Infrastructure Meets Business: Building new bridges, mending old ones

California Management Review

Volumn 51, Issue 2, 2009, Pages 6-29

  Gil, Nuno ^a   Beckman, Sara ^b  

^a UNIVERSITY OF MANCHESTER   (United Kingdom)

^b UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 65349132339     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: 10.2307/41166478     Document Type: Review

References (127)

1. Organization for Economic Co-operation and Development (OECD), Infrastructure to 2030: Mapping Policy for Electricity, Water and Transport. Vol. 2 (Paris: OECD, 2007).
2. L. Saigol, "Infrastructure Deals Soar to $145 bn," Financial Times (October 2006): 13.
3. Infrastructure also includes telecommunications and large IT systems. However, since these have received significant attention in management studies, we chose to focus this special issue on the large-scale physical infrastructure
4. For seminal work on this analytical positioning, see T.P. Hughes, "The Evolution of Large Technological Systems," in W. Bijker, T. Hughes, and T. Pinch, eds., The Social Construction of Technological Systems (Cambridge, MA: MIT Press, 1987).
5. OECD (2007), op. cit.
6. It remains unclear how the events were affected by the financial crisis that unraveled at the same time around the world.
7. Departments of Civil Engineering and Environment have welcomed, historically, small groups of scholars interested in construction, engineering, and project management, but they and business schools have remained disparate communities apart from notable exceptions. New developments call for more synergy and complementarity, we argue.
8. We acknowledge the support of the Royal Academy of Engineering, which is funding a visiting scholar appointment at the Collaboratory for Research on Global Projects at Stanford University through a Global Research Award (recipient Gil on sabbatical leave). We also thank Graham Winch and Ryan Orr for helpful comments on earlier drafts.
9. M. Wachs, "A Quiet Crisis in Transportation Finance: Options for Texas," Rand Corporation Testimony Series, 2006).
10. Van Miert Group, Trans-European Transport Network: The Enlarged EU must Find Adequate Resources, European Commission, Directorate-General for Energy and Transport, Ref. IP/03/914, 2003.
11. See G. Brown, "Budget 2006: The Speech," Financial Times, March 23, 2006;
12. N. Timmins, "One in Five PFI Projects Unprofitable," Financial Times, April 25, 2007.
13. UNESCO, Water for People, Water for Life (Paris: UNESCO Publishing and Berghan Books, 2003).
14. World Water Council, The 3rd World Water Forum Final Report (Marseille: World Water Council, 2003).
15. UN Habitat characterizes slum housing as lack of durable housing, insufficient living area, and lack of access to clean water, inadequate sanitation, and insecure tenure. See D. White, "Uneven Distribution," Financial Times, Special Report, African Infrastructure, November 21, 2006.
16. For details, see D. Downey, "Trenchless Technology: A Modern Solution for Clean-Flowing Cities," Proceedings of ICE Civil Engineering, 159 (2006): 26-30.
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20. R. Wright, "Blocked Up: How Failings in Transport Hold Back Prosperity for Billions," Financial Times, March 13, 2007.
21. Seminal studies use "privatization" as an umbrella term, encompassing divestment, private finance, and outsourcing. Lately, the term "public-private partnership" (PPP) has also been used to refer to schemes that involve the private sector.
22. C.V.P. Goldberg, "Regulation and Administered Contract," Bell Journal of Economics, 7/2 (Autumn 1976): 431.
23. For more on this discussion, see the international comparative study J.A. Gomez-Ibanez, Regulating Infrastructure. Monopoly, Contracts, and Discretion (Boston, MA: Harvard University Press, 2003).
24. A private company that manages investments and trusts for a single wealthy family.
25. For more information see, for example. R. Orr and J.R. Kennedy, "Highlights of Recent Trends in Global Infrastructure: New Players and Revised Game Rules," Transnational Corporations, 17/1 (2007): 95-130.
