What is the goal? To spend capital or gain beneficial outcomes?

Ignoring a problem doesn’t solve it!

You might think the answer to be self evident: surely we would all wish to see the best outcomes!  However, when it comes to government spending on infrastructure and public assets, this may not be the case. For state government public authorities, capital expenditures are often seen as a means of increasing the state’s GDP (gross domestic product), or a means of keeping up ‘a pipeline of investment projects’.  When this is the case, departments that do not spend all their capital budgets are not regarded  as ‘economical’, instead they are considered grossly inefficient.

When I was a policy manager in one of the state public works departments, budget meetings were only concerned with how fast money was being spent, not how effectively.  Taking the time to find more efficient ways to produce any given outcome, and so to spend capital money more efficiently, was actively discouraged: it slowed things down and the department did not spend ʻenoughʼ.

Much of the problem is that there is no easy way for politicians to demonstrate performance – only dollars of spending.   I doubt that this happens for any organisation with a quantifiable ʻbottom lineʼ (utilities, mining, manufacturing, etc) –  but maybe they have other problems?

Even for local governments, which are generally very short of capital money overall, and where one would think the ideal solution would be to get the ʻmost bang for the buckʼ, taking the time to look for ways to achieve ‘more for less’, is rarely well regarded as the economies achieved are often difficult to demonstrate, while the extra time taken will often feature in negative media reporting.  In addition, local governments frequently depend on capital grants from state and federal resources with short decision and expenditure deadlines imposed in order to secure a fillip to the economy (i.e. to spend money fast).

This problem has bedevilled me for over 30 years.  Is there a solution?


Grenfell Tower Fire

Grenfell Tower Fire June 14Many of us watched in horror as the flames raced up the 24 stories of the Grenfell Tower in London, as firemen desperately tried to find and save individuals in the dense smoke, and where the death toll is now 79 (and may still be rising).  Much has been written about this already, and with the inquiries now launched, more will be written.  We will, hopefully, find out the details of this particular infrastructure failure.  In the meantime there are two areas to consider.

1.  Technical issues and organisation (this is probably our first departure point).

“Sprinklers would have saved lives. Fire stops that should have protected the internal means of escape may have been faulty or missing. The gas supply lines are under suspicion. The Grenfell Action Group had presciently warned of a lack of fire safety instructions. 999 operators fatally stuck to the official advice that people should stay in their homes, which makes sense when the building regulations are doing their job of containing fires within a single flat, but not when the whole building is engulfed. Compartmentalised thinking – the inability of any one agency to see the whole picture – played a role. It’s likely, as often in major disasters, that it was the cumulative and multiplying effect of several factors that made it so terrible.”  Guardian columnist, Rowan Moore

cf. Post on The Titanic and Apollo 7 on June 13

2.  Social Attitudes  

“I have sat in council meetings where comments from leading majority councillors have shown a total lack of empathy or even respect for those not born to a world where basic human comforts and a good education are givens. I have heard – and noted – comments stating that social tenants should simply move away if they don’t like what they’ve been “given”. As if social housing was not a public good but some kind of privilege to which they are not really entitled. Alongside this has been a slow but deterministic programme of privatising and monetising public assets such as schools, libraries and community and public space.”  Local Councillor, Emma Dent Coad, writing in The Guardian

cf Post on Gentrification in Infrastructure and Progress June 16.


Infrastructure and Progress

When he asked me what I did, I replied I looked at ways in which we could, as a community, make sounder infrastructure decisions.

‘Then, what are you are doing about gentrification?’

It wasn’t an idle question.  He was poor, with infrequent, casual and poorly paid employment. His partner earned the minimum wage. They had moved many times as the affordable accommodation they found was ‘upgraded’ and they could no longer afford it.

Gentrification is happening all over the world.  We call it progress.  But is it?   How much of what we call progress is actually only making the world better for the well-off?  And by this, I mean us!   In a world of increasing inequality, this kind of ‘progress’ could actually be considered to be regress from the perspective of overall community wellbeing.

Is it not time to reconsider what we mean by progress, and, indeed, to rethink the entire purpose of infrastructure?


The Titanic and Apollo 7

The Titanic

This story was originally told by the Young Asset Managers Group at the 2013 ICOMS (now AM-Peak).

What can we take away from it?

Consider the Titanic. There was poor equipment management – only one pair of binoculars and even that was not with the look out, no safety training for the staff (some of the lifeboats were launched with only a fraction of the passengers they could have held.) Safety regulation then was largely non-existent. Lifeboats were not really considered necessary (the ship was unsinkable) and they occupied space and interfered with the view of the passengers. There was also little operational training either as this would have slowed down the departure date.

The Titanic was a commercial venture and, although it was the latest and most modern of ships, nevertheless the company had been operating ships for years, so there was a certain amount of complacency. Was this the cause of failure : complacency and costs before people?

