Innovation in services for infrastructure investments Is ... · PDF fileInnovation in services for infrastructure investments Is there new paradigm?Is ... Project Sustainability Management

CAPEC 2014 International Forum

Innovation in services for infrastructureinvestments

Is there new paradigm?Is there new paradigm?

Service innovation drives the green transformation 6 November 2014

Peter Boswell, Switzerland

FIDIC – INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS – WWW.FIDIC.ORG – [email protected]

FIDIC

FIDIC th lti i i i d t ’ l b l iFIDIC: the consulting engineering industry’s global voice.FI DI C = “contractor dancing with heavy weights”g y gPromote the business interests of suppliers of technology-based intellectual services for the built and naturalbased intellectual services for the built and naturalenvironment.R ti th h ti l i ti (Representing through national associations (one per country) 60,000 consulting firms in 98 countries.


FIDIC

St d d t t f t ti kStandard contracts for construction worksCurrent project value: 2% GDPp j


FIDIC

St d d t f f i l iStandard agreements for professional servicesClient – ConsultantSubconsultantJoint VentureRepresentative


FIDIC

Th th it b i tiThe authority on business practiceHow to run a businessProcurementRisk ManagementRisk ManagementIntegrity ManagementProject Sustainability ManagementProject Sustainability ManagementInnovation ManagementQuality (Ford Anglo American Battelle)Quality (Ford, Anglo American, Battelle)Environment (platinum, autocatalysts, nuclear radiation)

FIDIC Accredited Engineer


China pilot starts 2104

Sustainability challenges

S t i bilit h ll 1Sustainability challenges - 1Solve sustainability challenges while promoting economic y g p gactivity.Climate changeClimate changeGlobal mean temperature change:1 5-2 5 oC by 20501.5-2.5 C by 2050

ResourcesPhosphorous reserve exhaustedPhosphorous reserve exhaustedby 2050-2060.



S t i bilit h ll 2Sustainability challenges - 2PovertyyAvailability of physical infrastructure (electric power generation; km of roads; phone lines) per capita:km of roads; phone lines) per capita:USA; 2.3; Sub-Saharan Africa: 0.3

Electric power consumption kWh:Electric power consumption, kWh:USA: 13.3 per cap; SS Africa: 2.0 per cap; hotplate: 1.5

.


IMF2014.


S t i bilit h ll 3Sustainability challenges - 3Populationp


Project sustainability goals

A i j t t i bilit l & i ti h ?Aggressive project sustainability goals & innovation - why?1. DutyyConstruction and plant investments that consulting engineers help plan, design, construct or renovate, operate, and recycle:help plan, design, construct or renovate, operate, and recycle:- have lengthy lifetimes - the industry has a duty to clients and society to encouragethe industry has a duty to clients and society to encourage

thought and action aimed at the long term. 2 Traditional measures of performance2. Traditional measures of performanceSuitability (fitness) of purpose, cost optimisation and on-time d li t l i fl d b t i bilit id tidelivery now strongly influenced by sustainability considerations.


Sustainability/innovation risks

S t i bilit /i ti i kSustainability/innovation risksRisk – greatest inhibitor of innovation in construction.gTwo risk management aspects:

1. Contracts1. ContractsSeen as a way to protect each stakeholder from liability as a result of planning, design, construction or operatingas a result of planning, design, construction or operating decisions.

2. Procurementocu e e t“Build to specifications” prevents collaborative, holistic approaches that take advantage of what is possibleapproaches that take advantage of what is possible.


Contracts

1 C t t1. Contractsa) Traditional contract types) ypFIDIC Construction (client-design) and Plant (contractor-design) contracts:design) contracts:- assign risks to the party best able to carry the risk;- sustainability requirements specified in detail insustainability requirements specified in detail in

Specifications /Employer’s Requirements and the risks assigned accordingly.ass g ed acco d g y

For sustainable procurement: - convince clients to seek sustainability in their specificationsconvince clients to seek sustainability in their specifications

or requirements; - FIDIC contract/Engineer’s role unchanged


FIDIC contract/Engineer s role unchanged.