26. S.M. Stodder and R. Orr, "Understanding Renegotiation and Dispute Resolution Experience in International Infrastructure Investment," Proceedings of the 2nd General Counsel's Roundtable, Stanford University, Stanford, CA, February 1-3, 2006.
27. D.C. Johnston, "In Deregulation, Power Plants Turn into Blue Chips," New York Times, October 23, 2006.
28. The investment management fund responsible for Singapore's foreign reserves.
29. The offer was 49 per cent more than the level BAA's share price was at before Ferrovial's interest became known, beating off competition from a consortium led by U.S. bank Goldman Sachs.
30. C. Thorne, "Infrastructure's Era of Bumper Returns Over," Financial Times, July 20, 2008.
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32. For a comprehensive discussion see J.D. Donahue, The Privatization Decision: Public Ends, Private Means (New York, NY: Basic Books, Inc., 1989).
33. The issues with water privatization are described at length in Gomez-Ibanez (2003), op. cit.
34. See, for example, J.A. Gomez-Ibanez and J.R. Meyer, Going Private: The International Experience with Transport Privatization (Washington, D.C.: The Brookings Institution, 1993).
35. This point first surfaced in D.W. Caves and L.R. Christensen, "The Relative Efficiency of Public and Private Firms in a Competitive Environment: The Case of Canadian Railroads," Journal of Political Economy, 88/5 (October 1980): 958-976.
36. See, for example, M. Pollitt, T. McDaniel, and S. Mani, "The Declining Role of the State in Infrastructure Investments in the UK," in Masatsugu Tsuji, S.V. Berg, and M.G. Pollitt, eds., Private Initiatives in Infrastructure: Priorities, Incentives, and Performance (Chiba, Japan: Institute of Developing Economics, Japan External Trade Organizations, 2000).
37. For more on this discussion, see A.A. Altshuler and D. Luberoff, Mega-Projects: The Changing Politics of Urban Public Investment (Washington, D.C.: Brookings Institution Press; Cambridge, MA: Lincoln Institute of Land and Policy, 2003).
38. This topic is discussed and illustrated at length in J.L. Guasch, Granting and Renegotiating Infrastructure Concessions: Doing it Right (Washington, D.C.: The International Bank for Reconstruction and Development, The World Bank, 2004).
39. Equally controversial, the decision to break-up the monopoly builds upon criticisms that it resulted in poor service standards, complacency about responding to airline needs, and inadequate capital investment. For the controversy in the eighties, see D. Starkie and D. Thompson, "London's Airports: The Privatization Option," in J. Kay, C. Mayer, and D. Thompson, eds., Privatization and Regulation: The UK Experience (Oxford: Oxford University Press, 1986), pp. 210-220.
40. E. Woodhouse, "The Obsolescing Bargain Redux? Foreign Investment in the Electric Power Sector in Developing Countries," New York University Journal of Law and Policy, 38/121 (2006): 121-219.
41. For a comprehensive discussion, see Gomez-Ibanez (2003), op. cit.
42. See W. Baumol, "Modified Regulation of Telecommunications and the Public Interest Standard," in M. Bishop, J. Kay, and C. Mayer, eds., The Regulatory Challenge (Oxford: Oxford University Press, 1995), pp. 254-282.
43. Altshuler and Luberoff (2003), op. cit.
44. Gomez-Ibanez and Meyer (1993), op. cit.
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46. For more on this discussion, see Gomez-Ibanez (2003), op. cit.
47. Altshuler and Luberoff (2003), op. cit., p. 220.
48. See also G. Winch, "Managing Project Stakeholders," in P.W.G. Morris and J.K. Pinto, eds., The Wiley Guide to Managing Projects (Hoboken, NJ: John Wiley & Sons, 2004), pp. 321-339.
49. Point noted in Stodder and Orr (2006), op. cit.
50. See also M. Olson, The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities (New Haven, CT: Yale University Press, 1982);
51. K. Arrow, "A Difficulty in the Concept of Social Welfare," Journal of Political Economy, 58/4 (August 1950): 328-346.
