Forming the Future: Flexibility in Essential Infrastructure

November 1, 2018

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Originally appeared in PEI: Infrastructure Investor, November 2018

Flexibility is emerging as the fundamental development principle for essential infrastructure that meets the needs of both current and future generations, writes InstarAGF president and CEO Gregory J. Smith, and it is no longer business as usual.

TODAY’S PACE OF change may or may not be unprecedented, but it is undeniably remarkable. Growing urbanisation. Huge demographic shifts. Accelerating technological advancements. The irrefutable impact of climate change. As billions of people in North America and around the world increasingly choose to live in cities, urbanisation above all else is profoundly altering the human condition, connecting communities globally, and creating intricate economic, social and environmental interdependencies and opportunities.

In the face of these rapid transformations, our world faces ever greater levels of uncertainty. Yet, the potential for disruption in this state of flux is balanced by incredible progress in our capacity to foresee such transformations and their possible effects and risks.

While the need for flexibility is more urgent than ever, our infrastructure is tracking behind the pace of change. Collectively, we must embrace our responsibility to ‘future-proof’ the essential infrastructure upon which our communities depend. How can we design, build and finance infrastructure that can withstand and overcome the challenges wrought by change while meeting the needs of both current and future generations?

“CONVENTIONAL APPROACHES TO INFRASTRUCTURE GROWTH AND DEVELOPMENT ARE NO LONGER SUFFICIENT, AND COMMUNITIES AND CITIZENS ARE DEMANDING DIFFERENT KINDS OF SOLUTIONS.”

Indeed, flexibility is emerging as the fundamental principle for infrastructure development. Flexibility is rooted in adaptability, or the ability to implement new ideas quickly. It also requires a willingness to test new approaches and methodologies and take measured risks. Innovation necessarily demands that we reject business as usual and think differently about what it is possible to achieve. As Albert Einstein once said, “If you always do what you always did, you will always get what you always got.” Yet, incentivising innovation in design while demonstrating how it adds to the overall value of infrastructure is a significant challenge for most current procurement and development models.

Simply, conventional approaches to infrastructure growth and development are no longer sufficient, and communities and citizens are demanding different kinds of solutions. Our approach to infrastructure is reaching a crossroads that could lead to a decline in quality of life and economic productivity if we fail to do a better job of planning for the future.

FLEXIBILITY IN DESIGN

Planning and evaluating infrastructure investments involves assessing not only the technical and design aspects of the projects, but also the economic impact they have locally, regionally and nationally – today and in the future. Cities and regions are linked together through the movement of goods, services and people, and the location of economic activity is in a state of flux from decade to decade, or from generation to generation, as is the entire world that surrounds us. We continue, however, to build infrastructure assets with 50- to 100-year lifespan expectations, designed for today’s needs rather than tomorrow’s requirements, and to overlook the risk of obsolescence that may occur from project inception to delivery.

By moving away from development in ‘silos’, a more flexible cross-sector approach to infrastructure can help to meet social, economic, environmental, transportation, energy and information technology needs all at once. Projects must increasingly be multi-use, such as a park that doubles as a storm water barrier, thereby adapting the urban environment using nature-based approaches, or malleable roadways that can change from car to pedestrian to bike use, which is a vision proposed for Quayside, the first phase of Toronto’s smart-city development and collaboration between Waterfront Toronto and Sidewalk Labs. Quayside in Toronto, along with Port Covington in Baltimore, and Hudson Yards in New York, are examples of neighbourhoods being developed or redeveloped to redefine urban mobility, connectivity and liveability for the future.

“INFRASTRUCTURE CAN HELP TO MEET SOCIAL, ECONOMIC, ENVIRONMENTAL, TRANSPORTATION, ENERGY AND INFORMATION TECHNOLOGY NEEDS ALL AT ONCE.”

This kind of forward thinking is also changing how we conceive transportation and telecoms infrastructure, which individually bridge gaps between geographic locations and together play an important role for integrated economic development. When building a new high-speed rail line, for example, it is worth considering how other technologies such as drones or hyperloops might use the same space and provide more flexible solutions, as KPMG pointed out in a 2018 report.

The LinkNYC programme – which is replacing every phone booth in New York’s five boroughs with public Wi-Fi kiosks to provide broadband access to every neighbourhood – is creating new digital opportunities out of old infrastructure. With 1,440 kiosks operating and a total of 7,500 planned, studies suggest that LinkNYC is driving incremental economic growth in the neighbourhoods where it is active.

