2018 is the Institution of Civil Engineer’s bicentenary year. As one might expect this month’s NCE celebrates the achievements of Civil Engineers in our adopted role of “directing the great forces of nature for the betterment of mankind”. But of course there are always new challenges. As Mark Hansford says in his editorial “The science tells us that it is the level of greenhouse gases in the atmosphere that is unquestionably the cause of climate change, and that is driven by our carbon based society.” He goes on to add that the UK government’s Infrastructure Carbon Review highlighted that the infrastructure sector has full control over 16% of total carbon-based emissions and influence over a further 37%. The UN has just said that 2017 and 2016 were the second and third hottest years on record and that global carbon emissions rose again in 2017 after three years of little or no growth. And Mark asks how has our (Civil Engineering) industry changed? His assessment – “Not much. The materials and methods used to build operate and maintain infrastructure remain carbon-intensive.”
I’m going to quote the next bit in full because it’s truly shocking. “We are still not using whole-life carbon emissions as the primary parameter by which we decide what gets built and how it gets built. But then we are still not even using whole life costs (Totex) as a primary calculation rather than capital costs (Capex) on anything but a handful of projects in the utility sector. And Anglian Water is still seen as the only client that really cares about this.”
So is there any hope? Apparently institutional investors and insurers are waking up to the threat that climate risks pose to their investments and are asking searching questions of the companies advising them.
Well if I can help anyone being asked those searching questions, or indeed the investors asking the questions, the RICS recently published guidance on Whole Life Carbon Assessment in the Built Environment . My book Project Sponsorship gives detailed and easy to use guidance on whole life costing and developing the business case for investment. We must all get smarter on this vital issue.
There is a simple technical reason why so many projects finish late, which is very poorly understood by project managers.
Imagine a project programme (or schedule in the US) where a task of 1 week duration is followed by three parallel tasks also of 1 week duration each. These three tasks must all be completed before a final task (also of 1 week duration) can commence. It’s clearly a three week overall programme.
However, let’s take a closer look at the three parallel activities and consider the possibilities. I’ll simplify the maths by suggesting that a task can either finish early (E) or late (L).
There are eight scenarios (two possible outcomes to the power of three tasks). Seven of those eight include at least one Late finish, which because the successor task depends upon all three tasks being complete results in a late overall finish. So in this simple five task schedule the odds are stacked 7:1 in favour of a late finish. Understand now why so many projects finish late? A simple sensitivity test using Monte Carlo simulation allows this problem to be spotted at the planning stage, but it’s rarely done.
If you found that interesting you might enjoy my book, Project Sponsorship
The emerging scandals triggered by the Harvey Weinstein investigations seem to have brought about a watershed moment. Enough is enough, abuse of power and inappropriate sexual advances have to be stopped. I have heard politicians and others making suggestions about how they might be stopped, but I haven’t heard anyone mention one of the fundamental problems with men. Most men are useless at body language. I read a book about body language many years ago and reading it was one of those lightbulb experiences. Apparently successful courtship behaviour is conducted through body language. Women are generally genetically programmed to read the body language of a small human which can’t speak, whereas men aren’t. The book described the average man’s attempts at courtship behaviour as like trying to catch fish by standing in the middle of a river trying to bash fish over the head with a club.
Of course there is still an urgent need for measures to stop the inappropriate behaviour we are hearing about now. But wouldn’t it help if men and women spoke the same language of courtship? Wouldn’t it be better if a man understood whether a woman was interested through some subtle body language signals rather than clumsy suggestions or worse?
So my suggestion is teach body language skills in schools. The girls might get bored, but it would be a useful lesson for them too, in understanding how poorly most men are equipped in that communication channel.
I am indebted to my friend James Catmur for sharing an amazing presentation by Tony Seba called ‘Clean Disruption Energy & Transportation’. It’s just over an hour long and totally absorbing, really worth watching. It covers a few things I already knew, kind of, like Moore’s law whereby computing power per dollar doubles every two years; and the ’S’ curve adoption of new technology which is slow to get started but then takes off. Mix that with technology convergence, like lithium-ion batteries meeting great computer power, touch screens and sensors and you see how technologies coming together enable game changers like the smartphone to arise.
