IDM in Pictures 2/12: Data and our future

The possibilities of big data are impressive but let us not get carried away.

Not only is there the danger of trusting in the results of data manipulation that we do not understand (cf the many studies showing the dangers of ‘private’ algorithms that are not open to analysis), but there is the greater danger that we put our faith in aiming at ‘data’ outcomes (e.g. KPIs) rather than people outcomes.

So let us put our effort into better measurements of what really matters – better (i.e. more relevant) data. This will inevitably mean using non-dollar measures – and judgement.

Discussion today tends to conflate the benefits of greater use of digital data and digitisation itself.  Both are valuable, and both impact infrastructure decision making, but they are not the same.

There is currently much discussion of loss of work opportunities through the use of robots.  If our decisions are driven purely by data, then robots can do a great job. But if we want our decisions to include values such as kindness, compassion, and fairness, then we need people.

We appreciate the benefits of big data but do we really want to live in a world without kindness, compassion and fairness?

IDM in Pictures 1/12: A Connected World

When computerisation first appeared on a large scale, we eagerly adopted it – and used it to carry out the same processes we had used bc (before computerisation). It was many years, in some cases, decades, before we realised that the real value of computerisation was to adopt completely new processes for new outcomes. Today the power of digitisation for connection is still being recognised. We eagerly embrace ‘smart technology’ in our cities – but are slower to recognise that connection can be used to bypass the city. That is we are increasingly able to  ‘live, work and play’ in the suburbs, or the country, improving our lifestyle opportunities and reducing environmental costs.  But first we have to see it.

INFRASTRUCTURE DECISION MAKING (IDM) IN PICTURES

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How to enjoy any conference talk

There was a time when I would be in and out of an art gallery in 30 minutes, bored.  I looked, but did not engage.  Then at a Picasso Exhibition, i found paintings that I really liked, but also many that turned me off completely.  After viewing all, I went back and studied these two groups and asked Why?  Now galleries are no longer boring.  I apply the same process to conference talks. I note all the new ideas, the new linkages that really please me and write them down so that I can think more about them later, and I also note those statements that drive me nuts, and I think about these as well.  No prizes for guessing what category the ‘heretical questions’ in the last post  fell into.

But the IPWEA Congress this week, ‘Communities For the Future, Infrastructure for the Next Generation’   was far richer in yielding good new ideas, thoughtful linkages, and new ways of expressing accepted ideas so that they come to life and are taken out of the realm of platitudes.  These deserve a far wider coverage, and so, with the support of our podcast partner, the IPWEA, we will be bringing you these ideas, and many others, in our forthcoming podcast series.   Watch for it!

Or better still, join the Talking Infrastructure Community (click here) (its free!) and you will be the first to know when we launch.

A closing note:  At an after lunch session in Parliament House many years ago, the talk was so boring I found it a hard job to keep my eyes open.  Yet my colleague was riveted!  He was listening intently and taking notes.  At the end I sighed and said ‘That was a really boring talk’.  ‘Absolutely’, he agreed.   Surprised I responded ‘But you were riveted, paying great attention, taking notes, how come?’

His reply? ‘To make so boring a presentation, there must be many things he was doing wrong.  I just wanted to figure out what they all were!’  Be engaged!

Six Heretical Questions

A heresy is a belief or opinion contrary to the orthodox (usually for religion, but applicable more generally)  Here are some heretical questions in the asset management/infrastructure decision making field.

Heretical Question 1.  Spend better or spend faster?   An economist speaking at the IPWEA Congress in Canberra recently, argued that a greater spend on infrastructure was better ‘performance’. But is it?  Jeff Kennett, former Victorian Premier, complained that 26% of funding allocated for capital construction had not been spent. He blamed over cautious bureaucrats.  Both are focused on the size of the spend – and not what the money is being spent on.   Is this really in the community interest?  Or is this attitude (not confined to Australia) a contributing factor to the increasing evidence that infrastructure funds are poorly planned and many demonstrably lacking in justification? (cf Joseph Berechman ‘The Infrastructure we Ride On’ 2018)

Heretical Question 2.  What is the purpose of infrastructure?  And what should it be?  Wearing our ‘better angels’ halo we say we are building for the future, but is this really true?   If we were, would we not have a well developed vision of the future that we wished to create, and an infrastructure decision process that enabled us to plan to achieve it – and to adapt those plans as changes occur?   Where is that vision?  Where are those decision processes?

