How Do We Build-Back-Better for Tomorrow’s World?
Updated: Dec 22, 2020
It seems that we are finally through the endless Presidential election process and in a month the new United States Administration, led by President-elect Joe Biden, will be in place with an initial focus on rapid Covid-19 vaccine distribution, getting the economy opened and moving again, and launching a critically important infrastructure program that will both create jobs and rebuild our badly deteriorating national infrastructure.
That’s all great and we applaud those involved in this herculean effort. But on this latter point about “rebuilding our infrastructure” we need to be very clear-eyed. While our national infrastructure is desperately overdue for upgrade and overhaul, we owe it to ourselves and our children to do this right. And “right” has to do with making sure that we don’t just get people working to fill potholes and rebuild old road systems from a by-gone era. And it doesn’t mean funding political pork and expensive boondoggles. Instead, it means building infrastructure that will make us competitive in the global markets both today and tomorrow; that will embed and encourage continuous integration of innovative technologies and efficiencies now and in the future; that will support attainment of the urgent environmental goals we have set at state and national levels; and that our “infrastructure plan” will take into account the climate altered planet that is our new reality. Stationarity is a bygone assumption, and the future will not look like the past from an economic, technical, environmental, or climate perspective. But having said all that, we still need new infrastructure to replace the crumbling foundations of our communities and the economy – so what should that look like?
Back in July we wrote one of our first Musings on “Why Rush Now?”. In that blog we made a number of points that I think it might be helpful to recapitulate here. First, we pointed out that there are a lot of infrastructure projects that simply should not be done, as they replicate legacy projects no longer needed, focus on the wrong technology, are inefficient, don’t have a compelling future need, or fail to adequately capture that system’s future economics or it’s operations and maintenance costs or funding needs. Second, there are projects we should not do because they fail to capture changes in behavior and other shifts that will change infrastructure requirements – like the impact that working from home will have on commuting, mass transit and commercial office needs. Third, there is the issue of infrastructure ownership. The Federal government is over-extended, and states and municipalities are deeply financially hobbled by the pandemic’s impacts. So, if private sector funds are going to be major investors in these new projects, what are the funding mechanisms that will be employed and how does that private ownership either undermine or help satisfy public sector objectives and ambitions for the new infrastructure? Fourth – we pointed out that the world is already climate-altered and failure to account for those continuing changes (sea level rise, hurricanes, flooding, desertification, extreme temperatures, wildfires, population migration, water shortages, etc.) would be a massive design mistake. And finally, we made the point that there are smaller-scale WPA-type programs that could generate a lot of useful employment outside of a massive infrastructure program – and these should be considered. When you build big, expensive, important infrastructure, it should be for the right reasons and for the future, not just for today’s jobs.
Some months ago a friend passed on a Vice Media article by Shayla Love, titled “Our Infrastructure is Being Built for a Climate That’s Already Gone”. It is an important discussion and delves into many of the same messages that we have been preaching - that climate change is already a reality, that the world of environmental and climate stationarity is behind us, and that societal and infrastructure adaptation to these climate-altered realities is an essential shift we have to make. The author highlighted some of the other issues we have raised – like the needs and challenges around setting new building standards in a world where we don’t really know what the impacts will be from sea level rise, increased storm frequency, water availability, and the like. She also made some further points that are helpful regarding how to plan in a world where you can’t use past data as an indicator of future conditions. This would always be a challenge, but infrastructure projects have an unusually long expected life span – often 20, 30 or even 50 years – which makes the lack of certainty around future conditions all the more critical. Experts interviewed in the article acknowledge the difficulty this future uncertainty poses for planners and project developers and suggest some of the ‘solutions’ that are just now being proposed, including very broadly modeling for the full range of future conditions, but this approach raises the question of whether you build for the worst-case potential or something else? Do we yet have enough understanding of how the complex elements of our environments will interact, what those interactions will mean for the physical environment 20 years hence, or what that will mean in a specific location? Moreover, there is the issue of “cascading effects” where the failure of one infrastructure system impacts many others (increased hardscaping causes more storm run-off, overwhelming drainage systems, flooding roads and buildings, damaging power and water systems, etc.).
One approach suggested in the Vice article for planning in this uncertain environment is to focus on future adaptation flexibility. The idea is to “develop infrastructure that is agile, flexible, and ultimately adaptable, rather than sturdy, unchanging, and permanent. The goal isn’t to make rickety bridges or weak pipes that need to be replaced all the time, but to shift from an ideology of rigidity to flexibility so that the infrastructure that surrounds us can be updated quickly to match our environments.” One important tool in this approach is modularity – focusing on flexible infrastructure that can be modified more easily as future conditions change. This could include such things as designing for the ability to raise or lower the height of bridges or change the size of drainage systems as needed – or even infrastructure with multiple uses, such as Kuala Lumpur’s Stormwater Management and Road Tunnel (SMART), a traffic tunnel that can be repurposed for use as storm water drainage in case of extreme weather events. Other approaches to designing in the non-stationary world are just evolving but include collaboration between engineers and decision-scientists looking at decision-making under “deep uncertainty” which at least forces a very serious look at the myriad future conditions a project might face and encourages front end planning around ways that the project could be designed and financed, from the start, to respond to those potential future conditions, thus creating an “adaptation map” -- as is being done in the UK’s Thames Estuary 2100 Project.
