How much does infrastructure maintenance really cost?

Back in the 1990s, when I was deputy mayor for housing and utilities, I had an argument with the deputy mayor for finance and the heads of public institutions. It was about two numbers: how much was in the budget, and how much was needed to keep buildings warm.

The finance side insisted that schools and hospitals should take exactly as much heat as the budget allowed. I argued that we had to pay in full, otherwise classrooms would be cold and children would sit at their desks in padded jackets.

Two numbers that keep getting mixed up

1. Budgeted O&M (operation and maintenance): what the utility was actually allocated.
2. Unconstrained O&M: what is really needed to run the network at the required quality, with no discount for the lack of money.

The second number is almost always higher than the first.

Why the budget is too low

• O&M is the first candidate for cuts: repairs can be "postponed", salaries and construction are harder to touch.
• The budget often misses the full cycle: spare parts, chemicals, scheduled repairs, calibration, diagnostics, metering, staff training. These "small items" later turn into breakdowns.
• Deferred maintenance does not disappear, it gets more expensive: save 1 today, pay 3 tomorrow. The system moves from planned mode to firefighting, where everything costs more.
• New assets load the old system: a new facility sits in an old network with losses and wear, and inherits its problems.

A back-of-the-envelope example

A road agency needs, say, 100 units a year to maintain its network, and the budget has 60. On paper everything looks fine, but every year 40 units of under-maintenance pile up. A couple of years later this turns into a spike in major repairs and a sharp drop in quality.

Three conversations to have

1. How much money is needed for an adequate service: not "what we can afford" but "what it takes".
2. How big the gap between "needed" and "available" is, and what happens if it is not closed: quality, breakdowns, asset life, complaints.
3. Who closes the gap and how: tariffs, budget compensation, availability payments, KPI-based deductions and incentives in a PPP, or a mix.

Until you calculate unconstrained O&M, you do not know the real price of the service. Without it, any PPP contract becomes a game of who blinks first.

First published in Russian in the Telegram channel «Просто о ГЧП» on 12 January 2026.