The importance of
We reason that, like in many physical constructions,
in infrastructure, getting the system design right is all important.
No more so than in transport infrastructure,
which is crucial for all our residents and enterprises.
This is what we specialise in.
Engineering & Construction
Construction efficacy, quality and sustainability
AIM: Minimising construction costs
whilst maximising long term performance
PLANNING & DESIGN MATTER
Who pays, who benefits
Designing the funding sources is vital
User pays, beneficiary pays, taxes pay, etc.
+ Cross-mode matters (eg road vs rail & other modes)
As do effects across time (inter-generational impacts)
ALLOCATION OF FUNDING SOURCES MATTERS
Our principals, associates and alliance members have spent significant pro bono time in the last 5 years on structural design issues associated with Australia's' transport infrastructure challenges.
We found that there were serious areas in need of improvement and, once properly analysed (which rarely happens) some of the conceptual solutions were not all that complex.
What is complicated is fitting new designs to legacy arrangements and getting past political hurdles, either of lack of vision, understanding, too short a horizon or just plain system inertia.
Much can be solved by Government with its cheaper access to capital and its greater control of policy environments and funding sources. Yet reluctance to borrow has been a constraint.
The typical Infrastructure PPP theoretically allocates a given risk to the party who can best handle it, but the practice in this regard has fallen well short of the theory of optimal risk allocation.
The methods of project evaluation and priority ranking are failing to select optimal long term capital projects for what Governments can provide relative to the private sector.
Infrastructure Australia guidelines 9 years post-GFC have not been updated for the world-wide fall in interest rates which occurred due to the banking crises - this favours short termism.
Benefit cost ratios for road projects based on travel time savings do not generally attentuate such savings over time as induced demand regenerates congestion - BCR's can be over-stated.
Benefit cost ratios for major rail projects take too short term a perspective, due to entrenched evaluation method biases, meaning that rail transport is not alleviating road pressures as it should.
Australia has become efficient in and oriented towards the lower-skilled transport employment sectors - trucking, buses, taxis, road construction. Higher skilled employment is under-emphasised.
In 40 years Australia has been left behind by places like Singapore in virtually all economy enhancing respects. In 30 years China has leapt forward while Australia hasn't learnt from the new Asia.
Especially this applies in the area of backbone infrastructure, poorly contrasting Singapore's infrastructure: Changi Airport, Metro Rapid Transit, electronic road pricing and soon high-speed rail.
And in China, notably how it has grown the largest high-speed rail network in the world in such a short time span. In roads it already has the world's 2nd largest highway network as well as having over 70% of the world's toll roads (source KPMG). It has rapidly built new airports and modernised sea ports and developed new ones at a rate which is astounding to the rest of the world.
Whilst the population and population density issues are prevalent in these comparisons, we feel differences in the decision-making process are the most telling - long termism v short-termism!
Financial-Architects.Asia Pty Ltd*
Ian F Bell, Actuary
Mobile +61 (0)410-488-196
Leo Economides - Numtech (Software Models)
POSTAL: GPO BOX 1004
SYDNEY NSW 2001
* ABN 75 159 143 227
** c/- Fraser Bell Pty Ltd [NSW BN98625331]
Finance & Governance
Time gaps always exist between outlays and receipts
How that gap is financed matters,
and how the process is made ethical and efficient
Asset & liability cash flow streams rarely match
DESIGN OF FINANCE OVER TIME MATTERS
© Copyright Financial-Architects.Asia, Financial-Architects.Asia Pty Ltd, 2017
Train, road images attribution Wikimedia Commons, except where otherwise shown