I have observed in previous posts that the problem with renewable energy is storing the energy for use when the sun isn’t shining or the wind isn’t blowing. Well Tony says that the cost of lithium-ion batteries has been coming down by 20% a year between 2010 to 2016 and this now means that by 2020 a U.S. consumer will be able to store a day’s worth of electricity in Lithium-Ion batteries for $1. Without storage, generating capacity has to be rated to meet peak demand, which means that these fossil fuel powered “peakers” are utilised around 6% of the time. You may not be surprised to know that the cost of photo-voltaic (PV) solar panels has been coming down too. In 1970 the cost was $100 per watt and in 2016 it was 33 cents per watt. The installed capacity of solar panels globally has been doubling every two years since 2000. That means that in another 6 years almost all of the worlds electricity will be solar. Already Tuscon Electric are selling solar + storage at less than 5 cents per kWh whilst fossil fuel generation is 20 cents per kWh.
Now take electric vehicles (EV’s). The electric motor is 5 times as efficient as an internal combustion engine (ICE) and ten times cheaper to fuel. An ICE vehicle has 2000 moving parts and an EV has 20. An EV powertrain currently has a life of 500,000 miles whereas an ICE powertrain has a life of around 140,000 miles. We are also moving towards Autonomous Vehicles (AV’s) which drive themselves. To achieve that you need an amazing sensor called LIDAR which uses lasers and radar to sense what’s going on around the vehicle, and a super computer to crunch the data and navigate the car safely to its destination. In 2012 a LIDAR was $70,000 and by 2016 it was $250 and a tiny fraction of the size. Super computers are measured in Tera Flops apparently. In 2000 a 1 Tera Flop computer would take up 150m2 of space, consume 850 watts of power and cost $46 million. In 2016 a 2 Tera Flop computer used 15 watts, cost $59 and you could hold it in your hand. Wow! Tony says that by 2025 every new road vehicle will be an Electric AV. Couple that with a business model like Uber and you can see how a fleet of Electric AV’s roaming around and summoned by us to take us to work or pick us up from the shopping centre makes sound economic sense. The average car today is used 4% of the time. 96% of the time it is parked somewhere. Would you own a car at a cost of $10,000 per year over 5 years if you could easily achieve all your journeys at a cost of $1,000 per year? Tony says that by 2030 95% of all passenger miles will be by TAAS (Transport As A Service) or Hailed Electric AV.
It seems to me that this is very good news for the climate if not for professional drivers, car and oil workers.
In the current issue of Enterprise Risk, the official magazine of the Institute of Risk Management, which dropped onto my doormat this morning, there are some interesting articles.
From an analysis of survey results the status of British business relative to BREXIT is:
- 43% of businesses say they have assessed Brexit risks
- 29% have made plans for leaving the EU
- 21% say they are willing to explore new markets
Source ICAEW (Institute of Chartered Accountants)
- 8% of Chief Finance Officers expect a positive outcome
- 43% say the top worry is economic and financial uncertainty
Source Deloitte’s CFO survey
In another article addressing extreme events and Hurricane Harvey, Howard Kunreuther draws from the book he wrote with Robert Meyer called The ostrich paradox: why we underprepared for disasters. Apparently there are six biases that cause individuals, communities and organisations to under prepare. These are:
- Myopia – we have a hard time thinking much beyond tomorrow
- Optimism – we believe the disaster won’t happen to us
- Amnesia – we forget too quickly the lessons of recent disasters
- Inertia – we tend to do nothing if we don’t know the best thing to do
- Herding – the tendency to imitate others
Hurricane Harvey has wreaked havoc on Houston, Irma has laid waste to the Caribbean and this year’s monsoons brought some of the worst flooding on record to South Asia. This week’s New Civil Engineer (NCE) informs us that although the floods caused by 2017’s Hurricane Harvey are by far the worst, the floods hitting Texas in 2015 and 2016 were also considered to be “1 in 500 year floods”. Now it seems to me that if you’re getting “1 in 500 year floods” every year then something certainly is going dramatically, and catastrophically wrong with the climate. Who in their right mind can deny it?
