Worldwide Tab To Fix Aging Infrastructure Will Total $40 Trillion Over 25 Years

A new initiative leverages Booz Allen’s critical expertise in infrastructure planning, project management, operations and maintenance, and construction oversight.

Roads. Bridges. Airports and seaports. Sewer treatment facilities. Pipes, concrete, and cables that house and deliver power, water, fuel, goods, and communications. These are the basic systems and architectures—the infrastructure—that ensure productivity for a community, a city, or a country.

But today, global infrastructure is in serious decline. Infrastructure projects will spike dramatically over the next 25 years as existing infrastructure reaches the end of its useful life in developed countries and demand explodes for new infrastructure in emerging economies, as noted in the 2007 strategy+business article, “Lights! Water! Motion!”.

For decades, Booz Allen Hamilton has helped manage the planning, construction, operations and maintenance, and demolition of infrastructure projects, especially in the transportation and defense industries. In December 2007, CG/LA Infrastructure LLC invited the firm to share its insights at the Global Infrastructure Leadership Forum, “Building a More Productive World, Together,” in New York.

Says senior associate David Erne: “Booz Allen’s expertise shows that successful infrastructure projects must integrate four factors called ‘S³A’: Smart, sustainable, secure, and affordable.”

To underscore the firm’s position as the preeminent provider of S³A solutions, Booz Allen launched the Transforming Physical Infrastructure (TPI) initiative. TPI provides a broad understanding of infrastructure and stakeholder perspectives and proven approaches to tackling today’s complex challenges in financing, governance, and management.

At the forum, principals Joyce Wenger, Scott Heefner, and Todd McNutt and Booz Allen/ASE senior consultant Harry Zimmerman spoke about S³A as it applies to transportation and “smart” technologies, facilities and affordability, water and sustainability, and energy and security. They noted that modernizing worldwide water, electricity, and transportation systems will cost over US$40 trillion—and require careful navigation of political, cultural, logistical, ecological, technical, and economic challenges.

Upcoming projects will also be complicated by multiple government, corporate, NGO, and public stakeholders: “We will need new ways of designing decision rights among dozens of players from the public and private sectors,” notes the “Lights!” article. “Transportation, energy, and water infrastructures are so interdependent that they cannot be effectively addressed separately from one another.” The firm’s expertise and services supporting “mega-communities” is particularly relevant in this regard, and clients are turning more and more often to Booz Allen for its experience in providing effective S³A solutions in global infrastructure markets.

Long-Term Infrastructure Expertise in Major Market Sectors

Booz Allen’s understanding of the infrastructure project lifecycle spans strategy development, acquisition, operations and maintenance, construction oversight, and disposal in four primary sectors:

Transportation, including airports, railroads/bridges/tunnels, and ports/channels
Government and institutional facilities, including military installations and cities
Water and natural infrastructure, including wetlands, drinking water, and wastewater
Power, including electricity and oil/gas generation, transmission, and distribution

Transportation. In the transportation industry, technologies such as those used in U.S. air traffic control are outdated and difficult to update, says Joyce Wenger. Serious issues such as traffic congestion are driving the exploration of a new wave of infrastructure. “In this market, ‘smart’ open architectures and the culmination of numerous innovative technologies are enabling us to envision and design systems of the future,” she says.

“We must consider all modes of transportation and their relationships to each other. We must understand why a system is being implemented, and look at broad solutions and impacts across modes and even across other sectors. Then we must select solutions that balance impacts and objectives—a difficult undertaking because the benefits and costs aren’t always aligned to the same stakeholders.”

Booz Allen’s transportation infrastructure expertise is crucial in projects involving advanced technologies, such as intelligent transportation systems (ITS) and dedicated short-range communication (DSRC). As an example, the firm is providing design support and proof-of-concept testing to evaluate the technical and economic viability of deploying a nationwide real-time vehicle-to-vehicle and vehicle-to-infrastructure communications network to improve surface transportation safety and mobility.

Similarly, Booz Allen’s design work for an ambitious next-generation air transportation system, now under way, will accommodate three times today’s traffic levels as well as the air transport demands of 2025.

Facilities. Reduced public funding and increased costs are the primary challenges faced in facilities infrastructure projects. Affordability is part of the solution, including creating public – private partnerships (PPPs) for funding. Harry Zimmerman outlines the three most important components for success:

Budget, which must be adequate to achieve the desired outcome. Procurements that focus on the lowest cost generally yield facilities that don’t perform well over the lifecycle.
Performance requirements and scope, which allow flexibility for designers to offer innovative solutions. In the market of the future, the changing definition of “workplace” may result in reduced requirements for permanent facilities.
Qualified design and construction teams. Experience with similar projects is not a substitute for a thorough evaluation of the quality of a contractor’s past performance.

One example of Booz Allen’s extensive experience managing large military and federal installations is its support of a federal intelligence agency as it plans and executes its base realignment and closure (BRAC)-driven consolidation and relocation of more than 8,000 employees. The effort is shattering traditional paradigms as agencies work with design and construction teams to deliver a state-of-the-art facility on a fast track, with construction and design progressing in parallel.

Water. Limited natural resources demand sustainable, environmentally sensitive solutions, says Scott Heefner. To ensure sustainability for the water sector, Heefner says the focus for all societies should be on three overarching considerations:

Resolving governance. Throughout the world, water is considered a human right and should be available to all. Yet the U.S. and many other countries have governance policies that effectively limit the availability of water for human consumption and do not consider other beneficial uses such as ecosystem protection. Better consistency in government policies is needed.
Paying for infrastructure. Water infrastructure is in desperate shape worldwide. Subsidized tariff structures intended to provide potable water to the world’s poor do not lead to full cost recovery of the infrastructure needed to provide the resource. Water recycling and reuse should be included in infrastructure planning.
Security. Ensuring a sustainable water supply is a security issue. Because of water overuse and drought, regional conflicts regarding payment and ownership are emerging or under way in places like California, Nevada, Georgia, Tennessee, Florida, India, and North Africa.