Contracts

) T diti l t t t ( ti d)a) Traditional contract types (continued)For FIDIC’s balanced-risk type contracts, claimed that:yp- contractors better able to assume innovation risks;- design-build teams with no split responsibilities better able to g

bring innovative solutions.Expect consulting engineers to increasingly work within design-Expect consulting engineers to increasingly work within designbuild teams (and similar arrangements for turnkey contracts). But generally not the case: choice between client- or contractor-But generally not the case: choice between client or contractordesign still depends upon the nature of the project, the level of in-house expertise and clients’ prioritiesin house expertise and clients priorities.Conclusions: clients now better prepared to assume innovation /sustainability risks; FIDIC contract/Engineer’s role unchanged


/sustainability risks; FIDIC contract/Engineer s role unchanged.

Contracts

b) N t t t P f B d C t tb) New contract types, e.g. Performance-Based Contracts(PBCs)

Incorporate innovation with PBCs that:- sets metrics for the contractor’s output rather than

programmes, methods and plant and material input requirements;

- contractor can choose methods and technologies. .


Contracts

b) N t t t P f B d C t tb) New contract types, e.g. Performance-Based ContractsBut BCPs are complex:p- combine a subset of design, build, finance, operate,

maintain, and transfer; - combine input-, output and outcome-based payment

mechanisms. World Bank 2014: use PBCs as facilitators of good asset management, rather than a goal in its own right. a age e t, at e t a a goa ts o g tConclusions:- traditional FIDIC forms of contract are undoubtedlytraditional FIDIC forms of contract are undoubtedly

viable and preferred in the majority of cases;- FIDIC contract/Engineer’s role unchanged


FIDIC contract/Engineer s role unchanged.

Sustainable Public Procurement

2 S t i bl P bli P t (SPP)2. Sustainable Public Procurement (SPP)Public sector has a major responsibility in most countries:j p y- largest consumer; procurement: 8-30% GDP.Historically a project can only be awarded to the mostHistorically a project can only be awarded to the most economically advantageous tender.Strong push for SPP in many regions i e procure works etcStrong push for SPP in many regions, i.e., procure works, etc. with an enhanced sustainability impact throughout their life-cycle compared to works etc with the same primary functioncycle compared to works, etc. with the same primary function that would otherwise be procured. Specify award criteria for tenders; Europe strengthen legalSpecify award criteria for tenders; Europe - strengthen legal basis to allow sustainability criteria to be used more thoroughly. FIDIC t t/E i ’ l h d


FIDIC contract/Engineer’s role unchanged.

Paradigm shift

C ll f di hiftCalls for a paradigm shiftConsulting engineer’s role – and the demand for consulting g g gengineering services – is reinforced by the need for project sustainability. yHowever, many in the industry are calling for a paradigm shift in the way the industry acts. Why?the way the industry acts. Why? While successful, industry is seen as being weak in handling innovation risk for clients to seeking increased sustainabilityinnovation risk for clients to seeking increased sustainability.Probably because:

not seen to contribute sufficiently to developments;- not seen to contribute sufficiently to developments;- not bridging the plant/industry and buildings/infrastructure

sectorsFIDIC – INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS – WWW.FIDIC.ORG – [email protected]

sectors.

The consulting engineering industry

Th lti i i i d tThe consulting engineering industryDemand for services arising from investments in:g- construction - plant and equipment. Demand for these two types of services can be compared with actual demand from supply-use tables.actual demand from supply use tables.Investments are SNA08 Gross Fixed Capital Formation:- new dwellings and other new buildings and structures withnew dwellings and other new buildings and structures, with

renovation and the in-house own-account production of architectural and engineering designs addedarchitectural and engineering designs added.

- transport equipment, other machinery and equipment, weapons systems and intellectual property (e g R&D)


weapons systems and intellectual property (e.g., R&D).


FIDIC EFCAFIDIC - EFCA Survey



T f ti itTwo areas of activityEuropean Union, 2010:p- construction investments responsible for 70.3% of demand =

“architecture and engineering services” g g- plant investments responsible for the remaining 29.7% =

“industrial “ or “plant engineering”.Industry profiles vary considerably between countries (e.g., Sweden; 22% industrial; Spain: 2% industrial).S ede ; % dust a ; Spa % dust a )Globally speaking the industry able to help create synergies for sustainable development in the two areas of activitysustainable development in the two areas of activity


Urban focus

C t ti i t tConstruction investmentsConsulting engineers needing to address all dimensions of g g gsustainability now have many issues to face. Focus on the main area of concern, notably the urbanFocus on the main area of concern, notably the urban environment (cities, towns and conurbations).More than one-half of the world’sMore than one-half of the world spopulation lives in urban areas andfuture population growth will almostfuture population growth will almostexclusively happen in these areas.