52. The process was controversial, not surprisingly. Some groups argued that the new Planning Bill needed to include a Strategic Infrastructure Planning Body capable of working across government departments to ensure a more joined up approach, and draw up a "National Infrastructure Framework." Others were concerned that the definition of national significance was too loose, and that planning approval would be taken out of the hands of the local authorities.
53. L. Trigeorgis, Real Options: Managerial Flexibility and Strategy in Resource Allocation (Cambridge, MA: MIT Press, 1996).
54. A.K. Dixit and R.S. Pindyck, Investment under Uncertainty (Princeton, NJ: Princeton University Press, 1994).
55. Altshuler and Luberoff (2003 ), op. cit.
56. This case also illustrates the power of infrastructure to improve public welfare. The Victorian network of sewers was spurred by the last of three cholera epidemics affecting London between 1831 and 1854. The network of sewers facilitated the restoration of the highly polluted Thames River. Such was its success that by 1872 London had a lower death rate than any other major city (despite being the most populous city in the world at the time).
57. The term "future-proofing" has been labeled an oxymoron. The point, however, is not to design an infrastructure assuming that predictions about future scenarios are 100% reliable. Rather, the aim is to have a process in place that ensures serious thinking about foreseeable scenarios informs design decision making. See, for example, R. Kitching, "Future Proof" Hospital Design Impossible, Say Consultants," New Civil Engineer, December 2, 2004.
58. Wang and de Neufville call it building options "in" projects; see T. Wang and R. de Neufville, "Real Options "in" Projects," 9th Annual International Conference Real Options, Paris, France, 2005.
59. Some infrastructure architectures can be, however, difficult to modularize; and the lack of competitive intensity and low heterogeneity of demand also do not create a sense of urgency to modularize. When the architectures remain integral, designers can incorporate safeguards to purposely leave an option open. For more, see N. Gil, "On the Value of Project Safeguards: Embedding Real Options in Complex Products and Systems," Research Policy, 36/7 (September 2007): 980-999.
60. See C.Y. Baldwin and K.B. Clark, "Modularity in the Design of Complex Engineering Systems," in A. Minai, D. Braha, and Y. B. Yam, eds., Complex Engineered Systems: Science Meets Technology (New York, NY: Springer-Verlag, 2006).
61. For details, see Downey, op. cit.
62. This case is detailed in J. Sreeves, "Future-proof: Upton upon Severn viaduct, UK," Civil Engineering, 160/1 (February 2007): 33-38.
63. See, for example, M.V. Martin and K. Ishii, "Design for Variety: Developing Standardized and Modularized Product Platform Architectures," Research in Engineering Design, 13/4 (November 2002): 213-235;
64. C.Y. Baldwin and C.J. Woodard, "The Architecture of Platforms: A Unified View," Harvard Business School Working Paper, No. 09-034, September 2008.
65. For how this notion was originally derived from studies in manufacturing and service firms, see A. Davies, T. Brady, and M. Hobday, "Charting a Path toward Integrated Solutions," Sloan Management Review, 47/3 (Spring 2006): 39-48.
66. For more on this practice, see N. Gil, "Project Safeguards: Operationalizing Optionlike Strategic Thinking in Infrastructure Development, " IEEE Transactions on Engineering Management, (in press).
67. The "coalition" term first appeared in G. Winch, Managing Construction Projects: An Information Processing Approach (Maiden, MA: Blackwell Publishing, 2002). [New edition scheduled to appear in 2009.]
68. At least $250 million in inflation-adjusted year 2002 dollars in Altshuler and Luberoff terms [(2003), op. cit.]. See also R. Miller and D. Lessard, The Strategic Management of Large Engineering Projects (Cambridge, MA: MIT Press, 2000).
69. For more information, see E.W. Merrow, Understanding the Outcomes of Megaprojects: A Quantitative Analysis of Very Large Civilian Projects (Santa Monica, CA: Rand Corporation, 1988);
70. B. Flyvbjerg, N. Bruzelius, and W. Rothengatter, Megaprojects and Risk: An anatomy of Ambition (Cambridge: Cambridge University Press, 2003).
