This presentation was given at the International Symposium for Next Generation Infrastructure and lays out a comprehensive way of thinking about out infrastructure challenge and how to address it.

1. Constructing Tomorrow’s Infrastructure
Bob Prieto
September 14, 2015
The Global Forum on Urban and Regional Resilience
Next Generation of SMART Infrastructure

2. Infrastructure Gap
AV20030137001.ppt2

4. Framing the Problem
 Project prioritization methodologies are weak
 Two out of three large projects “fail”
 Construction productivity unchanged
 Barriers to improved delivery persist
 Time is not valued
 Assets are not well or consistently maintained
 Life cycle performance not a guiding principle
 Resilience to respond to a changing future lacking
 Post disaster environment not provided for
 Systemic innovation absent

6. Financing the Problem
Funding and Financing confused
Tax exempt debt preference limits capital
Disparity of covenants
Tax policy does not reward longest term ownership
Federal tools good but not sufficient
Secondary markets immature
Post disaster funding requires building back better

8. Fixing the Problem
Robust standard on infrastructure prioritization
– Outcomes focused vision
– Consistent methodology
• Doing the right things
• Doing enough of the right things
• Doing right things right
– Classes of factors to be considered
– Portfolio approach
• Maintenance
• Productivity
• Growth
• Innovation

9. Fixing the Problem
Strategic Management
– Strengthened Foundations
• Owner’s readiness not just project readiness
• Optimism bias addressed by reference class forecasting
• Realistic risk registers, models and modeling
 White space risk; fat tail distributions; assumption
migration; constraint coupling
• Recognize, address and measure complexity
– New theory of large complex projects
• Semi-permeable boundary; emergent outcomes
• Focus on Flows – transformational, influencing, induced
• Engage, not manage - Sentries, scouts, ambassadors
– Decouple by minimizing precedences
– Contingency management

11. Fixing the Problem
Build for the lifecycle
– BODX – Expanded Basis of Design (BOD)
• CBOD – design to build
• O&MBOD – design to operate, maintain and replace
– Life cycle performance based standards
– Manufacture vs construct
• Standardize, optimize, automate, build lean
 Nuts & bolts; 3rd Gen modules; knowledge assemblies
– Optionality as a resilience strategy

12. Fixing the Problem
Remove the handcuffs
– Facilitate contractual innovation
• Federal $$$ = No preclusions by law or regulation
– Facilitate means, methods, materials innovations
• SAFETY Act equivalent
Value time
– Include escalation and cost of schedule risk in all
estimates and budgets
• Include economic value of time – revenues, costs
• Life cycle view
– One stop permitting process for critical infrastructure
• Limit period for filing lawsuits
– Consolidate procurement steps
– Recognize the true cost of disruption

13. Fixing the Problem
Post disaster construction framework changed
– Labor, materials, equipment
– Logistics
– Damaged construction infrastructure
– Extensive temporary works
– Overwhelmed regulatory and administrative agencies
– Changed contracting frameworks
– Good Samaritan challenges
– Bonding requirements
– Evolving codes and standards

15. Fixing the Problem
Encourage industry consolidation and global leadership
– Horizontal and vertical
• Competition of supply chains
• Essential for systemic innovation
– Supportive international tax policy
• Personal and business

16. Fixing the Problem
New financial construct
– Eliminate tax exempt infrastructure financing
• Opens broader capital markets (pension funds)
– Reward long term infrastructure investment
• Reduced capital gains on 15 year or longer investments
– Create a subordinated debt infrastructure bank with public
and private shareholders
– Require life cycle maintenance and debt service coverage
ratio covenants
• Funding mechanisms must be pre-established to support

18. Fixing the Problem
Post disaster requires improving resilience of urban
environments
– Government funding and insurance typically focused on
in kind restoration
– Pre-existing long term plans required to provide context
and minimize delayed decision making
– Improvements must carry a life cycle covenant

19. Fixing the Problem
 New infrastructure paradigm
– Consolidate
• Multi-infrastructure framework required
 ROW as an increasingly valuable asset
– Prioritize
• Security/ Resilience
• Discretionary
• System Enhancements
• State of Good Repair
– Manage
• Enterprise or portfolio management approaches
– Improve
• Incentivize R&D and provide liability protection for initial
deployments of innovations
– Monetize
• What is the value of the nation’s infrastructure assets?
 Trillion $$$ example
• Create secondary financial markets

21. Resilience
AV20030137001.ppt21