Urban focus

D l i itiDeveloping citiesHousing will need to nearly double by 2050 (160,000 million m2g y y (in 2010 to nearly 300,000 million m2, all in urban areas). Of today’s 3.9 billion urban dwellers, 1 billion live in “slums”-Of today s 3.9 billion urban dwellers, 1 billion live in slumshabitation with insufficient clean water or durable housing.If poverty is not surmounted in 2030 some 2 billion people willIf poverty is not surmounted, in 2030 some 2 billion people will be living in slums.By 2050 Nairobi and Dar es SalaamBy 2050, Nairobi and Dar-es-Salaamwill have populations approaching 60million double today’s largestmillion, double today s largestmetropolitan area (Tokyo) with huge numbers living in slums


numbers living in slums.

Rethink Cities

R thi k CitiRethink CitiesCities use 75% of all energy and generate 80% of all green-gy g ghouse gas emissions, but generate 80% of GDP.Cities are not all bad: neitherCities are not all bad: neitherdrivers of climate change nor thesource of ecosystem degradationsource of ecosystem degradationin spite of the Human DevelopmentIndex/eco-footprint link.de /eco ootp tThe problem (UNEP): certain consumption and production patterns and certain population groups within cities are badpatterns and certain population groups within cities are bad.FIDIC is actively promoting “Rethink Cities” as a strategy for sustainable urban development


sustainable urban development.

Rethink Cities


Rethink Cities

R thi k Citi t t Th b tRethink Cities strategy – The urban ecosystemUrban areas (cities) make it possible to respond to climate ( ) p pchallenges in new ways.- can use a holistic approach to more effectively respond tocan use a holistic approach to more effectively respond to

energy, climate and environmental challenges;- well-planned compact well-designed and connected cities- well-planned, compact, well-designed and connected cities

are more resource-efficient and lead to lower greenhouse gas emissions per person;gas emissions per person;

- with their higher population density cities offer economy of scale for public transport and for recycling of water wastescale for public transport, and for recycling of water, waste and materials as well as for efficient energy use.

I t iti l t kFIDIC – INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS – WWW.FIDIC.ORG – [email protected]

Intuitively seems to make sense.

Rethink Cities

R thi k (OECD) Citi S ti d tRethink (OECD) Cities – Some supporting data. Electricity y

consumption per inhabitant decreases as population density increases.

Carbon-dioxide emissions from transport decrease as population density increases.


Rethink Cities

R thi k (D l i ) Citi S ti d tRethink (Developing) Cities – Some supporting data.

Carbon-dioxide emissions from transport decrease as population density increases


population density increases.

Rethink Cities

R thi k Citi I l t ti f kRethink Cities – Implementation frameworkA systematic and coordinated improvement in cooperation, synergies and systems.Improved methods and processes for creating synergies in g y gurban planning and between infrastructure supply systems.An awareness of the overall results of the various coordinatedAn awareness of the overall results of the various coordinated public and private responsibilities.An integrated planning methodology encompassing the socialAn integrated planning methodology encompassing the social environment with land use and urban planning incorporated into environmental scheduling and the coordinated development ofenvironmental scheduling and the coordinated development of infrastructure.Adjustments to city dwellers’ life style


Adjustments to city dwellers life style.

Rethink Cities

R thi k Citi E lRethink Cities – ExamplesAs examples, an ideal city should have:p y- sustainable energy systems based on effective use of

energy, cogeneration, closed loop systems and energy from gy g y gywaste, sewage water and other residues from other cycles.

- healthy ecosystems that factor their economic value into urban development plans (e.g., Johannesburg’s urban forest of 2.5 million trees supports water, biodiversity, air quality).

A very similar strategy, framework and implementation is used for Industrial Ecosystems with initiatives based on Industrial ySymbiosis and similar frameworks as exemplified by eco-industrial parks


p

Smart Cities

R thi k Citi t k h ld i l t S t CitiRethink Cities stakeholder involvement – Smart CitiesFIDIC’s Project Sustainability Management methodology j y g gyrequires several processes:

integration with project development, agreeing client g j g gobjectives, goal selection, life-cycle analysis, resilience planning, documentation, stakeholder consultation.

