensive database on subnational public employment that captures not only the \\nnumber of public employees, but also other crucial characteristics such as gender, education level, \\nhierarchy, etc. This would provide a useful database of subnational public staffing and its evolution \\nover time, helping to identify key capacity gaps.  \\n• \\nConduct surveys or consultations with regions and municipalities to better understand regional and \\nmunicipal gaps in public administration and management and find common challenges. This \\ndiagnosis could be led by the Ministry of Regional Development or the Ministry of the Interior.  \\n2. \\nStrengthen national and regional support and assistance to plan, prepare and implement \\ninfrastructure investments at the local level. As the national and regional levels often have \\ngreater capacity than small municipalities they can provide direct support, instead of training, to \\nsmall municipalities for preparing investment projects.  \\n3. \\nEmbed a cross-sectoral and multi-level perspective within capacity-building activities to \\nhelp in breaking down silos. Proper co-ordination among the National Advisory Centre and the \\nRegional Housing Investment Support Centres could be a way forward: \\n• \\nEstablish concrete mechanisms and communication channels to ensure that the national and \\nregional centres take a cross-sectoral perspective. Use the 2024-2026 period to pilot both \\ninstitutions with a special focus on the housing sector, but while taking a broader view when \\nselecting and supporting project preparation. The State Fund for Investments Promotion, with the \\nassistance of the Ministry of Regional Development needs to establish concrete mechanisms and \\ncommunication channels to allow the national and regional centres to take this cross-sectoral \\nperspective.  \\n\\n\\n136    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nAvoid duplication of tasks by the national and regional centres and instead create \\ncomplementarities and synergies in the support they provide. This will require daily co-ordination.  \\n• \\nUse the pilot period as an opportunity to collect proper data at the territorial level or identify data \\ngaps for assessing infrastructure needs across all sectors. This will require a co-ordinated effort \\nnot only involving the National Advisory Centre and the Regional Housing Investment Support \\nCentres, but also all sectors and institutions developing or collecting data.  \\n4. \\nProvide special resources and tools for regions and municipalities to better prepare and \\nprocure infrastructure projects. One of the major bottlenecks for quality infrastructure at the \\nsubnational levels is the preparation phase. To strengthen these processes, some different \\nmeasures can be taken:  \\n• \\nComplement technical assistance provided by the Ministry of Regional Development and the \\nnational and regional centres with specific resources by including project preparation in eligible \\ncosts – cities and association of municipalities might particularly benefit from these. For this, \\nministries and state funds could consider two-round calls, with the first-round funding project \\npreparation and design or reimburse preparation costs after construction approval.  \\n• \\nPromote the use of online platforms to support project preparation and management. These online \\ntools usually provide a comprehensive map of all aspects to consider in preparing sustainable \\ninfrastructure projects, as well as model documents. \\n• \\nMake sure that regions and municipalities can access framework agreements established at the \\nnational level with larger contracting authorities. For frequently purchased goods, services and \\nworks, a framework agreement can reduce administrative burdens for contracting authorities and \\nsuppliers by allowing simplified ordering processes once the agreement is in place.  \\n• \\nProvide special support for regions and cities to use PPPs given the renewed interest in this tool. \\nPPPs require careful consideration and implementation by subnational governments. A PPP Unit \\nwith dedicated and technically sound expert teams (in house and/or contractual) established at the \\nnational level could strengthen subnational governments’ capacity in undertaking PPPs. \\n5. \\nLeverage the role of the national and regional governments and the associations of \\nmunicipalities to build capacities at the local level. It is important to provide co-ordinated \\ncapacity-building activities to enable municipal administrations to better plan, prepare and deliver \\ninfrastructure projects. Capacity building can include classroom training, guidelines and training \\nmaterials, or