Apollo 7 at launchThe Apollo 7 was also a new venture, but it was a public project. The goal was not simply to get off the launch pad but to take a man into space – and bring him back safely! A year earlier Apollo 1 had suffered a cabin fire during a launch pad test which killed all three crew members. The subsequent inquiry discovered a great number of design and construction flaws – and these problems were corrected, Apollo 7 launched successfully in October 1968. Attention to safety paid off! Pre flight safety checks and operational training won the day. Apollo 7 was not complacent, not commercial and put safety first.

And there the story could have ended, were it not for Challenger.

Less than 20 years later, in January 1986, the Challenger broke apart 73 seconds into its flight killing all 7 of its crew. The cause, as we all know now, was the O-ringseal which became brittle in low temperatures and disintegrated. The O-rings, as well as many other critical components, had no test data to support any expectation of a successful launch in low temperature conditions. NASA managers had known the design contained a potentially catastrophic flaw in the O-rings since 1977 but failed to address it properly and they disregarded warnings from their engineers about the dangers of launching posed by the low temperatures that morning. There were internal financial pressures to get the launch happening, and they had launched successfully many times before.

So complacency and commerciality can affect us all! Being a publicly funded and operated venture is no protection!



Announcement: Full Talking Infrastructure Association Membership

No fees

The Board has decided that for the foreseeable future we will not charge fees for full voting membership of Talking Infrastructure.  Full membership will, instead, be by invitation to those Community members that contribute in a meaningful way to the work of the Association.

Our first invitations go to

  • Kerry McGovern, of K.McGovern & Associates, who initiated, and collaborated with Talking Infrastructure in designing, a 5 day workshop in the audit of infrastructure performance for Auditors-General in the Pacific Islands.
  • Mark Neasbey, of the Australian Centre for Value Management, who has contributed many posts for the Blog, that have been amongst the most highly read and commented on.
  • Ben Lawson of Common Thread Consulting who has been a regular reader and prolific commentator on the blog

Our congratulations to Kerry, Mark and Ben.  Your commitment to the development, information exchange and debate ideals of Talking Infrastructure are putting us where we are today.

Thank you.

Populism? – or Community Participation?

A Question

Sydney Opera ouseBen Lawson’s response to the post “I measure therefore I manage” (do read it!) reminded me of a question I have recently been asking myself – What’s the difference between ‘populism’ and ‘community participation’?   Is it, for example, the difference between uninformed (and often knee-jerk) reaction and informed and considered judgement?   And, if so, what can we do to lift the level of informed response?

Good and Bad Practice

Back when I was writing “Strategic Asset Management” it was my job to note both good and bad practices in the measurement of community satisfaction. The clue? Good practices stepped themselves out from the pack by the amount of real understanding of the problem that they generated (both the costs and the consequences).

Citizen Juries

One example was the use of Citizen Juries, such as the exercise in Boroondara where a representative sample (about 20) of the citizenry were engaged (and paid!) to learn over a period of six weeks about the issues and the options facing the city and then – as informed citizens – to give their considered opinions.  It is notable that the City then implemented those decisions, and the jury members were the strongest advocates for both the City and the Council.

Sydney Opera House

A smaller example was the decision to replace the broken flagstones in the courtyard of the Opera House. The question was ‘should all cracked flagstones be replaced or only those that were major problems?’ Three costings were developed according to the degree of replacement and pictures were provided of both the current situation and what the final result would look like for each option.  Then local visitors (i.e. those that would be taxed to pay for it) were polled to see what level they supported. With both the costs and the consequences in evidence, those polled voted for a moderate degree of renewal, not the most expensive.  You can see that good practice asked specific questions and provided both costs and consequences.

Poor practice?

Current local government ‘satisfaction surveys’ on the other hand ask general questions and provide neither costs nor consequences.

How would you prefer that decisions on your rates and taxes be determined?

Paris Climate Accord – America’s loss, Australia’s gain?

The future – or our past!

As everyone now knows, the US President has withdrawn the USA from the Paris Climate Accord. Although he claims to be saving US jobs, the strong likelihood is that it will lose US jobs as the renewal energy industry at the moment is the fastest growing industry in the USA. With President Trump’s decision, Germany is expected to take the lead in wind energy and China in solar.

Australia is now making key decisions for its own energy future. Will we permit the Government to continue to back the old technology, coal, or force it to support the new renewables?  The next big gains are to be made with renewal energy battery storage and the encouragement and the development opportunities we provide now could be decisive. Companies now developing in this area in Australia could have a real chance at world leadership. Or they could miss out to more innovative governments (e.g. California which is taking an opposite stance to the federal decision, and being very active about it.)  Infrastructure decisions have recently been discussed in terms of immediate construction jobs. but they have a longer term importance that goes far beyond mere, and relatively temporary, construction jobs.  The techniques we develop now could have major export capabilities to the entire world.

