Infrastructure, pump up the value!

By Arjan Hijdra – The universal framing of infrastructure is that these structures are crucial for a prosperous society. Politicians and decision-makers worldwide stress the socio-economic importance. But if we dig a bit deeper, it is not that easy to ensure this potential is realized. When developing a road, railroad, port basin and so on, there are numerous variables which can be altered. In the stress and pressure of development, with deadlines and financial risks all around, it is hard to remain calm and tweak exactly the right elements of the project to optimize its value. Reducing risk and complexity and avoiding delays it usually the day to day priority. But leaving value on the table is a loss for society in general, and certainly for the developers involved. So in a nutshell, how exactly is value to be realized?

Fortunately there is plenty of literature on this topic. Not always for the infrastructure sector, but for sure applicable for this sector. And as straightforward the concept of value might seem, it is not a straightforward exercise to walk through. In fact it has three dimensions; product, time and actors. I will get back to time and actors in another blog; let’s focus on the product here. The value of a product is often expressed as the utility divided by the resources required. Utility can be split into two components; functionality and esteem value. Functionality means the way the project is able to deliver the services as required. The esteem value refers to the appreciation of the project in a broad sense, other than the direct functional purpose of it. So from an engineering point of view the entire project can be seen as follows:

Value = (functionality + esteem value ) / required resources

Such a representation immediately shows the spectrum of possibilities in the design domain. So if we wish to pump up the value we can either increase the functionality, increase the esteem value or reduce the required resources. Many tools are available for either three of these goals like for instance value engineering, creative design methods, real option strategies and lean management. There is much more to tell about these and other techniques, but perhaps way more illustrative are a few examples of infrastructure projects touching the extremes. This would be examples of extreme functionality, extreme esteem value and extreme low investment of resources. Functionality can again be split into two parts, offering great performance on a function and offering a wide range of functions bundled together. So let’s provide some examples here. What project is an example of extreme performance on a certain function? The railroads and railway station at Shinjuku Station is known as the busiest part of the intensively used Japanese railway system. With 3.5 million passengers a day, the performance in quite extreme.


Shinjuku station: high performance on a single function

The second way of performing on functionality is addressing a wide variety of functions, in a single piece of infrastructure.  The Afsluitdijk in the Netherlands is a nice example of this. This dike closes off the IJsselmeer lake making it a freshwater storage basin, protecting a large area of the Netherlands against flooding, and providing a short route connecting the most northern areas of the Netherlands.


Dutch afsluitdijk: broad range of functions

In terms of esteem value, the Millau bridge in France is a very elegant example. This bridge over the valley shortens traveltime by car by about 30 minutes. But most striking is it’s elegant design. Therefor it became not only a part of a route, but a destination itself. It is an iconic piece of infrastructure adding to the attractiveness of the region.

millau bridge

Millau bridge France: high in esteem value

Value can also be increased by keeping the invested resources low. As traveling distance in Australia is often large, but traffic intensity low, it does make sense to be keen on cost. The network of dirt roads stay low in invested resources, but do provide the necessary service: a road which can be travelled.

dirt road

Australian dirt road: low on required resources

The mentioned four examples are in fact just examples of how value of infrastructure can be influenced. Increasing the value of infrastructure projects is in fact doing the analysis and playing with these variables until it fits the context in an optimal way. But keep in mind, a design taylor made to resolve a defined problem can leave significant value on the table. Finding and optimizing the value goes beyond that. It is balancing and optimizing product and actors and keeping in mind the time dimension. But as complicated as it might be, just keeping a keen eye on functional performance, the multitude of functions, the esteem value and the invested resources will help for sure in the process of pumping up the value!


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