71. For seminal applications of stakeholder theory to project settings, see N. Gil and S. Beckman, "Design Reuse and Buffers in High-Tech Infrastructure Development: A Stakeholder Perspective," IEEE Transactions on Engineering Management, 54/3 (2007): 484-497.
72. See, for example, Z. Shapira and D.J. Berndt, "Managing Grand-Scale Construction Projects: A Risk-taking Perspective," Research in Organizational Behavior, 19 (1997): 303-360.
73. F.H. Knight, Risk, Uncertainty, and Profit (Boston, MA: Houghton Mifflin, 1921).
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76. P.W.G. Morris and G.H. Hough, The Anatomy of Major Projects: A Study of the Reality of Project Management (Chichester: Wiley, 1987).
77. See J.K. Pinto, and D.P. Slevin, "Critical Factors in Successful Project Implementation," IEEE Transactions on Engineering Management, 4/1 (1987): 22-27. See also Miller and Lessard (2000), op. cit.
78. See, for example, A.J. Shenhar, "One Size Does Not Fit All Projects: Exploring Classical Contingency Domains," Management Science, 47/3 (March 2001): 394-414;
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84. For seminal work, see R.E. Levitt, J. Thomsen, T.R. Christiansen, J.C. Kunz, Y. Jin, and C. Nass, "Simulating Project Work Processes and Organizations: Toward a Micro-Contingency Theory of Organizational Design," Management Science 45/11 (November 1999): 1479-1495.
85. J. Ross, and B.M. Staw, "Expo 86: An Escalation Prototype," Administrative Science Quarterly, 31/2 (June 1986): 274-297.
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87. Gil and Beckman (2007), op. cit.
88. N. Dayanand and R. Padman, "Project Contracts and Payment Schedules: The Client's Problem," Management Science, 47/12 (December 2001): 1654-1667.
89. For exploratory work on this matter, see Yun Shin Lee, "Flexible Design in Public Private Partnerships: A PFI Case Study in the National Health Service," MSc. Dissertation, Judge Business School, University of Cambridge, 2007.
90. M. Wachs, "When Planners Lie with Numbers," Journal of the American Planning Association, 55/4 (1989): 476-79.
91. Flyvbjerg et al. (2003), op. cit.
92. See A.O. Hirchman, Development Projects Observed (Washington, D.C: The Brookings Institution, 1967).
93. G.H. Bruntland, ed., Report of the World Commission on Environment and Development, Our Common Future, General United Nations Assembly Resolution 42/187, December 11, 1987.
94. Lord Stern The Stern Review on the Economics of Climate Change (London: HM Treasury, 2006).
95. Information in this section is drawn from Nick Santero, "Pavement Life-Cycle Analysis," Ph.D. Prospectus, July 25, 2008.
96. K. Holtz and T.T. Eighmy, "Scanning European Advances in the Use of Recycled Materials in Highway Construction," Public Roads (FHWA) 64/1 (2000);
97. Federal Highway Administration, Status of the Nation's Highways, Bridges, and Transit: Conditions and Performance, U.S. Department of Transportation, 2006;
98. Federal Highway Administration, Highway Statistics 2006, available at , 2007
99. See, for example, S.C. Tyler, E. Dlugokencky, P.R. Zimmerman, and R.J. Cicerone, "Methane and Carbon Monoxide Emissions from Asphalt Pavement: Measurements and Estimates of their Importance to Global Budgets," Journal of Geophysical Research, 95/9 (1990): 14,007-14,014;
100. T. Häkkinen and K. Mäkelä, "Environmental Impact of Concrete and Asphalt Pavements," in Technical Research Center of Finland, Environmental Adaption of Concrete, Research Notes 1752, 1996;
101. A. Horvath and C. Hendrickson, "Comparison of Environmental Implications of Asphalt and Steel-Reinforced Concrete Pavements," Transportation Research Record, 1626 (1998): 105-113;
102. R. Berthiaume and C. Bourchard, "Energy Analysis of the Environmental Impact of Paving Material Manufacture," Transactions of the CSME, 23 (1B) (1999):187-196;
103. H. Stripple, Life Cycle Assessment of Road: A Pilot Study for Inventory Analysis, Second Revised Edition, Swedish National Road Administration, 2001.