Rethink Cities broadens stakeholder consultation.The holistic and coherent development of cities requires the fullThe holistic and coherent development of cities requires the full involvement of all the parties who contribute. Individuals must be able to interpret data and receive clearIndividuals must be able to interpret data and receive clear feedback on value creation.B i f S t Citi


Basis for Smart Cities.

Smart Cities

S t Citi C tSmart Cities – ComponentsNetworked infrastructure:- the design, construction and operation of infrastructure for

energy, waste, etc. create the environment that shapes how cities procure, use and dispose of required resources;

- the networked city uses ICT to solve problems (exchange data, ....) and manage participation (online consultation, ....)

Social assets:- urban dwellers better educated and more skilled so that they

can contribute more thoroughly in stakeholder consultation.Environmental assets:- platforms to simplify online collaboration between


stakeholders using diverse data sets for energy, .......

Smart Cities

R thi k Citi T d b ttRethink Cities – Top-down or bottom upMuch debate; most agree that adding smartness is necessary.g g yTop-down - city-wide planning and control:- central control rooms;central control rooms;- standards are being developed;- large potential market for services & equipment;large potential market for services & equipment;- products poorly received (too ambitious/expensive).Bottom-up - provide access to data that lets citizens make theirBottom up provide access to data that lets citizens make their own decisions:- smartphone-based;smartphone based;- applications for information based on location;- cities asked to make data available but quality poor


cities asked to make data available, but quality poor.

BIM

R thi k Citi BIMRethink Cities – BIMBuilding Information Modelling (BIM) creates, manages and g g ( ) gstores information of all objects in a 3D model of an asset. Becoming the normal shared platform for consulting engineers, g g gcontractors and architects working on a project.Project-level BIM:Project level BIM:- expanding from initial design to the construction and

operation phases;operation phases;- integrates better building and plant.B t b ildi / i i f t t /i d t i l l t d tBut buildings/service infrastructure/industrial plant need to developed in their context (site, environment, systems)

i ll if th t t i b it ill b i th f t CIMFIDIC – INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS – WWW.FIDIC.ORG – [email protected]

especially if the context is urban, as it will be in the future = CIM

CIM

R thi k Citi CIM Th i t l itRethink Cities – CIM – The virtual cityBIM is expanding beyond projects to City Information Modelling p g y p j y g(CIM) – becomes part of the Smart City. Modules for:Modules for:- buildings, roads, piles, drainage, water, etc. - urban planning aspects (programmes, designs, evaluation);urban planning aspects (programmes, designs, evaluation);- information tool for stakeholder collaboration. Key technology – BIM-GIS integrationKey technology BIM GIS integration.Industry Foundation Classes andCity Geography Markup LanguageCity Geography Markup Languageare the most prominent models,hopefully!


hopefully!

Smart Developing Cities

S t D l i Citi M k ?Smart Developing Cities – Makes sense?. Premise: Smart Cities - easier and more efficient to provide housing and service infrastructure in cities.Strategy: decouple city-based economic growth from the unsustainable consumption of finite natural resources.Framework: so far mainly focused on heavily digitised cities with well-established infrastructure.“Facts” for the poorest:- “investments in urban service infrastructure targeting the

poorest drastically reduce urban poverty levels”;- “availability of basic services has a tremendous impact on

improving their quality of life”.$


What to do without massive ($40 trillion by 2030) investments?

Plant investments

Pl t i t tPlant investmentsIndustry’s global environmentaly gchallenges are well known; 5th IPCC:carbon emissions (2010) 21% direct,( )11% indirect (total: 32%; buildings: 18.4%; transport 14.3%).As in Rethink Cities, industrial sustainability requires:As in Rethink Cities, industrial sustainability requires:- industry-society-environment interaction;- cooperative approach.coope at e app oacIndustrial Ecology (IE) is the main paradigm: a broad, systemic and cross-industrial strategy that views industrial systems as gy yecosystems encompassing a network of processes and flows, including industry’s wider links to society.


