An Economist’s Manifesto for Standardization and Automation to Deliver Sustainable Infrastructure

by | Dec 22, 2014 | Economics

A Challenge

The idea for Impact Infrastructure was born when John Williams challenged me and other economists to rank sustainability initiatives; to put a value on green.

We did, using the gold standard for infrastructure decisions: cost-benefit analysis. We added three facets to the standard – sustainable returns, risk analysis, and multiple perspectives.

  1. Sustainable Return on Investment – Because society builds infrastructure for the public benefits it brings rather than its direct financial returns, we calculated the sustainable return on investment – including the externalities – that is the harm to the environment, benefits to health, and so on, that are often not quantified in a direct financial return calculation.
  2. Risk – Because the value of an acre of wetland and other benefits is uncertain we were explicit and transparent about this risk. Some studies suggest that the value might be $100 or $300 rather than the average $260/acre. We carry that risk through to the results so informed decisions can be made.
  3. What’s in it for me? – Finally, our experience in dealing with large building and infrastructure projects told us that you cannot do one analysis to make the business case for the project satisfy all stakeholders. People have different interests, they want to know “what is in it for me?” We found that triple bottom line and multiple account cost-benefit analysis was required to address everyone’s concerns.

For several years, after John’s challenge, I managed a successful business doing economic consulting analyzing sustainability for buildings and infrastructure.

It’s a success. What’s Wrong?

Two things bothered me about our success.

First, we did the economic analysis early in a project’s planning process. We helped in the feasibility analysis. the go or no go decision. Answering the question: “is this the right project?” Then the engineers, designers and architects made a thousand decisions that altered the results of the now shelved study. How big should the detention pond be? Should permeable pavement be used? Could the green-space also be used for recreation? No-one could afford to hire us to analyze these decisions that together answer the question “is the project done right?”

The second thing that was disturbing was that we were re-inventing the data, the process and the reports for every client. When you are selling consulting services this is how you make money. But it was not very efficient for the client.

My epiphany came when I realized that it was possible to automate the analysis. For several years the most profitable part of our consulting business was preparing cost-benefit analyses for the US DOT’s stimulus grants. The input data was dictated. The methodology used was documented. Even the format output was provided by publishing example reports from successful applications. We’d often make our year’s profit in a couple of months by simply following the government’s dictums.

I realized that professionals needed the ability to run a triple bottom line business case early and often throughout the life of the project. Sustainable Return on Investment had to be cheap and easy to run. It had to be loaded with local data and integrated into the planning and design of the project.

Standardization is not a new phenomenon

  • 1936 US Flood Control Act required cost-benefit analysis for flood control infrastructure.
  • 1946 the US Army Corps of Engineers’ Green Book standardized the methodology.
  • Other countries, Canada, UK, EU, Australia etc. standardize the use of cost-benefit for major infrastructure projects
  • 2000 LEED (Leadership in Energy and Environmental Design) started rewarding projects for their environmental and health performance
  • 2009-2014 TIGER grants (Transportation Infrastructure Generating Economic Recovery) standardize the data in, the methodology, and the format of the output for competitive funds
  • 2012 Envision – Institute for Sustainable Infrastructure’s rating system for sustainable infrastructure is released

AutoCASE has simply incorporated these standards.

At Impact Infrastructure we have spent the last two years building on the experience of our years of custom consulting to compile the research and data for AutoCASE.

Our research and databases allow AutoCASE to be run in different locations for projects of varying size. And we’ve plugged it into Autodesk’s AutoCAD Civil 3D software so when a stand of new trees is added to a project, the costs and benefits can be quantified.

Impact Infrastructure is committed to doing what my team couldn’t do as economic consultants. Deep and thorough research into quantifying and monetizing all of the benefits and costs of buildings and infrastructure.

We are compiling the best research, the best data and automating the process and output.

Impact Infrastructure wants to disrupt the market.

Cost-benefit analysis for major infrastructure has been standardized for over 75 years. We do acknowledge and embrace the uncertainty in the data we use. And as the science progresses we’ll capture the growing consensus or dissention in our analysis.

We want to make triple bottom line business case analysis embedded into the planning and design process so that sustainability can be designed-in to infrastructure projects easily and cheaply.

Engineers, designers, and architects benefit by having AutoCASE available to them, inside the tools they are using anyway. Infrastructure and building projects can be optimized for sustainability and stakeholder interest.

Easy, cheap, automated business cases for all sustainability analysis.

Let the revolution begin.

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