Heretical Question 3.  The pipeline.   An economist spoke of waves of capital expenditure and was concerned at the lack of a pipeline of projects that would maintain construction activity in the near future.  Another speaker commented to the effect that Australia should ‘prioritise infrastructure’.  But should it?  Why?  A pipeline of construction projects will ensure work in the construction industry.  But the construction industry represents only about 10% of total employment.  Why should we spend massive amounts of capital to ensure the jobs to privilege such a small section of the economy?

Heretical Question 4.   Multipliers.   You might argue that construction expenditure generates much more by way of multipliers – three times as much according to one speaker.  Really?  Where is the evidence for this?  Many people blithely quote figures such as this, but cannot justify them.  Construction expenditure does create jobs.  ANY expenditure creates jobs.  If the people who receive the income go out and spend it, other people benefit.  This much makes sense.  But how much of a large construction contract goes to the rich who may save rather than spend, and how much of the rest goes to workers who do not know where their next job is going to come from, and thus will tend to save more than spend?  Wouldn’t a permanent maintenance job do more good for the economy than a short term construction contract. Or the same amount of money spent on nurses or teachers?

Heretical Question 5.  Supply driven infrastructure.    Jeff Kennett argued that we would do well to follow up projects with more projects to take advantage of the, now unemployed, workers completing the first job. In other words build infrastructure to provide jobs.  Is this sensible? Tasmania in the late 1980s came to grief over this. With little employment in the North, infrastructure projects were created to provide jobs.  The projects not only provided work for the unemployed in the north, but they attracted others from around the state so that when the  project finished, there was now a bigger pool of unemployed, demanding a bigger project – and so on.  Now most of the Tasmanian population is in the South so the infrastructure was largely underutilised.  As a result of this expenditure, the state came close to bankruptcy.  So, is this really a sensible idea?

Heretical Question 6.  Vision/Plan.   We have a tendency to use these words interchangeably, but is this sensible and safe?   A plan is a set of actions designed to secure a goal or objective.  A vision is an idea of some future state that we would like to achieve.  Affordable healthcare could be a vision.  A set of projects including asset and non-asset solutions could be in a plan.  As technology, demographics, environment, governance and public attitudes change and information is acquired, we would have a succession of plans, all adapting to the current circumstances but addressing the vision.  The vision may be a 50 year vision (even a 7th generation vision) but we would surely not wish to commit ourselves to a 50 year set of projects conditioned by only what we know now.

Feel free to add your own heretical questions.

Questions Arising

Media articles often leave infrastructure questions dangling.  QUESTIONS ARISING is an opportunity for those of you who read widely and keep their eye on what is happening to identify these articles and the questions that need to be answered. These can then be addressed in our forthcoming podcast series, so get involved – add your questions to those listed here, suggest possible lines of development, add new media articles along with the questions they raise. Sources may be the daily journals, the web, podcasts, radio, TV. Plenty of scope!

Here to introduce our first QUESTIONS ARISING  are two items identified by our Business Development Manager, Ian Spangler.

1. The Economist’s Intelligence Unit’s recent report on “Preparing for Disruption: technological readiness ranking, 2018”, places Australia in the top ten for the historical priod (2013-2017) BUT it forecasts that in the next five years, Australia, Singapore and Sweden will take over as the top-scoring locations. The ranking is based on the number of mobile phone connections and internet access.

Questions arising.

  • Is this enough to ensure technological readiness?
  • What else should we be looking at to test readiness?
  • Australians, who are not easily overawed by authority, may well joyfully take up the idea of disruption, but to what end?
  • How can we tell whethe our innovation is well directed?
  • What else?   Add your comments below.

