The Economist (http://www.economist.com/node/21560838) on August 25th 2012 wrote about NEON, the National Ecological Observatory Network and how “America’s National Science Foundation managed to persuade Congress to earmark $434m … to set it up. The operating budget will be around $80m a year. Dr Schimel’s team is thus now starting to wire up the landscape.”

Sensors

The landscape is not the only thing getting wired for data. Infrastructure is also being built with sensors embedded in.

“Smart” sensors with embedded microprocessors and wireless communication links have the potential to change fundamentally the way civil infrastructure systems are monitored, controlled, and maintained. A 2002 National Research Council report noted that the use of networked systems of embedded computers and sensors throughout society could well dwarf all previous milestones in the information revolution. Structural health monitoring and control systems (SHM/C) represent one of the primary applications for new sensor technologies.” Manuel E. Ruiz-Sandoval dissertation http://etd.nd.edu/ETD-db/theses/available/etd-05212004-175346/unrestricted/RuizSandovalME052004.pdf

Size

The use of sensors may be supply driven. Sensors, data storage, and data processing are becoming very cheap. However, it is also partly demand driven. Companies and projects are getting bigger. People want to know about the footprints, about the impacts, of infrastructure projects.

What are the implications for infrastructure projects of this trend to collect data from buildings, bridges, and America’s ecology?

1. Infrastructure project performance will be able to be monitored as never before.
2. Project stakeholders (including opponents) will be able to measure infrastructure project’s impacts.

The first is obvious and it is the reason engineers and designers are using sensor technology. The first implication also has some spin-off benefits for impact infrastructure investors who will be able to monitor forecasted benefits.

The second implication is more of an unintended consequence. It is the result of more — and more accessible – data and it has profound implications for infrastructure projects and investors.

Sensibilities

Let’s think about the positive first. When a project is proposed, big claims are made. It will reduce CO₂ emission by millions of tons. It will improve water quality. It will … fill in the blank. Well, now those claims may well be able to be monitored thanks to the sensors collecting data. And the monitoring may not just be from the project sensors. It may come from others monitoring your project. That leads to the second point.

What about the negative? Infrastructure changes the landscape and as well as benefits there may be costs. According to The Economist, NEON’s team is putting in place a network of 15,000 sensors collecting more than 500 types of data. “The idea is to see how ecosystems respond to changes in climate and land use.”

The Harvard Business Review article a few years ago (“The Big Idea: Leadership in the Age of Transparency” by Christopher Meyer and Julia Kirby, April 2010) captured the trend to more sensors, the growth in the size of companies and projects, and heightened sensibilities. They also beautifully captured how businesses (and investors) should respond:

The big idea: The key to becoming a contemporary corporate leader is to take on responsibility for externalities—what economists call the impacts you have on the world (like pollution) for which you are not called to account.

The argument: Thanks to trends in three areas—the growing scale of companies and their impacts, improvements in sensors that measure impacts, and heightened sensibilities of stakeholders—the demands to operate responsibly are dramatically increasing. The stark difference between the tobacco industry’s irresponsible refusal in the 1980s to acknowledge lung cancer risks and the food industry’s swift actions two decades later to remove trans fats from products comes down to a willingness to internalize externalities.

A better approach: An externalities framework allows you to respond rationally and in ways that are simultaneously defensible to all stakeholders. By focusing on your company’s own footprint—societal problems that really can be laid at your doorstep—you can establish priorities, set measurable goals, and take action.

Infrastructure projects need to take responsibility for their externalities – both positive and negative. They need to think about their Sustainability Impact Value (SIV). This means they need an accounting system that incorporates sustainability from their project supply chain through to operation and decommissioning.

Data collection is cheap and ubiquitous. Investors, and stakeholders, require a comprehensive accounting of the costs and benefits – cash and non-cash.

Get ready to make the comprehensive business case for your project. Also be prepared to be audited on your performance.