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

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!

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?

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?

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?

For senior decision makers, infrastructure used to be a relatively simple matter – assign different teams of engineering and finance specialists to determine if it could be built and could be afforded. Infrastructure decision making is no longer simple, more a matter of juggling many factors, each of unknown severity and immediacy.  This is why I have introduced the ‘big picture’ issues now being dealt with by the world’s financial elite at the World Economics Forum, and the many practical issues essential for economic, social and environmental sustainability, that the United Nations are grappling with in the 17 SDGs, the sustainable development goals.

Being aware of the issues is clearly the first step, but then what?

How would you go about including these goals in your own infrastructure decision making?  And how would you know when you have been successful?  The Australian Senate has recently launched an inquiry into the implementation of the SDGs.  Here is what they are looking at.   (Note that the last 4 line items refer to Australia’s work in supporting other nations.)

Questions for Today:

• Are they the right questions for the Senate?  What is missing?
• Are they the right questions for You in your own infrastructure decision making?  What questions would you add, or modify?

Here is the Senate Inquiry’s Terms of Reference

An inquiry into:

1. the understanding and awareness of the SDG across the Australian Government and in the wider Australian community;
2. the potential costs, benefits and opportunities for Australia in the domestic implementation of the SDG;
3. what governance structures and accountability measures are required at the national, state and local levels of government to ensure an integrated approach to implementing the SDG that is both meaningful and achieves real outcomes;
4. how can performance against the SDG be monitored and communicated in a way that engages government, businesses and the public, and allows effective review of   Australia’s performance by civil society;
5. what SDG are currently being addressed by Australia’s Official Development Assistance (ODA) program;
6. which of the SDG is Australia best suited to achieving through our ODA program, and should Australia’s ODA be consolidated to focus on achieving core SDG;
7. how countries in the Indo-Pacific are responding to implementing the SDG, and which of the SDG have been prioritised by countries receiving Australia’s ODA, and how these priorities could be incorporated into Australia’s ODA program; and
8. examples of best practice in how other countries are implementing the SDG from which Australia could learn.

Edward de Bono wrote much.  His book, Simplicity, I think is very appropriate to apply to asset management and KPI decision making. The part that resonated with me is the difference between simple and simplistic.

In Infrastructure decision making a simple model is a great thing, a simplistic model is a destructive and dangerous thing. This is true in all fields, engineering, economic and social included. Simplistic by definition is overly simple. Unfortunately many of out decision makers have a simplistic understanding of both the English language and the role of infrastructure.  You will hear many people calling for a more simplistic solution or approach. They mean “simple”, but one doubts whether the inability to differentiate between simplistic and simple translates into the making of sound decisions.

Regardless, satisfaction surveys, mandated bureaucratic KPIs, single-digit comparisons to like organisations and other such endeavors are  simplistic management techniques.  They have been over-simplified and are as a consequence of no value.

Simplicity before understanding is simplistic; simplicity after understanding is simple.
– Edward De Bono

Simplistic decisions are tolerated and often demanded by our populations.  I believe this is because the general public has little understanding of the complexities of the modern world, and no desire to embrace that understanding.  While the situations and decisions can be presented simply by our leaders, there is no political advantage in straying from binary arguments, right and wrong, black and white.  The issue here is to help people understand that complex arguments about infrastructure can be presented simply, and be debated on their merits.  With this understanding, the people can call for rational debate, not simplistic decision making.  As professionals in our fields we can assist by presenting our work as simply as possible and resisting pressure to make our work simplistic.

Question for the day:  

What techniques do you use, or know of, that help you to determine whether your reasoning is ‘simple’ or ‘simplistic’?

No I’m not talking about huge structures, but about talking with Uber drivers about infrastructure decision making, and what I have learned from them.

Uber drivers are business people, they are characterised by having a drive for improvement of their lives and are often driving as a second career or while transitioning from one life circumstance to another, new job, new city, new family, etc. They are also polite.

As professional drivers they have a serious interest in transport infrastructure, especially roads. As service providers they will listen to customers’ stories. My drivers are often surprised when I voice the opinion that we don’t need more lanes, roads and tunnels; especially if we are in slow-moving traffic. There then follows a discussion, usually around 20 minutes, that covers the underlying needs for roads, traffic loads and the factors that contribute to peak congestion, the available solutions to the problems of road transport and the contribution that smart, connected technology can make to the problems of city life.

Since my drivers are constant consumers of connected technologies (GPS, booking apps, forecasting software) they have no trouble understanding the benefits that flow from the ideals of “Smart Cities” and easily understand that improvements flow from having information sources connected. They see that transport issues are directly related to things that can be adjusted with a connected view of the world. They also comprehend that the technology needed to address these issues has been available for years, and that it is the lack of integration of business, government and social information and policy that retards us.

What I have learnt from Uber drivers is that a conversation of 20 minutes can change a person’s understanding of infrastructure needs completely, from a view that continuous infrastructure construction is essential to a view that the solution to congestion of all kinds can be addressed with understanding and leadership.

Smart cities are coming, but I’d like the benefits now. Rather than upgrading highways, I’d like to see freely available information that can be used to tell drivers that leaving 15 minutes later will get you to your destination at the same time and with less fuel and frustration. Then service providers like Uber can give me an option to have a cup of coffee before my car arrives and everybody wins.

President Trump’s protectionist stance has been cemented by executive order withdrawing from the Trans-Pacific Partnership (TPP). Protectionism has swept Europe; Trump is not an isolated believer.

Much of the world’s infrastructure is built by international firms, their success built on scales of economy and expertise.

In the new protectionist environment, major infrastructure will increase in expense and/or decrease in quality.

My question is – where are the economic advisers, educators and leaders that help people understand the facts of globalisation, rather than the beliefs about globalisation?