A Joint Planning, Management and Operations Framework for Airport Infrastructure

Many airports around the world are actively considering development or expansion projects. Such projects can spur tremendous benefits but are investment-intensive and span several decades from conception to completion. We formulate the associated dynamic, complex decision-making problems using a broad systems frame. We propose a conceptual framework that links airport infrastructure investments and airport management and operations in a time-expanded, state-contingent problem. To develop this framework we consider the social and policy objectives for well functioning air transportation infrastructure, the decision levers available to stakeholders, the influence of the institutional field and regulatory context on these decisions, and the key performance measures that operationalize system ilities. Our framework integrates literature from investments under uncertainty, airport demand management, and airport operating procedures. Four case examples of airports in Delhi, Charlotte, London and New York illustrate decision-making in the context of our framework. We argue for a more integrated approach to decision-making while evaluating investments in greenfield airports or capacity expansions

Electricity Network Tariff Architectures: A Comparison of Four OECD Countries

The study is motivated by the question “what is the optimal tariff design?” While we do not offer an answer to this question, we use the different designs in four select countries to illuminate the issues involved in designing electricity network tariffs. Electricity networks are a resource shared by all network users. A tariff design that is clear to network users and well understood by them can help them make efficient decisions. A design that sets up conflicting or perverse incentives results in economic distortions. We find that there are a variety of choices and trade-offs while designing the electricity network tariffs for any electricity system. The tariff design must not only be influenced by the technical and economic characteristics of the system, but also the secondary policy objectives that policy makers wish to achieve, while allowing network companies to recover the costs of building and maintaining the network.Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research

The effects of climate risk on hydropower P3 contract value: Preliminary study of the Inga 3 Dam

Large hydropower dams are at the centre of a debate weighing the value and costs of renewable energy against the risks of climate change. The debate is especially relevant on the African continent, which offers vast hydropower potential, but which is exposed to possible climatic changes. This paper presents one possible framework for analysing, valuing, and mitigating the possible impacts of climate change on investment returns. It applies the framework to the proposed series of Inga projects. We find that project concessions can recapture value by phasing dam build-out. Our optionality framework can help structure P3 contracts to improve hydropower project value as well as insure sponsors against climate risk

Exposing Attention-Decision-Learning Cycles in Engineering Project Teams through Collaborative Design Experiments

Engineering project outcomes are driven by a dynamic mix of the social physics of teams, the unique complexities of the engineering challenge at hand, and stakeholder pressures in context. Various related research has demonstrated formal experiments for tightly controlled problems and in small teams, including work in organizational psychology, computational organization theory, design thinking, and coordination science. We realize there is room for testing these foundational concepts in quasi-controlled environments with distributed teams challenged by problem, solution, and organization complexity common today. This paper presents a quasi-experiment to study how engineers proceed through attention, decision, and learning cycles in the design of a System of Systems. The experiment utilized an ensemble of an agent-based model, a decision-support interface, and a variety of sensors to record behavior and activity. Four pilots were conducted for a maritime industry challenge with experienced industry experts, followed by a primary experiment for data collection. Though this work is preliminary, the experimental approach detects (for this case) how designers focused on different variables (attention), manipulated variables to accomplish desired outcomes (decisions), and explored the system performance trade space variously over time to reveal false assumptions and uncover better decisions (learning). Lessons learned from this quasi-experiment are guiding this research team to prepare scalable and reproducible engineering teamwork experiments that include sensors of events over time in the problem, solution, and socials spaces of engineering projects

Long-term contracts for new investments in power generation capacity : pain or gain?

