A multidimensional understanding of public infrastructure project delivery and economics
By Dr. Alan Russell, Professor Emeritus in Project & Construction Management in the Department of Civil Engineering, Faculty of Applied Science,
Public infrastructure projects are difficult and complicated. Many stakeholders are involved, each with their own agendas and value systems, which are not always aligned. Increasingly, public infrastructure projects are also being used as instruments of social policy.
Not only must they cost-effectively perform a specific function over their anticipated decades-long life cycle, they are also expected to contribute to other goals, such as training and employing specific groups in the construction process and capacity building for small businesses in the local market.
With many objectives and policies at play, each “can” or “must” associated with a project’s social, environmental, economic and performance goals add to cost, time and other complexities, potentially affecting project feasibility.
Given this context, much as we might want to find the project delivery mode that will neatly address all of these issues, there simply isn’t one. Similarly, long gone are the days when value was measured solely in terms of a single performance metric such as net present value. There is no magic formula or recipe to follow – although the good news is that there are processes that can help us address multidimensional participant objectives and measure the value of potential solutions.
Managing public sector projects
I teach a course in Project Delivery and Economics to students in the Master of Engineering Leadership (MEL) in Urban Systems program that explores these issues.
The course seeks to provide students with a holistic understanding of what’s involved to successfully deliver a public sector project – including determining how you measure success.
This class is offered in the final semester and acts as a synthesis of the content introduced in other program courses, exploring topics in stakeholder value systems, project delivery options, analytical methods, and economic and risk modelling.
Procurement mode for healthcare, transportation, or housing
Students complete two major assignments in groups of two.
In the first, I ask them to make the case for and against a procurement mode for a project of their choice, typically healthcare, transportation or multi-family housing.
They prepare one brief arguing for a specific procurement option (such as a public-private partnership) and a second brief arguing against another procurement mode (such as design-build-finance). Groups then present their arguments to the class.
Diving into rental housing
In the second major assignment, students complete a comprehensive cash flow model for a proposed multistorey rental housing project in Vancouver.
Equipped with a spreadsheet, students must validate the data and determine how they can make the project work economically for one of two scenarios – market rental or affordable rental. They soon discover that design, construction and financing variables alone have a limited impact on the bottom line, government policies tend to increase costs, and that there are many unknowns and hence risks, including inflation rates over the next two to four decades. Often the only solution to make it work really comes down to subsidies, requiring policy choices of subsidizing upfront capital costs or offering rent subsidies over the life of the building.
Equipped to lead
There’s a pressing need for leaders with both the broad view of the general practitioner and the detailed understanding of a specialist. Combined with the coursework on leadership and management taught through UBC Sauder’s Robert H. Lee Graduate School that make up the non-technical components of the curriculum, our graduates leave the program better equipped to navigate the complexities of project delivery.
They have a deeper understanding of the unique strengths and insights they bring to their professional roles and have the technical, communication and leadership skills needed to achieve better project outcomes.