PST Flashcards
What is the definition of Instrastructure?
- System of public facilities, both publicly and privately funded
- Provide the essential services and a sustained standard of living
- Interdependent, yet self-contained, set of structures provides for mobility, shelter, services, and utilities
What is Infrastructure?
• Group of physical systems or facilities that provide essential public services, such as:
o Transportation
o Utilities
o Energy
o Telecommunication and wireless communications
o Information technology and online social media
o Parklands, landmarks, and theme parks
o Sports complexes and recreational buildings
o Hospitals, public housing, rental housing, and education buildings
o Industrial, manufacturing, and commercial facilities
o Supply chain infrastructure assets
Infrastructure can include management and human resources associated with providing a physical facility.
Why do we need systematic infrastructure asset management?
- Scale
- Scope of works
- Interrelated infrastructure elements
Definition of Asset Management:
• “… systematic, coordinated planning and programming of investments or expenditures, design, construction, maintenance, operation, and in-service evaluation of physical infrastructures and associated facilities.”
• Additional key terms:
o Acceptable service level, rehabilitation, replacement…
What are the five key elements?
- Providing a defined level of service and monitoring of performance;
- Managing the impact of demand changes both in growth and in decline, using demand management and infrastructure investment;
- A lifecycle approach to developing cost effective management strategies for the long term that will meet the defined level of service;
- Identifying, assessing and controlling risks; and
- Having a long-term financial plan which identifies the required expenditure and how it will be funded.
What are issues in asset management?
• Aging infrastructure
– Development vs infrastructure spending
– Exposure to nature, extended use, disasters
• Lack of planning in maintenance and rehabilitation
– Ad-hoc and reactive maintenance and rehabilitation
• Funding
– Lack of awareness and understanding the role of infrastructure
What is the systems approach to IAM
Khisty et al.: “…a broad-based, systematic approach for problem solving and particularly geared toward solving complex problems that involve systems. A system is a set of interrelated parts that perform a certain functions to achieve common goals.”
• Systems Approach is a holistic approach to solve complex real world problems.
• Holistic vs. piecemeal analyses.
Ossenbruggen: “… a coordinated set of procedures that can be used address issues of project planning, engineering design, and management.”
• Systems Approach is a decision-making tool to optimize the efficiency of resource utilization for achieving goals/objectives.
Chang: “… an attempt to allocate resources in an efficient manner.”
What are systems approach tools?
• Cost-Benefit models/Engineering economics • Optimization models – Exact vs heuristic solutions • Simulation models – Monte Carlo Simulation • Forecasting models – Regression, neural networks etc.
What is involved in a simulation for outcomes?
The technique consists of repeated, independent and random sampling from range estimates that represent parameter/variable values within a system and evaluating performance functions of interest for each set of sampled values.
• Each set of sampled random variable values is considered to be one possible (simulated) state for a physical system or process of interest.
• A certain number of repeated simulations are carried out to obtain a probabilistic outcome for the process of interest.
What is LCA?
LCA is a “cradle-to-grave” approach for industrial systems that begins with the gathering of raw materials from the Earth to create the product and ends at the point when all materials are returned to Earth. It enables the estimation of the cumulative environmental impacts resulting from all stages in the product life cycle.
What are system boundaries (4 points)?
- Cradle to gate
- Gate to grave
- Cradle to cradle
- Gate to gate
What are objectives and constraints of IAM?
- Maximise all utilities or profits
- Minimise amount of resources
- The amount to be minimised or maximised is call an objective
- Restricting a given amount of resource is a constraint
A Structural Engineer is asked to design a new bridge connecting the city to South Brisbane. What could be the objective and constraints?
• Objectives o Within budget o Within Timeframe o Fulfils purpose o Does not collapse o Safe • Constraints o Size o Local infrastructure to match o Surface levels
What is Infrastructure Project Finance?
- A form of financing a capital-intensive project on non-resource or limited recourse basis through a special project vehicle
- What are the recourse for lenders?
- Attractive to sponsors – off-balancing sheet, not jeopardise the parent company to borrow funds
- More risky to lenders requiring limited contingent financial support and/or third-party guarantee
What are the benefits of infrastructure?
• Additional taxes/income • User saving – Reduce delays – Reduce fuel costs – Reduce CO2 • How do these compare with costs?