Booz Allen has longstanding relationships with U.S. and foreign governments on a variety of water infrastructure projects, and was a key contributor to a treaty involving navigation, flood control, and environmental protection to restore the health of a major river tributary in Eastern Europe. The firm has also improved wastewater utilities in a South American country; restructured the water and wastewater sector, analyzed water provision, and prioritized infrastructure improvement for a country in North Africa; and developed desalination strategies for a country in the Mideast.

Energy. Todd McNutt notes that the projections for continued growth in energy demand paint an increasingly daunting picture for new energy infrastructure in the U.S. and—more critically—around the globe.

“The cost and availability of energy resources to meet growing demand is on the forefront of world issues, along with interrelated concerns about security of energy supplies, carbon, and global climate change. The energy infrastructure is being challenged to simultaneously expand and evolve under a highly uncertain regulatory and policy framework and amidst continuous advancements in the state of clean energy technology.

“There is broad agreement that future energy infrastructure must be more innovative, resilient, and adaptable, both from a technological and a policy perspective. The existing infrastructure, however, is an inflexible patchwork of systems that struggles to adapt to technology, market, or environmental changes. Therefore, a new framework is needed that includes both predictable and coherent policies as well as emerging technologies to catalyze the development of an innovative energy infrastructure.”

An example of Booz Allen’s energy infrastructure projects involves biofuels. The President introduced a goal to reduce U.S. gas consumption by 20% by 2017 through higher fuel efficiency and production of 35 billion gallons per year (BGY) of renewable and alternative fuels. These alternatives fuels must come from sources other than the traditional food crops to ensure sustainability of biofuels. Working with several federal agencies, Booz Allen conducted a holistic, data-driven supply chain analysis of infrastructure requirements and possible constraints in the contribution of cellulosic (i.e., from non-food crops) ethanol to meeting the 35 BGY target.

The Formula for Building Sustainable Solutions

Solutions to infrastructure-related problems point toward improvements in research, efficiency, technology, cooperation—and planning. “Infrastructure is not just about building things,” says Heefner. “Infrastructure projects must also consider the entire lifecycle of the structure and plan for its expansion, maintenance, and replacement after its useful life is over.

“To ensure a sustainable water infrastructure, you cannot simply build more pipes, treatment plants, and dams,” he continues. “The infrastructure of the future must consider non-structural options to come up with sustainable solutions. We have to sustain water through conservation and treatment—User 1 uses water, then puts it back by making it useable for User 2—and sustain the infrastructure that provides resources to users.”

Although sustainability also factors into successful energy infrastructure projects, a lack of certainty in costs, schedules, and regulatory requirements is of considerable concern. McNutt says, “Some of the developing world’s largest governmental and private sector energy infrastructure projects have foundered or failed because regulatory hurdles were ignored or minimized.”

To ensure project success, both the regulatory infrastructure and full regulatory lifecycle—what it takes to certify, license, and operate the project, especially in emerging economies—must be understood and integrated regulatory strategists must be involved from project inception.

“In many developing countries, regulations combine old and new requirements that rarely act in concert. Regulatory approval can be delayed due to paralysis in decision making by Ministries and regulatory bodies. We’ve witnessed this in oil projects where the drilling, extraction, and distribution infrastructure is built only to be delayed or abandoned because the program manager did not fully understand the complete lifecycle of regulatory actions required.”

Facilities infrastructure also considers regulatory issues, but cost, performance, and sustainability are the priorities, Zimmerman says. “We must address a facility’s effectiveness in supporting its intended purpose. Owners must take a more holistic approach to facility lifecycle trade-offs to optimize not only energy efficiency, but also the facility’s performance and its impact on the workforce that will occupy it.”

Because many strategies to achieve a high-performing facility are counter-intuitive or conflict with traditional design and building practices, Zimmerman says owners should use sophisticated procurement techniques that leverage specialized industry expertise:

Designers and constructors should be rewarded for offering highly effective innovative and proprietary solutions that may not be available through traditional design and construction contract mechanisms.
Technical evaluation and selection criteria should emphasize a systems approach to lifecycle performance and facility functionality so that procurements focus on sustainability and flexibility over time. The goal is to buy high-performing facilities and use sophisticated procurement strategies to do so.
Performance specifications should be used to describe the owners’ desired outcome rather than invoking prescriptive methods or techniques that unnecessarily limit solution sets for the designers and constructors.

Although projects in transportation infrastructure face similar challenges, Wenger says, Booz Allen has been involved in new technologies and processes that keep the firm at the forefront of innovation in transportation and can offer insight to others. “Our recent activities with the ‘connected vehicle’/roadside infrastructure integration project are an example of work with technologies that could have major impact.”

“Smart” technology is also impacting upcoming transportation infrastructure requirements and easing the planning process, she says. “There are lots of technologies and process improvements that could be deployed to support major positive impacts on new and improved transportation infrastructure. Developing countries in particular now have the opportunity to learn from our expertise—and mistakes—and go directly to the best solutions.”

Whether in energy, water, facilities, or transportation, owners must use the right talent and expertise when undertaking complex infrastructure projects. Booz Allen has the broad perspectives, deep client relationships, and specialized tools and knowledge that have established the firm as a premier provider of S³A infrastructure solutions.

story posted June 17, 2008