The Organization for Economic Co-Operation and Development (OECD) published their “Climate-resilient Infrastructure” report in late 2018, and stressed some of these same cautions about our future, and the need to design flexibility into infrastructure as we go into a non-stationary, climate changing world where past standards will almost certainly be wrong and inadequate. “Flexible, adaptive approaches to infrastructure can be used to reduce the costs of building climate resilience given uncertainty about the future. Climate model projections are a significant source of uncertainty, particularly on a regional or local scale, but other factors (such as socioeconomic changes) are also relevant for climate resilience.” And this last point is critical. There will likely be major human dislocations and relocations, as well as technology innovations and changes to technology competitiveness, industry and technology obsolescence, mandates to reach carbon reduction targets, and a host of other issues that will drive where and how we design our infrastructure.
Experts are wringing their hands over “what to do” in this new and uncharted world, and this planning dilemma is made all the more urgent by the impending launch the new U.S. Administration’s Build Back Better infrastructure initiative. Projects need to get built. Of that there is no doubt. But they need to be selected and designed and executed smartly and with a plan to deal with the uncertainty we face in a non-stationary future. So here are our suggestions for infrastructure planning, development and execution in this new era:
Plan, but also develop keen situational awareness, be alert for change, and be prepared to modify or change plans even if it is costly in the short term. The military analogy (attributed to Dwight Eisenhower) is probably appropriate here. He said plans are useless, but planning is essential. We add that one must be prepared to adjust and react and modify. Every good leader knows that “no plan survives first contact with the enemy” but this should in no way deter us from planning and being prepared to modify and adjust to meet the changing situation.
Always keep an open mind, watch and listen. Be prepared to cut your losses if you perceive conditions change. This is hard for developers and owners to do, but absolutely essential.
Think modular and flexible. Start in manageable increments that can be modified or changed or even cancelled. As change emerges (either technology shift or environmental or economic changes that impact your project), be prepared to change out increments that respond to those changes – which can only be done if modularity is built into the original design.
Focus on project execution. Be very cost conscious about project execution. Projects may not be able to absorb or overcome the huge cost over-runs experienced in the past in the future’s fast-paced and every-changing world. For example, cost over-runs once tolerated on nuclear power and rail are now essentially fatal.
Beware the “hiding hand”. The “hiding hand” that Albert Hirschman theorized could deliver hidden project benefits to offset unforeseen project difficulties (for example, unexpected project construction costs offset by unanticipated operational income increases) is a risky proposition and may not work so well – if it ever did. Beware of inherent project planning “optimism bias”. It will be increasingly difficult to absorb cost over-runs in projects designed to be shorter-lived, flexible and nimble.
Watch for technology disruption and competing technology cost breakthroughs. Always be on top of technologies that can disrupt or disintermediate your project or its value proposition. Solar PV wasn’t economic until massive scale made it so, and then the cost improvements became exponential.
Watch for regulatory or political shifts leading to disruption of your sector. Government mandates based on new political imperatives or environmental changes can render projects either more expensive or lead to their shut-down (e.g., coal fired power plants and zero carbon targets, prohibitions on the sale of internal combustion engines, restrictions on certain water uses, etc.).
Diversification is good. If you are an investor, diversify. Avoid betting all your money on one course of action.
Watch how funding is changing. Are investors/lenders looking at shortened tenures, restrictions on loans to certain sectors, or a ‘flavor of the month’?
Most of all, we need to stop the massive over-runs on mega-projects, and the intentional, unintended or careless cost optimism bias (or outright deception) in those initial cost estimates. More than ever, in a world that needs to be nimble and where project tenure might be shortened by environmental and technological change, we need to focus on project execution and ways to get projects done more efficiently. This includes building with cutting edge technology and systems, building in smaller increments, being flexible and designing so that technology improvements or environmental mitigations can be incorporated. And we need to be prepared to adjust midstream and be more realistic about both when to change a project design, and when to outright walk away from a project if its costs are clearly out of control. And complicit contractors and suppliers who know better could be forced to bear some of the economic risk and forfeit a portion of their profits. That might help with the front-end planning bias.
Yes, we need to Build Back Better and this revitalization of our crumbling infrastructure is long over-due. But as we do that we need to build for a hard-to-predict, climate altered world with technological, physical and societal unknowns. That means we have to be nimble, flexible, cost-conscious, and smart about what gets built and how we build it. That’s a very big part of what will make the build-back “better”.