2.  The small homes project was recently launched in Melbourne.  The RACV reports that “from the 1950s, Australia’s average house size more than doubled to 248 square metres at its peak in 2008-09. Then last year something strange happened: the size of new builds dropped.  Over the past 20 years, median house prices across the country have gone up by more than 300 per cent while weekly wages have only increased 121 per cent. Rising cost-of-living pressures are also draining our bank accounts, with the average annual energy bill in Victoria now around $1667.  Building and running a big house is not cheap and it is not great for the environment.”

Questions arising 

  • The ability of the demonstration small home to provide so much convenience in such a small space is its use of 4G and 5G connectivity.  How do you see this affecting futur constructions?
  • Will we continue to reduce the size of our dwellings?   If so, what factors may come into play?  If not, why not?
  • If our dwelling size does decline markedly, what impact might this have on other infrastructure?
  • Other Questions

The Day After Tomorrow

How might drones affect your life cycle?

Understanding the life cycle –  from asset creation to maintenance, to disposal and/or rehabilitation and reconstruction, is a fundamental concept that many need to know. But different groups need to know it in different ways.  We fail to communicate if the language we speak is not the language the listener understands.  So consider some of the different needs.

 

  • Elected members and all political decision makers need to understand the impacts of life cycles in terms that they can relate to – current and future service delivery and risk.  They need to know this in broad terms, but they do not need the technical details.
  • Policy, planning and finance people need to understand how to measure costs and timing so that they can plan to match future revenues and expenditures, They need to understand that predictions from our models are based on ‘average’ economic life cycles.  Here we face a dilemma.  More closely specifying our asset groups enables more accurate descriptions which helps to determine more accurate economic life averages. But it also reduces the size of each asset group and the reliabiity of averages diminishes as the numbers in the group diminish.
  • Technical people need to understand it in terms of long term optimisation rather than short term. Their knowledge need is not so much dollars as technical intervention events, e.g. maintenance or renewal.

Understanding the life cycle in all these ways is essential to ‘keeping the show on the road’, and all of the above groups have taken this as their objective.

But the ‘day after tomorrow’ requires more.

Those of us advising Infrastructure Decision Makers need to do more, we have to be able to anticipate the nature and impact of changes in the life cycle itself.  Along with elected members, policy, planning, finance and technical folks, we are concerned to enable functionality today and tomorrow but, in addition, we also need to ensure that we are able to take advantage of technological options and anticipate demand changes so that we may understand the changes in the life cycle itself, arriving the day after tomorrow*.

*And for more on future change and its impact on us see the coming IPWEA event in Sunday’s weekly round up!

Wilful Blindness

‘Just the facts, ma’am’ – was a catchphrase made popular by Detective Joe Friday in the TV detective show, Dragnet.  The implication was that it was he, the detective, who would interpret the facts, for we do not make decisions based on the facts, but rather on our interpretation of the facts.

Interpretations can vary widely. In 1987 when the PAC revealed for the first time, the full extent of the cost of replacing all of South Australia’s public infrastructure in South Australia, I interpreted this as a liability to be planned for so I was unprepared for the State Treasurer to thank me most sincerely for ensuring that the State retained its triple A rating!   A triple A rating when it was facing a quadrupling of its asset renewal within the next 15 years and had no idea of what to do about it, how was that possible?  Simple: the ratings authority had been persuaded (as, unfortunately, so had the government itself) to interpret the replacement cost of assets as the ‘value’ of the assets and, since this value exceeded the measured value of the debt (ignoring future replacement considerations), all was considered to be well.

At least if the facts are clear, we can debate the interpretation (see Evidence based decision making).   But what if the facts are wilfully distorted?

The ABC reported last Thursday (June 14) that 40% of infrastructure spending is now ‘off-budget’.   This translates to being invisible for most.  Even Saul Eslake (the former ANZ chief economist and member of the Parliamentary Budget Office’s panel of expert advisors) is reported to have ‘only noticed the scale of such spending days after the budget lock-up, as he went through the finer details in hundreds of pages of Treasury papers”.  The ABC says that he isn’t the only one now paying attention – and perhaps we all should!

