Management at the Public-Private Interface: Insights from the World of Infrastructure

Montreal, August 2010

Nuno GilAcademic Director, Centre for Infrastructure Development

@Nuno Gil, Manchester Business School

Infrastructure Systems (or systems of systems): the Backbone of Modern Society

•Public policy

•Strategy and Planning

•Financing

•Project/programme Management

New Infrastructure Development: A Changing Landscape

Property of BP. To be used or distributed only by employees of BP, The University of Manchester MP faculty or those affiliated with BP.

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Policy Changes

•Transformation of Public Infrastructure into Business

Ownership: Private equity, statutory corporation, infrastructure funds, pension funds, funds of infrastructure funds

•Office of Fair Trading stock-take exercise:

“There have been significant changes in ownership of infrastructure assets in both regulated and unregulated sectors… We want to take this opportunity to step back and assess how these developments might have affected competition and consumers.”

Property of BP. To be used or distributed only by employees of BP, The University of Manchester MP faculty or those affiliated with BP.

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Planning Changes

•Infrastructure Planning Commission Independent body that decides applications for nationally significant infrastructure projects. These are large projects that support the economy and vital public services, including railways, large wind farms, power stations, reservoirs, harbours, airports and sewage treatment works

•National Policy Statements Set out Government’s objectives for development of nationally significant infrastructure in a particular sector and say how this will contribute to sustainable development.

Property of BP. To be used or distributed only by employees of BP, The University of Manchester MP faculty or those affiliated with BP.

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Financing Changes

• UK Infrastructure needs: £45bn/year until 2020

• Infrastructure UK to develop strategy over next 50 years

• Identify and attract private sector investment

• Support Treasury in prioritising Government's investment

•Manage Government's investment in the 2020 European Fund for Energy, Climate Change and Infrastructure

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Property of BP. To be used or distributed only by employees of BP, The University of Manchester MP faculty or those affiliated with BP.

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Capital Project & Programme Management Issues

•Cost escalation affecting Olympic venues for London 2012

•Four times increase in cost of Olympics aquatics centre since London's successful bid for Games in 2005

•Collapse of PPP deals with Transport for London •2007, Collapse of Metronet•2010, Collapse of 30-year contract of Tube Lines

•Cost escalation in 10-year, £9bn upgrade of West Coast Main Line (originally £2.5bn)

•2001, collapse of Railtrack

•Scrapping of £12.7bn, 5-years delayed NHS IT programme?

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•How to design complex infrastructure for evolvability under conditions of uncertainty and resource scarcity?

•Can new infrastructure developments work as innovation catalysts for the broader socio-technical system ?

•How to balance efficiency and effectiveness in new infrastructure developments?

•How to reconcile public interest and profit-seeker’s commercial acumen in new infrastructure developments?

Fundamental research questions

•Collaboration and Competition, Glenn Ballard, University of California at Berkeley

•Learning to deliver ecocities: Renewal, reuse and reinforcement capabilities, Andrew Davies and Lars Frederiksen, Imperial College Business School

•Transformation of Infrastructures: Sector Characteristics and Implications for Fundamental Change, Jochen Markard, Eawag - Swiss Federal Institute of Aquatic Science and Technology

•Management at the Public-Private Interface: Using Industry Architecture as Method of Analysis, Jeff Funk, National University of Singapore

•Coffee break (11.30-11.45am)

•Peter Klein, University of Missouri, Discussant (11.45-12.15pm)Toward a Theory of Public Entrepreneurship

PDW Outline