Apart from technology, flexibility in infrastructure design is likewise deeply intertwined with more sustainable green solutions. In the water sector, natural infrastructure solutions are protecting, restoring or mimicking water cycles. Rain gardens, permeable pavements, bioswales and rainwater harvesting systems are all examples of how cities can move from a reliance on large-scale ‘grey’ infrastructure, such as centralised stormwater management, like building an overflow basin and then treating the runoff, to a more diversified and decentralised approach that permits the earth to naturally absorb the water as it falls. Such natural infrastructure solutions are inherently part of the flexibility endeavour as they complement built infrastructure by enhancing environmental benefits and reducing costs. According to the McKinsey Global Institute, six US cities managed to save up to $6 billion by shifting investments from water-treatment facilities to sustainable watershed management.

FLEXIBILITY IN PARTNERSHIP AND FINANCING APPROACHES

Neighbourhoods today must increasingly be developed as flexible spaces with the ability to evolve in line with innovation, and to merge physical structures and building systems with new technology. By extension, the contractual structures that govern the development and management of infrastructure must likewise evolve and consider how buildings or services could change over time.

At Mirvish Village, a block-scale redevelopment of the historic Honest Ed’s site at Bloor and Bathurst streets in Toronto, a district-energy system is being installed to improve the neighbourhood’s resilience and facilitate densification without taxing the city’s strained electricity grid. This system is flexible and is governed by performance incentives, upside sharing and alignment among partners, thereby allowing for more renewable energy sources or approaches to be incorporated in the years ahead in response to changes in technology, government policy or environmental needs.

“DEVELOPMENT AND MANAGEMENT OF INFRASTRUCTURE MUST […] EVOLVE AND CONSIDER HOW BUILDINGS OR SERVICES COULD CHANGE OVER TIME.”

In many cases, however, the additional unlocked value that may already exist within a project, or that could be generated through creative design, is often overlooked. Moreover, many current tools for infrastructure finance and evaluation are more deterministic in nature, and do not account for uncertainty and flexibility.

Today’s planners and designers need to consider the long-term value of flexibility and build those assumptions into a project’s business case, thereby making flexibility a core design and contracting principle. This could include establishing different contracts for different phases of a project, such as the award-winning Saint John, New Brunswick water public-private partnership, or convertible contracts that allow projects to initially commence under one contract form and to later convert to another, which permits the adjustment of risk throughout the project as new information becomes available.

FLEXIBILITY TO PIVOT IN THE FACE OF CHANGE

Enshrining flexibility in our infrastructure approach requires old models to pivot in the face of change. Many of the traditional assumptions and approaches used over the past 100 years or more to design, build, and operate our existing infrastructure are insufficient to meet the 21st-century challenges we face.

For example, regulatory, financial, and governance structures have put water into separately managed silos for drinking water, wastewater and stormwater at every level of government. Federal legislation, the regulation and management of water rights at the state or provincial level and the fragmented nature of how local utilities and agencies are organised further entrench such silos. In addition, water resources are influenced by agricultural, industry, and ecosystem management, often in ways that are discrete from the decisions made by water utilities and other stakeholders within the same watersheds.

From a public-private partnership perspective, conventional procurement approaches are often overly prescriptive, demoting innovation in favour of other project elements, such as cost, because it is too difficult to measure, or for an adjudicator to justify.

“MANY CURRENT TOOLS FOR INFRASTRUCTURE FINANCE AND EVALUATION ARE MORE DETERMINISTIC IN NATURE, AND DO NOT ACCOUNT FOR UNCERTAINTY AND FLEXIBILITY”

 Solving today’s infrastructure challenges and instilling flexibility for the future requires breaking down deeply ingrained barriers or practices within a given industry, and among all the other stakeholders who influence, or are affected by, infrastructure development. It also means thinking more holistically about a community’s long-term infrastructure and overall urban development objectives.

In fact, the traditional lines between forms of infrastructure – between energy, transportation and technology, for example – have been blurring for years. Many governments and communities are starting to adopt more integrated and inclusive approaches to address this increased connectivity. An example is the establishment of building codes in some jurisdictions that require developers to construct buildings with the capability to connect to district energy sources, which can help neighbourhoods to quickly adapt to shifting energy delivery systems.

Keeping the end users of infrastructure in mind will help to broaden the appreciation for and acceptance of innovative design and development. Above all, effective communication and stakeholder engagement mechanisms improve our collective ability to deliver quality infrastructure, evolve in response to emerging needs, and to rise above unforeseen events.

ENABLING REINVENTION

When a city is on the right side of flux, better investment and community outcomes are achieved. When it is on the wrong side, infrastructure projects can become underutilised or impractical, resulting in waste and potentially creating a barrier for future development. In Einstein’s words, “the measure of intelligence is the ability to change.” Embedding flexibility in our approach to infrastructure today would leave an indelible legacy for the cities of tomorrow. We can no more anticipate the city of the future than our ancestors could have predicted the contour and complexity of our cities today. What we can do, however, is create the capacity for our communities to reinvent themselves and enable coming generations to continuously form the future. 

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