The Government is effectively treating this infrastructure as a ‘financial investment’ which implies a financial return. A case of wilful blindness since most of its infrastructure spending not only will not provide a financial return but will require further commitment of resources to manage and maintain.

We need to see the facts as they are, not how they have been massaged to appear.  This can happen in major cases such as the above, but also in smaller ways in our own organisations.

With infrastructure, what we choose to see – and choose NOT to see-  may have serious impacts for many generations to come.

This is a case to follow.

See

The Budget 2018 Sliced and Diced.

The 2018 Budget contains hidden investment time bomb

 

 

Po = Provocation!

DeBono invented the term ‘Po’ for a provocation – something that begged to be thought about and commented on!

In this light, my friend, Miso, has submitted the following:

“With respect to managing infrastructure, the shortcut to “a more enjoyable trip” is to say that rather than expanding resources on collecting more condition data, let’s “recycle” (actually use for the first time) the mountains of information we have produced through decades of decision making.

By analyzing patterns in financial, engineering, and administrative data we can derive the comprehensive infrastructure performance measure.  One which inherently accounts for all factors (e.g. conditional and functional) which were taken into account when the professionals made their decisions.”

Your Thoughts?

Job Creation v. Increased Productivity


Thought for the day

‘Well chosen infrastructure projects contribute to job creation and increased productivity’.

Notice anything odd about this?   (Apart from the fact that it is a circular statement, since ‘well chosen’ is presumably defined by the outcomes achieved.)

Increasing Productivity

When we ‘increase productivity’ we enable the labour force to produce more.  This is normally done through investment in capital, and nowadays through increasing use of automation. When we are struggling to produce enough to meet demand, that is, in times of low unemployment and high demand pressure, increasing productivity leads to an easing in the economy, reducing inflationary pressures.  It is good.

However, in times of low demand – i.e. when we have high unemployment – increasing the ability of firms to produce more with less, may increase profits, but if there is not the demand in the economy to soak up this increased output, this is at the expense of reducing their need for labour.   Then, it is not so good, at least not for labour.  And, to the extent it is successful, increases the demand for job creation.

Job Creation

When do we wish to ‘create jobs’ – in times of high, or low, unemployment?    Clearly in times of high unemployment.   In other words, precisely at the time when ‘increasing productivity’ will lead to less job creation’.

‘Job creation’ and ‘increased productivity’ would thus seem to be incompatible goals for Government.  And hardly justification for expensive investment in infrastructure.  There must be a better argument.

Thoughts?

What’s wrong with Infrastructure Decision Making?

 

This is by way of a ‘heads up’ to coming posts on infrastructure decision making.   In June last year, the Institute for Government  in the UK produced the report “What’s wrong with infrastructure decision making: conclusions from six UK case studies”

Major conclusions were:

  1. There is no national strategy for infrastructure investment
  2. Government does not devote enough time to assessing early options and seizes apon preferred projects too soon
  3. The more ambitious the project, the more questionable the model
  4. A failure to understand project risk
  5. The difficulty of making decisions which create ‘concentrated losers’ (which can and do become vocal opposition groups)
  6. Inadequate post project evaluation means we do not learn for future projects

You can probably identify with all of these problems in your own work.  The Institute draws on mega projects in the UK such as The Third Heathrow Runway, the High Speed 1 and 2 rail proposals and the ultra expensive Hinkley Point C nuclear energy plant proposal, amongst others.   But you can think of large and small projects in your organisation, state or country.

Over the next six posts we will consider each of these and then look more closely at the way we make our infrastructure decisions here in Australia. We are all familiar with studies that argue that government decision making is abysmal and should be replaced with private sector decision making, which is assumed to be so much better ‘because it is focussed on profit making’.  But when it comes to infrastructure, both economic and social infrastructure, ‘profit-making’ is not the goal.  Here, we are really looking at ‘the social value of shared resources’ in the terms of Brett Frischmann. 

It is important to bear this in mind as we consider these infrastructure decision making problems, no matter who is making them, for when an infrastructure decision is passed to the private sector to make, it is a public sector decision that makes this possible.

QUESTION:   What other problems beside these can you identify?