g y y

Industrial Symbiosis

I d t i l S bi i (IS)Industrial Symbiosis (IS)A central IE concept = a holistic approach to close an industrial system, like a natural ecosystem, where residues from one industry can be used as raw materials for another.Involves the detailed study of material and energy flows and exchanges between multiple actors in local industrial systems.Exploits the interaction and utilisation of processes and flows within the IE, e.g., recycling of residues for symbiosis products t t e , e g , ecyc g o es dues o sy b os s p oductsin eco-industrial parks.IS corresponds to one end of the IE scale:IS corresponds to one end of the IE scale:

Comparative analysis of Societal, environment and


products and processes economic transformation


IS K l db i d t i l kIS – Kalundborg eco-industrial parkKalundborg, Denmark, is the model: individual industrial symbioses have sprung up over 30 years around a power station, such that the park’s industries have developed into a complicated waste-reuse and energy recovery network which significantly reduces the use of virgin raw material.



IS L i l tiIS – LegislationLegislation is increasingly encouraging the application of IE g g y g g ppstrategies and IS methods, e.g., European Union:- product design to include life-cycle analysis;product design to include life cycle analysis; - Best Available Techniques now in technical standards for

environmental permits waste recovery chemical safetyenvironmental permits, waste recovery, chemical safety, .....- waste management to have a hierarchy of methods: waste

prevention preparing for re use recycling other recoveryprevention, preparing for re-use, recycling, other recovery (e.g., energy recovery), disposal;

d ti id h E d f W t t t i l- production residues can have End-of-Waste status in law and thus be more easily used as secondary raw material.



IS P tiIS – PromotionIS acts as a bridge to broader IE thinking; has the potential to redefine industrial organisation by pushing industry to think beyond individual company boundaries to broader systems.Much effort now spent promoting IS in eco-industrial parks.Like Smart Cities, much debate over which approach is best:Like Smart Cities, much debate over which approach is best:- bottom-up, self-organised (e.g., Kalundborg); - facilitators operating independently (e.g., Australia);ac tato s ope at g depe de t y (e g , ust a a);- top-down networking (e.g., UK National Industrial Symbiosis

Programme). g )As for Smart Cities, approaches are complementary.



IS E i d t i l kIS – Eco-industrial parksExtent to which eco-industrial parks is reaching for sustainable development can be gauged using their rating criteria: - Network of institutions covering socio-economic aspects- Innovative approaches to waste utilisation;- Environmental control and impacts- Use of residues in beneficial interactions.- System boundaries Process industry links to society- Comprehensive approach Life-cycle/systems thinking2014 Swiss survey of 168 eco-industrial parks combining residential and industrial activities showed that sustainability impacts were almost the same as for conventional parks.



E i d t i l k B t lEco-industrial parks – Best examplesA fully operational eco-industrial park covering the multiple y p p g pdimensions that would be expected is still missing.The most sustainable in terms of the number of criteria are:The most sustainable in terms of the number of criteria are:- London Sustainable Industries Park, UK- Masdar City, UAEMasdar City, UAE- Organic City, Luxembourg- Malmö Cleantech City, Swedena ö C ea tec C ty, S ede- Tianjin Ecocity, China, a

China-Singapore governmentg p g30 km2 project.

Developing countries: little discussion


Developing countries: little discussion.

Conclusions

C l iConclusionsLike Rethink Cities for construction investments, the broadening gof Industrial Symbiosis for plant investments seen in project-level tools means that Industrial Ecology offers a viable strategy gy gyfor making industry more sustainable.Like Smart Cities, Industrial Ecology’s most commonLike Smart Cities, Industrial Ecology s most common implementation as eco-industrial parks applying Industrial Symbiosis has yet to demonstrate its full potential. Sy b os s as yet to de o st ate ts u pote t aThe main concern: how to apply sustainability strategies (Rethink Cities Industrial Ecology) to cities and industry in(Rethink Cities, Industrial Ecology) to cities and industry in rapidly urbanising developing countries.


A new paradigm?

Need integrated solutions (project to global levels).Need to manage innovation risk.Need to manage innovation risk.

Building/infrastructure and plant/industrial engineersBuilding/infrastructure and plant/industrial engineersneed to foster a common approach.

Is this a new paradigm?

Full presentation and notes at peterboswell.comFull presentation and notes at peterboswell.com

Thank youFIDIC – INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS – WWW.FIDIC.ORG – [email protected]

Thank you

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Innovation in services for infrastructure investments Is ... · PDF fileInnovation in services for infrastructure investments Is there new paradigm?Is ... Project Sustainability Management