The USA withdrawing from the Paris Climate Accord suits those who gain from oil and fossil fuel exploitation more generally – oil producers in Russia and Saudi Arabia – and coal producers in the USA and Australia.  An interesting question for Australia is who has the political strength in this country – the coal lobby or those promoting renewable energy?  This is not an idle question.  For a long time, Australia has been content to follow America’s lead. Will it this time?

Emanuel Macron, newly elected President of France, recently addressed the USA and the world – in fluent English! – arguing that France, and Europe, will continue the fight to control carbon emissions – ‘to make this planet great again’

Will Australia?

I measure, therefore I manage

data schematicTo conclude our current discussion of “If you can’t measure it, you can’t manage it” to its end point, let’s consider the consequences of taking this too literally- “I measure, therefore I manage”

There is an industry now for collecting data, massaging it, producing charts or spreadsheets – for others to use.  So how much time is spent finding out whether the data is actually used and appreciated?  Is there a process for following through the decisions made on the basis of that information to see how the data could be improved?

What can we do to improve our management?

Deming was, of course, a great believer in the value of metrics and statistical analysis, but even he realised that there was more to management than metrics and stated that one of the seven deadly diseases of management is running a company on visible figures alone.

A great example of the dangers of so doing can be drawn from the electricity company that decided to withdraw from service its most recent (and thus most efficient) coal fired plant only two thirds into its life and to build a new power plant using a new and untested coal source – because their model told them to!  Questioning revealed that neither the modeller nor anyone else knew what was causing the model to generate its results.

Many a works system is designed to determine when works should be carried out. Inevitably this is based on the designer’s best knowledge and judgement at the time. But what if circumstances change?  What alerts us to the fact that there IS a change? Do we know enough to make adjustments? Are we critically analysing the output of the system or do we take the system outputs for granted?

Question:  Do you have examples of where measurement has led us astray?

Be careful with ‘ease of measurement’

road in poor conditionIn our May 20 Blog Post we challenged the uncritical acceptance of the notion that “If you can’t measure, you can’t manage”   But measures can be deceptive, when they are chosen without understanding as we saw in the May 24 Blog Post.  With Government and Senior Management focussed on the notion of managing by measurement, more measurements are being demanded all the time – in all areas, not just infrastructure. In order to survive, operatives seek to comply by measuring what is easiest, rather than, measuring what is important.

Some things are easier to measure than others – quantity, for example, is easier to measure than quality. Inputs are easier to measure than outputs. Outputs are easier to measure than outcomes.         Products are easier to measure than services.

The aim of all management is to secure desirable outcomes but it is easy to get diverted into measuring what it is easy to measure rather than what it is important to measure,

For example,  many councils have hours of videos of storm water infrastructure – unanalysed!  Lots of measures – but no management- worthy information.

The condition of road seal is easier to measure than the condition of the underlying road pavement, the first is visible whereas the latter is not. Some years ago a state transport authority adopted a policy that they called ‘a stitch in time’, quite a catchy title for maintenance. Under this policy they required agencies to reseal every ten years and to reconstruct the road pavement every 100 years. Easy to measure! 

But it resulted in reseals being carried out over decidedly unsound road pavements because the time for road pavements was not up. It will not come as a surprise that the reseals did not last, much money was wasted and the overall condition of roads deteriorated until the policy was changed.

Question:  Is there an answer to this problem?  What is your experience?

Metrics can be deceptive

passenger in busIt is important not to confuse the notion of management with metrics.

Metrics are important – when they add to our understanding.

However, frequently they substitute for understanding.

Creating our own RELEVANT metrics is time consuming, so there is a natural human tendency to seek short-cuts.  For example when benchmarking first came to our attention it was through a thorough examination of the company’s own processes and comparison with those of its chosen exemplar.  It took a lot of time, but was very successful. Others wanted the success but were not prepared to put in the time and effort understanding either their own processes or those of the intended benchmark.  So they skipped the understanding and analysis stage and went straight to collecting metrics. A lot of time was wasted and bad judgement calls made in the 1990s and 2000s because of this.   Using figures from other times, places and cultures without understanding is as foolish as it sounds, but is still being done.

The ‘life’ of assets is an important factor in many decisions, from costing, to planning, to intervention.   But few ‘lives’ are calculated based on the type of asset involved and conditions of its use.  Some years ago, a Transport Company assumed that the life of its buses was 12 years. No-one actually knew where the figure came from but they swore by it. When challenged, it turned out that the figure had come from a statement – made some 15 years earlier – by the Chief Engineer at the time who had said: “We don’t know how long a bus should last but it certainly shouldn’t be more than 12 years.”  This was a statement based on his best professional judgement at the time.  But 15 years had passed.  When a proper analysis was conducted the figure turned out to be 16+ years. So the outcome of accepting, uncritically, the earlier metric, had caused early disposal and a 25% loss in bus value.

Question:  What has been your experience with metrics?