104. A. Wilson and P. Yost, "Building and the Environment: The Numbers," Environmental Building News, 10/5 (May 2001): 10-13.
105. See also M. Baum, Green Building Research Funding: An Assessment of Current Activity in the United States, U.S. Green Building Council, 2006.
106. K. Geiser, Materials Matter (Cambridge, MA: The MIT Press, 2001).
107. See, for example, M. Curran, Environmental Life-Cycle Assessment (New York, NY: McGraw-Hill, 1996);
108. J. Stokes and A. Horvath, "Life-Cycle Energy Assessment of Alternative Water Supply Systems," International Journal of Life Cycle Assessment, 11/5 (2006): 335-343;
109. H.S. Matthews, C.T. Hendrickson, and A. Horvath, "External Costs of Air Emissions from Transportation," Journal of Infrastructure Systems, ASCE, 7/1 (2001):111-117.
110. For a detailed narrative on the first steps given in the mid-90s, the Adam Joseph Lewis Center at Oberlin College, see D.W. Orr, Design on the Edge: The Making of a High-Performance Building (Cambridge, MA: The MIT Press 2008), p. 158.
111. Orr (2008), op. cit.
112. Building Momentum National Trends and Prospects for High-Performance Green Buildings, U.S. Green Building Council, 2002.
113. See T. Cathy and M. Frankel, Performance of LEED for New Construction Buildings, U.S. Green Building Council, 2008. For a practical application,
114. see D. Hershgal, M. Denner, A. Harush, and R. Bitan, "Intel's First Designed and Built Green Building," Intel Technology Journal, 12/1 (2008): 27-37.
115. Reducing the U.S. Greenhouse Gas Emissions: How Much at What Cost? U.S. Greenhouse Gas Abatement Mapping Initiative, McKinsey & Company, 2007.
116. S. Morton, "Business Case for Green Design," Building Operating Management, (November 2002).
117. Despite record profits it made in the same year. See F. Harvey, "BP Defers Decision on Carbon Capture Plant," Financial Times, February 9, 2007.
118. Challenging and Changing Europe's Built Environment: A Vision for a Sustainable and Competitive Sector by 2030, European Construction Technology Platform, 2005.
119. M.A. Delmas, and M.W. Toffel, "Organizational Responses to Environmental Demands: Opening the Black Box," Strategic Management Journal, 29/10 (October 2008): 1027-1055.
120. In the Black: The Growth of the Low Carbon Economy, The Climate Group, 2007.
121. R. Orr and W.R. Scott, "Institutional Exceptions on Global Projects: A Process Model," Journal of International Business Studies, 39/4 (June 2008): 562-588.
122. China, in particular, is spending around 12% of its GDP on infrastructure. For more data, see "Building BRICs of Growth," The Economist, June 5, 2008.
123. Orr and Scott (2008), op. cit.
124. The United Nations, "World Urbanization Prospects: The 2007 Revision," United Nations Publication.
125. Encouraging signs are coming from China with the planning process for Dongtan, an "ecoor green" city that aims to integrate environmentally friendly practices and the strict exclusion of older, polluting ones. See S. Cherry, "How to Build a Green City" in The MegaCity, IEEE Spectrum, 2007;
126. P. Head, "Entering the Ecological Age: The Engineer's Role," The Brunel Lecture Series, The Institution of Civil Engineers, 2008.
127. V. Foster, "Looking East," World Bank Working Paper, Washington, D.C. (forthcoming 2008) [cited in Orr and Kennedy (2007), op. cit.].