formative activities delivered by experts to subnational officials. Some important \\nconsiderations include: \\n• \\nTarget trainings to a group of regions or municipalities facing similar challenges or focus them on \\nspecific issues such as technical, economic, environmental areas, or social analysis to support \\ninvestment appraisal. \\n• \\nEnsure that training activities are structured and sustainable over time so that knowledge is \\nretained at the institutional level in spite of the turnover of government officials. \\n• \\nWork together with regional governments and the associations of municipalities to identify needs, \\nand define the scope, targeted audience and content of training. The future Regional Centres could \\nalso facilitate the training. \\n• \\nLeverage inter-municipal co-operation arrangements to pool expertise across local governments \\nand promote peer-learning, in particular taking advantage of the experience of the Shared Service \\nCentres. Regional centres – in co-ordination with associations of municipalities – could also act as \\nhubs to gather good practice across municipalities and organise peer-learning exchanges among \\nlocal authorities to tackle specific and common issues within the region. \\n\\n\\n   137 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nStrengthen the administrative capacities of Voluntary Associations of Municipalities (VAMs) \\nthrough systemic financial support so that VAMs have sufficient personnel and administrative \\ncapacities to implement investment activities. \\n3.6  Funding and financing subnational infrastructure investment \\nIn OECD countries, subnational governments often face infrastructure funding and financing challenges \\ndue to their limited revenue sources. Funding, which is essential to pay for infrastructure investment, \\noperations and maintenance, mainly comes from a mix of grants and transfers from upper-level \\ngovernment, as well as subnational own-source revenue such as taxes, user-charges and property \\nincome. Funding may also come from specific user-charges collected by a private operator of public \\ninfrastructure (e.g., through a concession agreement). Access to financing instruments – i.e. money from \\nprivate or public financiers – is also crucial for subnational infrastructure as it helps subnational \\ngovernments meet the high up-front costs of infrastructure investment, which could otherwise be \\nunaffordable or may place substantial pressure on subnational government budgets. The appropriate use \\nof finance can increase the ability of subnational governments to undertake needed investments and \\nspread the burden of payment across future beneficiaries. In most countries, the ‘golden rule’ applies, \\nmeaning that financing for subnational governments is only permitted to cover investment needs and \\ncannot be used to cover current expenditure. Opportunities for subnational governments to mobilise \\nfinancing mainly relate to the use of debt (loans, bonds), but may also involve equity and guarantees if \\ncertain conditions are met (OECD, 2022[38]).  \\nWhile financing can help cover up-front investment costs, by spreading costs over time, it will always need \\nto be repaid by funding. Funding is also required for infrastructure maintenance and operation costs during \\nthe investment lifecycle. This means that unlocking funding for the infrastructure lifetime is essential to \\nunlock investment, support maintenance and avoid creating a fiscal burden for future subnational \\ngovernments. To increase infrastructure investment, subnational governments can harness a range of \\nexisting and innovative funding and financing instruments. Even well-known approaches (e.g. grants and \\nsubsidies, taxes, and user charges and fees) are often under-utilised by subnational governments (OECD, \\n2021[48]). \\nIncrease subnational government funding capacity \\nThe high reliance of Czech regions and municipalities on central transfers, as well as their limited tax \\nautonomy, challenge subnational infrastructure funding. Czechia’s regions and municipalities strongly \\ndepend on central grants and subsidies – mostly aimed at funding state delegated functions. Grants and \\nsubsidies represent 46.7% of subnational governments revenue, which is in line with OECD countries \\nwhere on average almost 50% of revenue comes from transfers from the national government. While \\ntransfers include hundreds of subsidy schemes, which are mostly earmarked, grants for infrastructure \\ninvestments often come from different state funds – especially the State Investment Support Fund, the \\nState Fund for Transport Infrastructure and the State Environmental Fund (Box 3.17). State funds are also \\nresponsible, in most cases, for handling transfers from EU funds for investments. Subnational governments \\nin OECD countries usually access a mix of unconditional and earmarked grants – the latter are usually \\nprovided to encourage them to undertake certain investments that align with national policy objectives. \\nThe United Kingdom government, for example, has rolled out a funding programme to support local \\nauthorities to develop electric vehicle charging infrastructure as a policy measure to achieve its fully zero \\nemission agenda (OECD, 2022[38]).  \\nTax revenues also represent a significant source of subnational government revenue in Czechia, especially \\nfor municipalities. However, municipal tax autonomy is limited as taxes are mostly shared; subnational \\ngovernments have control over just 1.2% of total tax revenues (OECD, 2016[39]). Regions do not collect \\n\\n\\n138    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\ntheir own taxes and the property tax on land and buildings is the only tax levied by municipalities apart \\nfrom income tax from companies, which represents a tiny share of municipal revenue (OECD, 2023[18]). \\nLimited tax autonomy together with a strong dependence on central transfers challenge the capacity of \\nregions and municipalities – especially small ones – to fund, co-fund, and finance infrastructure \\ninvestments. Consequently, regions and municipalities strongly depend on EU funds to invest. This \\ndependence means that municipalities need to meet the eligibility criteria to access those funds, which are \\nnot necessarily aligned with the basic infrastructure needs of some municipalities.  \\nBox 3.17.  Czechia’s state investment funds  \\nThe State Investment Support Fund (SPI) is an independent legal entity under the Ministry for \\nRegional Development. The fund supports municipalities, cities and regions in housing and tourism \\ninvestment, but in accordance with the Housing Strategy 021+, the fund’s activities primarily focus on \\nthe availability, stability and quality of housing. The mission of the SFPI is to co-create quality conditions \\nfor housing development, whether this means the quality of buildings intended for housing, or the public \\nspaces near these buildings and in their wider surroundings, as well as the motivation of entities \\noperating in the housing market to take care of the housing stock, at the national and regional level.  \\nThe State Fund for Transport Infrastructure mainly finances road and rail infrastructure of national \\nimportance through national resources and EU funds.3 The fund also contributes to research, capacity \\nbuilding, and relevant expert support linked to transport infrastructure. It allocates resources from EU \\nfunds, road taxes, a percentage of the excise duties on hydrocarbon fuels and lubricants and the surplus \\nraised by fees on certain motorways. The fund is administered by an elected committee composed of \\nnine members, and headed by the Minister of Transport. The committee’s responsibilities include \\nappointing and dismissing the Director, approving proposed budgets, scheduling income and \\nexpenditures, setting timetables for the floating of tenders in accordance with legal requirements, and \\nreleasing funding for approved projects. \\nThe Czech State Environmental Fund provides direct or indirect financial support to subnational \\ngovernments and other beneficiaries through subsidies, soft loans, or a combination of both. The fund \\nprimarily co-finances projects to improve quality of water, air, waste management, protection of nature \\nand the countryside, environmental education, utilisation of renewable energy and measures to improve \\nthe energy performance of buildings. It is responsible for administering financial resources from the EU, \\nnamely the Cohesion Fund, the European Regional Development Fund and The Next Generation EU \\nFund. It also administers resources from the state budget, and from fees collected from polluters – \\nincluding wastewater discharge fees, fees for reclassifying agricultural land, air pollution fees and fees \\nunder the Waste Act. \\nThe subsidies provided by the fund are designed to support the public sector, businesses and \\nhouseholds, and can be used to improve heating systems, energy savings measures as well as funding \\ngreen infrastructure in cities and municipalities. In May 2022, the government announced an additional \\nCZK 4.75 billion (194 million EUR) in funds for 2022 for operating support related to the development \\nof new renewable and other supported energy sources. Importantly, the Act on Promoted Energy \\nSources (Act No. 165/2012) was amended in 2022 to provide additional support for existing and new \\npower plants with renewable energy sources. A key feature of the legislation was to move away from \\nexisting feed-in-tariffs and to introduce competitive bidding and auctions for renewable power \\ngenerators and to offer green bonuses, also for heat generation. The revised legislation opens the door \\nfor support to renewable sources that has largely been lacking since the end of 2013.  \\nSource: (State Environmental Fund of the Czech Republic, n.d.[65]) (State Fund for Transport Infrastructure, n.d.[66])  (OECD, 2023[67]) (State \\nInvestment Support Fund, n.d.[68]) \\n\\n\\n   139 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nThere are several avenues for increasing Czech subnational governments’ funding capacities. OECD \\nanalysis suggests that subnational tax revenues can be increased by revising the tax-sharing formula and \\nmaking better use of the property tax. Other OECD analyses have highlighted that the current tax-sharing \\nformula, which allocates revenue from personal and corporate income tax and VAT based on several \\ndeterminants among which the population size, implicitly sustains municipal fragmentation, by encouraging \\nvery small municipalities to remain small because on average they receive significantly more tax revenue \\nper inhabitant that way. Given the need for more intermunicipal co-operation, the reports note that this \\nformula could be better structured to acknowledge the differences in revenue-raising capacity among \\nmunicipalities in order to enhance horizontal equity (OECD, 2021[20]).  \\nIn addition to the issue of tax sharing, the OECD has long held the position that Czechia is not using the \\nproperty tax to its full advantage. Property taxes are often a key source of revenue for subnational \\ngovernments in OECD countries and the revenue raised from these taxes has a direct link to the quality of \\nlocal infrastructure and public services. Property taxes have numerous merits: they are a stable tax base, \\nthey have solid return on tax collection, they prevent vertical tax competition, and they have a direct link to \\ninfrastructure provision (OECD, 2022[38]). Various OECD studies have therefore suggested that the tax \\nautonomy of Czech local governments could be strengthened by encouraging municipalities to raise more \\nrevenue from the property tax. Collecting higher levels of property tax may not only strengthen the local \\nfiscal base, but may also act as a counter-cyclical revenue source that provides stability for local revenues \\n(OECD, 2020[17]) (OECD, 2023[18]). For this, property tax evaluation should be based on regularly updated \\nestimates of property value rather than the size of the property, as it is today. This has been the path \\nadopted by several countries that calculate the value of the property based on the rental value or the \\nmarket value.  \\nTo address demographic and territorial inequalities’ challenges that Czechia is facing, the OECD has also \\nrecently highlighted that there is a growing pressure for horizontal revenue redistribution across \\nsubnational governments. For this, many OECD countries resort to fiscal equalisation. There are a wide \\nvariety of fiscal equalisation models. Most can be classified depending on whether they equalise fiscal \\ncapacity or expenditure needs, or a combination of both; whether they are funded by vertical or horizontal \\ngrants; and whether they pursue a full or partial equalisation goal. However, many combine multiple \\nfeatures and some issues are relevant to all systems (Dougherty et al., 2022[69]) (OECD, 2023[18]).  \\nAdopt innovative financing instruments to boost subnational infrastructure investment \\nMobilising finance is essential to help subnational governments meet the high up-front costs of \\ninfrastructure investment and to spread those costs across the future beneficiaries of an investment \\n(OECD, 2022[38]). Subnational governments mainly finance infrastructure investment through debt in the \\nform of loans and bonds. While regions and municipalities access loans to finance infrastructure, their level \\nof indebtedness is very low. Czech regions and municipalities can borrow from different sources, including \\ncommercial banks, the State Environment Fund or international donors such as the European Investment \\nBank. Subnational governments may also issue bonds with the approval of the Ministry of Finance (around \\n9% of municipalities issue bonds).  \\nNational governments can regulate subnational borrowing by introducing effective borrowing controls in \\nthe form of administrative or regulatory rules to preserve fiscal discipline. Since 2017, regional and \\nmunicipal gross debt must remain below 60% of a four-year average of revenue (Act No. 23/2017). If the \\ndebt target is not respected, central authorities may cut revenue to a municipality or region by 5% of the \\ndifference between its amount of debt and the 60% target. This suspended revenue can only be released \\nto gradually repay subnational government debt obligations made before the year in which the suspension \\noccurred. As a result, subnational government debt in Czechia is well below the OECD average (3.5% of \\nGDP and 7.5% of public debt vs. 27.9% and 20.2% respectively). Financial debt, which accounts for 43.7% \\nof subnational government outstanding debt, is primarily made up of loans (85.6% of financial debt in 2020) \\n\\n\\n140    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nwhile bonds account for only 14.4% of subnational government financial debt. In 2019 approximately 550 \\nmunicipalities (9% of the total number) had a debt higher than 60% of their revenue and the regions had \\nno debt exceeding this threshold.4 \\nSubnational governments can also mobilise equity or guarantees provided by upper-level governments or \\nmultilateral development banks. While the use of guarantees needs to be carefully considered, this \\ninstrument can be an effective tool to improve access to finance for quality infrastructure investment by \\nsubnational governments, particularly where a project is economically and financially viable but includes \\nrisks that financiers would have little control over or may not be willing to bear (OECD, 2022[38]).  \\nOECD countries are increasingly using more innovative financing instruments, including green, social, \\nclimate and sustainability bonds or loans (Box 3.18). Green bonds, for example, are gaining traction for \\nfinancing green projects that deliver environmental benefits. Green bonds share the same financial \\ncharacteristics as conventional bonds, with the exception of the ring-fencing or earmarking of proceeds \\nrequired by the green label. They are usually issued by large cities or groups of cities that pool together \\ntheir financing and human capacities. For green bonds to be successful, governments need to develop a \\npipeline of quality, bankable projects (OECD, 2020[31]). The use of innovative financing instruments in \\nCzechia is very limited. No green bond has been issued at the subnational level and there is still low use \\nof private capital to finance public investment. Following the example of France’s Île-de-France region (Box \\n3.18), regions or big cities in Czechia could explore resorting to innovative financing instruments to make \\nbetter use of existing opportunities to finance their infrastructure needs, especially for social housing and \\ncomplementary infrastructure.   \\nBox 3.18. Innovative financial instruments used by subnational governments in OECD countries \\nFrance’s Île-de-France region has made climate finance a trademark for its investors. It has been a \\nfrequent and regular issuer in the green and sustainable bond market since 2012, with eight \\ntransactions. Its 6th Green and Sustainable Bond Issuance, launched in June 2018, amounted to \\nEUR 500 million. As part of the process and under the supervision of the region’s finance directorate, \\neach sectoral department in the region is asked to identify priority projects with a high environmental \\nand social impact and within a certain budget. The finance directorate then consolidates the information \\nacross departments and finalises the budget allocation by sector. Nine eligibility criteria have been \\nestablished to guide the purpose and management of the projects (e.g. environmental responsibility, \\nsocial and societal responsibility, economic responsibility and governance). Looking at the funds \\nreceived from the green bond during the 2014-18 period, half went to public transport and sustainable \\ntransport projects. Social housing and facilities for education and leisure accounted for 16% and 15% \\nrespectively. Minor shares of funding were also allocated to projects related to biodiversity (5%), \\neconomic and socially inclusive development (7%), support to vulnerable groups (5%) and energy \\nefficiency (2%). \\nThe first municipal green bond in the Nordic countries was issued in 2013 by the City of Gothenburg, \\nSweden, to fund energy, transport, water management and waste management projects. It has renewed \\nthe experience almost annually since then. To support its green bond strategy, the city has developed \\nits own Green Bond Framework, which specifies terms and conditions for the selection of eligible \\nprojects, follow-up and transparency requirements. Nordic