Why is it important to understand infrastructure financing?
- Money makes the world goes round?
- Large projects require both internal and external financing
- Subject to large financial risks in the form of changing interest rates on long term loan
- Project cash flow needs to be managed properly
- Lenders impose loan covenants as a condition of lending
What is LCC
• Also known as whole of life, LCC is the approach to assessing the viability of infrastructure investment
• There are two levels of LCC:
– Among alternative assessment
– Within project benefit maximisation
- Focus in the unit using LCC to compare different infrastructure investment options
- The basic principle is to estimate the benefits (i.e. cash inflows) and costs (i.e. cash outflows) for different investment alternatives, and compare these figures for decision-making
What are the basic principles of LCC?
- LCC is a comparative assessment that will assist in decision-making.
- The economic assessment is not related to project financing.
- Analysis should be considered for the same time period.
- Assessment should include agency, user and societal costs and benefits.
- Assessment should include as many options as possible within the practicality of the efforts required.
What are costs associated with infrastructure?
Agency Costs: • Initial feasibility/development costs • Construction cost • Maintenance cost • Rehabilitation cost • End of life costs • Project administration cost Non-Agency Costs: • User costs – Delays – Service interruptions – Accidents, vehicle damage • Nonuser costs – Noise – Emission • Societal costs – Water pollution, deforestation
What is a discount rate?
- This is the rate used to adjust for the time value of money
- Interest rate is the rate that money can be borrowed or invested
- Is discount rate and interest rate are the same thing?
- What is inflation?
What is inflation?
• Inflation is ignored in LCC calculations
– LCC is meant to provide a comparative assessment among alternatives, not actual costs
– Inflation is difficult to estimate, which may negatively impact model accuracy
– All economic transactions will be impacted by inflation
How can you value money?
• Net Present Value (NPV) • Equivalent Uniform Annual Cost (EUAC) • Internal Rate of Return (IRR) – Modified Internal Rate of Return • Benefit to Cost Ratio • Payback Period – Discounted Payback Period
What is IRR
Internal rate of return
What is the payback period?
• Time required for the total cash flow of a project to exceed the original investment.
• Discount payback period: same philosophy as the payback period with the discount adjustment applied to the cash flows.
– Is there a drawback to these analysis?
Which Option is Better
• Additional considerations?
– What if one alternative is significantly more expansive than the others?
– What if different alternatives have different useful lives?
– Can we easily justify higher upfront costs to be recuperated in long term?
What are opportunity costs?
- What is an opportunity cost?
- Why does it matter or rather does it matter?
- If we are in a rather uncertain market, which option is better long term benefits of reduced initial capital investment?
- How can we measure opportunity costs?
What does infrastructure planning involve?
Involves future-related activities • Concerns achieving desire goals • Dealing with: o Demand forecasting o Site/corridor selection o Financing o Budgeting o Policy issues
What are modern types of planning?
Modern Types of Planning
• Strategic Planning
• Tactical Planning
• Sustainability Planning
What is IAMS?
Infrastructure Asset Management System
What does an IAMS provide?
Maximum security and safety of critical lifeline infrastructure assets to safeguard against natural/manmade disasters
• Minimum adverse impacts on environment
• Reduction in energy consumptions where feasible and use new raw/recycle/reuse materials
• Sustainability performance
• Consideration of other sustainability dimensions
What activities are involved in modelling?
- Use of physical observation or measurements
- Statement of mathematical models
- Development of a system for prescribed behaviour using the mathematical model
- Physical realization of the system
What is demand forecasting?
Accurate prediction of future demand
• Selection of an appropriate alternative for new construction or M, R&R (Maintenance, Rehabilitation & renovation, Replacement & Reconstruction) actions
• Required historical data or data for a similar situation/location or simulated data
• Plotting historical data to show trend
What are three steps in model development?
• Preliminary model based on historical data
• Model verification using another set of data
• Model calibration using alternate data collected using different conditions
Once a predictive equation is verified and calibrated, predict demand in future year
What are Environmental Impact Studies and Sustainability Concerns (5 points)
- Pollution factors
- Ecological and biodiversity factors
- Sustainability factors
- Social factors
- Engineering factors