Thesis (S.M. in Technology and Policy)--Massachusetts Institute of Technology, Engineering Systems Division, Technology and Policy Program, 2010.Cataloged from PDF version of thesis.Includes bibliographical references (p. 132-137).In recent years, a debate has ensued regarding the role of long-term power purchase agreements for securing investments in power generation capacity in organized wholesale markets. This thesis illuminates the issues surrounding the debate and provides a framework for understanding the nature and use of long-term contracts. The main questions of interest for the formulation of a policy on long-term contracts are (1) whether parties encounter obstacles to their beneficial use and (2) in what situations should policy encourage or compel market entities to enter into such agreements? The analysis finds that long-term contracts do not appear to be "essential" for securing new investments in generation capacity. Long-term contracts are desirable in cases where the investments are highly specific to the relationship. Relationship-specificity is not a general feature of the industry; power producers or customers that find themselves in relationship-specific situations can identify the gain available through the use of specific assets and choose to use a long-term contract. However, this is a voluntary business decision and does not call for explicit policy guidance. Additionally, contracts are inherently "incomplete" and create the possibility of ex post regret and stranded costs. The electricity industry in the U.S. is familiar with the potential for significant economic distortions in the aftermath of the indiscriminate use long-term contracts. Policymakers should avoid mandating their use, and be careful to disapprove contracts that present a significant risk of ex post regret. Obstacles appear to exist for the beneficial selective use of long-term contracts. Current rules in restructured markets preclude the consideration of long-term contracts for most types of generators and make it unfeasible for the economy to benefit from relationship specific circumstances. Policies should encourage or require the selective use of long-term contracts only in relationship-specific situations where identified non-zero sum gains are not being realized under dominant practices. In cases where these gains are not observable or are insignificant, the long-term contracts are more likely to cause pain than gain.by Vivek A. Sakhrani.S.M.in Technology and Polic

Making Infrastructure Procurement Processes more Flexible under Uncertainty

A third to a half of development projects undergo restructuring due to changes in project objectives, scope or other unanticipated changes, therefore requiring schedule extensions, budget additions and rework. Current procurement processes discourage managers from responding strategically by anticipating and preparing for such changes in advance through better information search and design concept evaluation. This paper suggests three principles for making the front-end phases of procurement more flexible - understanding uncertainty, studying system-wide impacts, and phasing designs. A case study analysis of urban water system design in Kabul demonstrates the conceptual and analytical application of these principles

House of Project Complexity – Understanding Complexity in Large Infrastructure Projects

This paper describes our conceptualization of complexity in Large Infrastructure Projects (LIPs). Since complexity itself is an emergent concept that is hard to pin down, we focus on the relationship between various project features and, particularly, properties associated with complexity such as difficulty, outcome variability and non-linearity, and (non) governability. We propose a combined structural and process-based theoretical framework for understanding contributors to complexity in this particular substantive context – the “House of Project Complexity” (HoPC). The HoPC addresses the impact of inherent technical and institutional project features, the process of project architecting, the structural relationship between various project features and these “designed” constructs, and the emergence of risks and life-cycle properties (‘ilities’). The HoPC is first applied to two trial samples and then to the main data set of detailed case studies of infrastructure projects prepared for the IMEC study. We believe that the “House of Project Complexity” can be generally extended to other substantive contexts that exhibit similar properties as Large Infrastructure Projects (LIPs), in the extractive industries, large manufacturing projects, or other industrial megaprojects

Concepts and Mechanics of Evaluating Infrastructure Public-Private Partnerships: A discussion of key practical issues, illustrated through a case example

This text presents and illustrates crucially important concepts about how to perform a proper economic evaluation of an infrastructure public-private partnership (PPP) and appreciate the contractual value implications for the partners. The discussion speaks to managers, policy-makers, and all those concerned with the development of infrastructure projects. The discussion pays special attention to the economic issues associated with contracts between public and private sector partners for infrastructure projects. Contracts can be powerful instruments in shaping both overall project value, and the benefits to the contracting parties. The presentation starts with an overview of the concepts central to the evaluation of both general and PPP projects. It then presents the essential elements of the standard spreadsheet analysis of economic value. It illustrates the analysis using a realistic case study of a hypothetical public-private partnership for developing and operating a major international airport. This case provides a useful vehicle for illustrating the important concepts and mechanics of evaluating public-private projects