local government funding agencies, such \\nas Kommuninvest (Sweden) and Municipality Finance (Finland), are also regular issuers of green \\nbonds. In general, Nordic green bond issuers rely extensively on the use of external reviews and second \\nparty opinions to support their green bond issuances, which confirms compliance with the Green Bond \\nPrinciples and the climate components of the proposed investments. \\n\\n\\n   141 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nSubnational governments in OECD countries are also increasingly innovating in the type of investment \\napproach that they use. When delivering an investment, a subnational government might evaluate different \\noptions, including traditional and more innovative public procurement of infrastructure, the use of a public-\\nprivate partnership or harnessing a state-owned enterprise (e.g., a municipal company). Various models \\nexist to build public-private co-operation and leverage private investment, and new forms of collaboration \\nare emerging. While the PPP market has seen some decline in recent years, there are other innovative \\npartnership models involving national and local authorities in which there is a long-term vision and risks \\nand rewards are shared over time. One form of emerging model of public-private collaboration is the \\nregulatory asset-based model, which already exists for supporting private investment in some industries \\n(energy, water, etc.), but is increasingly being explored for use in new sectors (OECD, 2022[36]). To support \\nmore inclusive investment, they may also explore the use of different procurement innovations such as \\ngreen or social procurement. Green public procurement supports environment-friendly policies and \\ninvestment strategies by integrating environmental and social considerations into the procurement \\nprocess. In Europe, they have taken the form of Green Deals – generally, voluntary agreements between \\nprivate partners, civil society and the national and/or regional government to establish a joint green project \\n(OECD, 2020[31]). \\nPPPs can be attractive for a number of reasons (see Chapter 2), especially because they can be an \\nefficient way of accelerating infrastructure investments at the regional and local levels. Taking advantage \\nof the renewed momentum for PPPs, Czechia could envisage large municipalities engaging in PPPs. \\nHowever, it is extremely important to closely assess financial commitments to ensure that the sequence of \\nsubsequent payments is compatible with the financial situation of subnational governments. This requires \\nhighly skilled, competent, and experienced teams, given the complexity of the financial, technical and legal \\nframeworks of PPP projects. Such expertise is generally not available outside the bigger cities. Czechia \\ncould thus envisage appointing a special team within a National PPP Unit that is responsible for developing \\nand reinforcing regional and municipal capacity to effectively engage with the private sector through PPPs. \\nThe UK model of the Private Finance Initiative (PFI) programme or the French “public-private partnership \\ncontracts” could be followed.  \\nSummary of key recommendations  \\nGiven the challenges of implementing a full suite of reforms, Czech authorities could consider sequencing \\nthe recommendations made above. By grouping recommendations according to the time horizon needed \\nto implement them effectively (short term, and medium to long term), Czech authorities could allocate \\nresources to reforms in a way which would provide incremental benefits. A potential sequencing is included \\nbelow. \\nShort-term reforms \\n1. \\nIncrease subnational governments’ funding capacities. This can be implemented through \\nseveral complementary avenues: \\nIn 2014, eight local municipal water utilities in the Veneto region in Italy joined together to raise finance \\nthrough a ‘hydrobond’. To achieve this, the municipal companies pooled mini bonds into a Special \\nPurpose Vehicle (SPV) and jointly issued a EUR 150 million bond on the capital market. This has \\nfinanced 728 individual infrastructure investments in the region’s integrated water system from 2014 to \\n2017 (with an estimated value of EUR 300 million). These investments included new water mains and \\nsewer pipes, upgrading facilities and network maintenance.  \\nSource: (OECD, 2020[31]) \\n\\n\\n142    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n• \\nRevise the tax-sharing formula to avoid encouraging municipal fragmentation. The formula could \\nbe better structured to acknowledge the differences in revenue-raising capacity among \\nmunicipalities in order to enhance horizontal equity. For this it would be important to raise the \\nweight of factors linked to economic activity (number of employees) and income. \\n• \\nConsider designating the municipal income tax as own-source only for certain types of \\nmunicipalities or large cities, as small municipalities do not necessarily reach an optimum size to \\ncollect taxes efficiently. \\n• \\nMake better use of the property tax. Property tax evaluation should be based on regularly updated \\nestimates of property value rather than the size of the property, as it is today. This has been the \\npath adopted by several countries that calculate the value of the property based on the rental value \\nor the market value. \\nMedium to long-term reforms \\n1. \\nAdopt innovative financing instruments to boost subnational infrastructure investment. \\nMobilising finance is essential to help subnational governments meet the high up-front costs of \\ninfrastructure investment and to spread those costs across the future beneficiaries of an \\ninvestment. They can be either an alternative or a complement to subsidies, depending on their \\nconditions and investments needs: \\n• \\nEncourage the use of innovative financing instruments, including green, social, climate and \\nsustainability bonds or loans. In the first instance they could be targeted especially at social housing \\nand complementary infrastructure.  \\n• \\nProvide expert support for subnational governments to guide them in the use of innovative \\ninstruments. The Union of Towns and Municipalities could provide expert support, especially for \\nmedium or small municipalities. Bigger cities could aim at integrating this expertise directly in their \\nadministration. This could also take the form of a special task force bringing together stakeholders \\nfrom all government levels, as well as from the financial sector, to develop a methodology, pilot \\nand implement it to make innovative instruments accessible and attractive for subnational \\ngovernments. \\n2. \\nExplore wider engagement in public-private partnerships by regions and cities as an option \\nto accelerate infrastructure investments.  PPPs can be a tool for reforming public procurement \\nand public service delivery, and not just a means of leveraging private sector resources. For this \\nit would be of utmost importance to have a special team within a national PPP unit responsible for \\ndeveloping and reinforcing regional and municipal capacity to effectively engage with the private \\nsector in PPPs \\n \\n \\n\\n\\n   143 \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\nNotes\\n \\n1 The NUTS classification (Nomenclature of territorial units for statistics) is a hierarchical system developed \\nby the European Union for dividing up the economic territory of the EU and the UK. NUTS 1: major socio-\\neconomic regions; NUTS 2: basic regions for the application of regional policies; NUTS 3: small regions \\nfor specific diagnoses. \\n2 https://www.risy.cz/cs/  \\n3 With the establishment of regions in 2000 and the subsequent transfer to their purview of Class II and III \\nroads, the fund’s tax revenues were reduced as funds for lower class roads were transferred to local \\ngovernments in the form of tax budgeting. \\n4 The structural fiscal balance rule was amended in 2020 to allow the central government to deal with the \\nCOVID-19 crisis and to implement fiscal support. \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n \\n\\n\\n144    \\nOPTIMISING PUBLIC INFRASTRUCTURE INVESTMENTS IN CZECHIA: A WAY FORWARD © OECD 2024 \\n  \\n \\nReferences \\n \\nBakoš, E. et al. 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It offers \\nanalysis and recommendations for strengthening institutional capabilities at the national and subnational levels \\nfor planning, co‑ordinating, appraising and delivering infrastructure. By strengthening infrastructure investment \\nsystems at all levels, Czechia can improve its resilience and secure a more sustainable future.\\n9HSTCQE*dcahde+\\nPRINT ISBN 978-92-64-32073-4\\nPDF ISBN 978-92-64-91767-5\",\"difficulty\":\"easy\",\"domain\":\"Single-Document QA\",\"length\":\"medium\",\"question\":\"Given the constraints of limited fiscal space, the complexity of sectoral silos, and the EU's stringent regulatory frameworks for cohesion funding, which of the following options would be the most challenging to implement effectively, despite its potential long-term benefits, and why?\",\"sub_domain\":\"Financial\"}","display_format":"text","language":"","answer_status":"published","assets":[],"source_url":"https://huggingface.co/datasets/zai-org/LongBench-v2","history":"initial import","indexing_mode":"noindex","subproblems":[],"grids":[]}