I take my share of the blame. I’m still driving my 12 year old diesel powered car. It delivers many more miles to the gallon than any previous car I’ve owned; but I have started looking into what I will do when the mechanic shakes his or her head and says she’s no longer economic to repair. I had thought about a plug in hybrid, but the idea of lugging an engine and tank of petrol around with you as well as batteries and electric motor seems, somehow, inefficient. I am seduced by Mr Musk’s Tesla vehicles, which claim 300 mile range and rocket like acceleration, in a really attractive package. Sadly the price is currently way beyond my purse. But I daresay the technology will get both better and cheaper, I certainly hope so.
Elsewhere in NCE I was really excited to read about Hyperloop technology. This is pipeline technology in which a 2.5m diameter pipeline would carry passenger and freight pods through a vacuum, propelled by maglev. The pipeline could follow existing railway or motorway corridors and speeds of around 1,000 kmh (620mph) are easily achievable.
Of course if you could economically travel around the existing rail or motorway network at those sort of speeds, you’d have to start questioning the reason to have a car at all. For the local trips, some sort of Uber style app to efficiently allocate available electric and perhaps driverless transport to the supermarket, school or golf club has some appeal.
The NCE also of course reported on work underway on the UK’s HS2 high speed railway. Delivering projects on time and budget is hard enough, but I couldn’t help wondering how long it might be before the Hyperloop technology makes HS2 and its like redundant. Of course we can’t be paralysed into never doing anything because if we wait then something better will come along. But the job of the Project Sponsor, who manages the business case for a project, is an immensely difficult one. He or she must remain constantly vigilant to threats to the value of a project, either through cost increases or delays, or increasingly, through technological development which renders the existing project sub-optimal. Making passive provision for the next development is usually a wise move as I discussed in a previous post.
Talking of which, I took a break in the writing of this post to visit an exhibition on a planned development near me of a Lidl supermarket and adjacent housing development. Both had plenty of parking but neither, it seemed, made even passive provision for electric vehicle charging points. If we really are to become all electric by 2040 then every hotel car park space needs a charging point, and a significant number of supermarket parking spaces do too. In fact anywhere where you might park for half an hour or more.
For more on project sponsorship check out my book here.
A recent conversation with a friend touched on the issue of making provision in a project for future development. Sometimes, although one knows that the current project scope will not meet the needs of the future, the organisation cannot afford that future provision just now. However it is sometimes obvious to those close to the project that there are relatively inexpensive ways of making it easier to realise a future project by making some provision in the current one. You may have heard the terms passive provision and active provision.
I think the boundary between passive and active provision is blurred. They are both steps in a current project which make it easier to realise a future project. Passive will be cheaper than active provision, and may be focussed more on ensuring that the future project is possible rather than building part of it now. An example near me is a section of the A350 where the existing road has a corridor of land reserved alongside it. By not building on that corridor, we can say that passive provision is made for widening the road in the future. By building bridges which span both the existing road and the land reserved for widening we can say that active provision has been made.
The question is how can we assess the value of making provision now for a future development?
We can probably quite easily assess the cost of reserving the land, as land has a value. We can also assess the cost of building bridges of twice the span necessary now. But the value that it brings, how do we assess that? We are giving ourselves an option to widen the road in the future, and the financial world has a formula for valuing options. It’s called the Black-Scholes formula.
In the financial world a call option is the option to buy something, e.g. a share, at sometime in the future, at a price we can fix now (the exercise price).
The value of the option is a function of:
- The exercise price of the investment. How much would it cost now to build the wider road.
- The forecasted value of the benefits of the investment.
