Future-Proofing Resilient PPPs

“Hurricane Harvey Has Knocked Out 25 Percent of Gulf Gas Production” – GIZMODO36846391355_b535cade44_k

“This storm has already left hundreds of thousands without power along the Texas coast. And there are reports of significant damage to buildings in Rockport, Texas, near where the storm made landfall Friday night. At a press conference Saturday afternoon, Texas Governor Greg Abbott said it may be ‘several days before outages can be addressed’ due to continued high winds.” – VOX


What is Future-Proofing?

Future-proofing is described as the process of anticipating the future and developing methods to mitigate its impacts. Future-proofing when considered in infrastructure Public-Private Partnerships (PPPs) adds a layer of resilience to projects that will ensure their sustainability and longevity.

Future-proofing leans towards resilience planning strategies that accommodate future events and changes that ensure infrastructure facilities do not become prematurely obsolete. It can also be tied to building infrastructure that will be resilient to future adverse weather events that seem to be occurring with increasing intensity and more regularly. Future-proofing additionally adds value to infrastructure in the sense that investors are more likely to invest in infrastructure that has built-in buffers that increase the project’s resilience and financial sustainability of their investment.

Peter E.D. Love, Junxiao (et al) point out in their 2015 article on future-proofing PPPs that, “Future-proofing is defined as the ability of an asset to continue to be of value into the future, and is required to ensure that taxpayers are being provided with value for money (VfM).”

Why Future-Proofing?

Love and authors write further that VfM is defined as “the optimum combination of whole life cost and quality to meet the user’s requirement….”  This indicates that some values of PPP infrastructure projects cannot be entirely reflected by cost, but by such other issues as project duration and quality.

This observation is critical for considerations of project resilience and future-proofing. Resilience and future-proofing is not only about cost, it is about adopting common sense initiatives to building infrastructure that will survive into the future and be more resilient to the unknown.

Future-proofing should not be an afterthought, but be a project life-cycle approach from the beginning of project planning. This requires key performance principles and indicators being considered up-front that are built into the initiation and planning, procurement, and partnership phases of PPPs.

Future-Proofing Principles

Wikipedia identifies future-proofing principles that are relevant to resilient infrastructure and that are rapidly becoming resilience best practices for PPP projects. They include:

  • Acknowledging that construction materials and technology deteriorate and that deterioration can be mitigated through wise selections.
  • Adopting interventions that stimulate flexible approaches and adaptability strategies.
  • Adapting strategies that fortify infrastructure against extreme weather.
  • Using durable building materials that require fewer interventions and enhance service life of infrastructure facilities.
  • Constantly evaluating and reviewing trends that reduce the possibility of obsolescence.
  • Considering long-term life-cycle benefits for large infrastructure PPPs.

The Economic Value of Future-Proofing

The Economist Intelligence Unit (EIU) has made some very valuable observations on the future-proofing of PPP projects. They point out that if investors in long-lived assets are seeking reliable returns over a period of many years, it is essential that infrastructure projects can remain efficient and productive over the long term.

EIU says investors and developers need to anticipate demand trends yet also acknowledge that predicting the future with certainty and in detail is never possible.

Uncertainty can be mitigated by resilience practices that include future-proofing that incorporates building flexibility into infrastructure assets.

Although resilience planning is an upfront project expense that developers and investors can be wary about, upfront investment in future-proofing can protect against future shock and future financial losses.

Building Resilience into PPP Models

PPP procurement models that create resilience incentives for investment in future-proofing should be a choice priority, especially when it comes to building resilience into the operations and maintenance phases of projects where future adverse or evolutionary events are most likely to occur.

Design Build Finance Maintain Operate (DBFMO)/ Design Build Finance Operate Maintain (DBFOM) and Design Build Operate (DBO) are common examples of PPP delivery models where resilience and future-proofing can be built into the procurement terms. This will help PPP proponents think about lifetime costs as well.

Environmental Future-Proofing

The recent spate of adverse weather events make clear the urgent need to consider environmental sustainability and resilience for effective future-proofing of PPP projects. The EIU mentions environmental sustainability has started to drive capital efficiency in infrastructure and this should be noted.

Building capital efficiency into PPP projects must be considered by PPP public sector project planners and their private sector investors. How many more Hurricane Harvey’s can we afford? How many times are we willing to absorb exorbitant infrastructure reconstruction and recovery costs that could have been mitigated by resilience planning? Are we going to keep making the same mistakes?

IPPPRC

As government and investors explore future-proofing and resilience planning for PPP projects, they might consider collaborating with the new United Nations Economic Commission for Europe (UNECE)-affiliated International PPP in Resilience Center that has been established in Louisiana. This organization will be a thought leader in building resilient infrastructure best practices that will be able to withstand future shocks more efficiently.

Please share your examples or suggestions for future-proofing and resiliency planning for PPPs and infrastructure projects below.

The original version of this blog appeared on David Baxter’s LinkedIn page.

Disclaimer: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.

Related links:

Automation in Construction, Future Proofing PPPs: Life Cycle Performance Measurement and Building Information Modelling, April 2015

The Economist Intelligence Unit: Future-Proofing Infrastructure Assets – Building Capital-efficient Infrastructure in the Age of Austerity

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