- The duration of the option
- The interest rate
- The uncertainty inherent in the future investment cashflows
The word “function” hides some interesting maths including logarithms, square roots and probability distributions. There are calculating tools on the web. For project sponsorship purposes the interesting things to grasp are that:
- The greater the uncertainty about what the future project is worth, the greater the value of the option. If you know now that the future investment easily pays for itself, do it now, why do you need to wait?
- The longer the length of time the option gives you to make your decision to invest, the more valuable it is.
Another thumping good read dropped onto the doormat this morning in the shape of New Civil Engineer magazine. The problem of air pollution is brought into sharp focus by an OECD graph which shows that air pollution currently accounts for 3 million premature deaths globally every year, with that set to rise to 9 million by the year 2060. The EU and Russia are the only regions charted which show a significant fall in predicted air pollution deaths, whilst India and China deaths are predicted to more than double.
Another chart shows that UK CO2 emissions arising from power generation have fallen from 180 metric tonnes in 2005 to 100 metric tonnes in 2015. However transport hasn’t improved, with 130 Mt in 2005 and 130 Mt in 2015. So it is not surprising that other articles focus on how transport can be made greener.
There is an interesting piece on aviation with an eye-catching photo of a blended wing aircraft being developed by Boeing and NASA. The idea seems to be that by making the aircraft virtually all wing, and putting the seats in the wing, you end up with something much more efficient. Other, perhaps less ambitious developments, include making the drink and food carts lighter as well as other items like seats.
Of course we don’t have to be aircraft engineers to save a life. We can avoid unnecessary car journeys by walking or cycling where possible. Apparently just 20 minutes brisk walking a day brings us significant health benefits, yet only a third of Londoners report achieving this much activity. In Scotland physical inactivity results in 2,500 premature deaths a year, seven a day. There is a great article describing how we can make our city streets more pedestrian friendly through simple things like de-cluttering pavements to remove extraneous signs, improving crossings, providing seating and public toilets on walking routes.
I checked the front cover, when I wondered if I was the victim of an April fool story, but no, putting cat litter into concrete really is a way to cut CO2 emissions. There is a Bath University research project showing that the absorbent granules present in cat litter can be used to carry a material which can absorb or release heat depending on temperature, thereby helping to keep a building at a constant temperature.
In the editorial, civil engineers are asked to open their (our) minds and learn more quickly what people need; to be focussed on outcomes rather than outputs. Sounds like Project Sponsorship to me.
I live in a pretty village, not chocolate box pretty, but pretty nonetheless. It has a church, village hall, village shop, recreation field and the best pub in the world, where everyone knows your name, and you know them. It has community. When we moved here from the city, where we knew a few friends from across town, but nobody in our street, we loved the community here. I naively thought community just happened, but, of course, it takes a lot of hard working heroes, or more often heroines. Take Maureen, for example, who recently passed away and left a huge hole here. She worked for decades on every committee, in every office. She coerced Claire, my wonderful wife onto many committees. Claire is currently hard at work organising a progressive supper to raise funds for the church. When some problem occurs she misses Maureen’s sympathetic ear and wise counsel. Then there’s Kay, the dynamo of the village hall committee. Amongst many events she has organised film nights, put on by a man with a screen and projector who tours villages like ours and shows the best films, once a month. I think it’s a passion as much a business. But as much as he has passion for it, the audiences were not large. Each night he would protest that this really must be the last night, as the numbers were too small. But Kay, with her “Field of Dreams, screen it and they will come” faith, carried on. Last month I couldn’t help thinking he was right, as with minutes before curtain up (there is no curtain, but you know what I mean) there were just the committee and me there. Then the door opened and in they poured. Bridget Jones’s Baby had a full house. It’s a community you see.
This appears to be one of the most popular search queries on Google, so I will explain. A project manager is tasked to deliver a project with a specified performance level and within a set budget and timescale. He or she then organizes a team to do that.
The Project Sponsor is the person who has assumed the role within the organization of identifying and defining the project, such that it delivers a required change consistent with corporate strategy that adds value to the organization.
For an amusing, and hopefully informative article on the difference between the Project Manager and Project Sponsor see my post
And for much, much more take a look at my book on project sponsorship