Global Infrastructure Stocks/Reliability

H. Scott Matthews

February 12, 2004

Recap of Last LectureDefined and discussed performanceHumplick paper reminded us of multiple

levels and perspectives We hadn’t discussed users much before

Talked about why infrastructure mattersAnd why performance measurement is

difficultOverview of performance methods

Before the Paper..Recent data from the World Bank…Significant infrastructure differences

Indicator Developing Developed(High

Income)Daily newspapers (per 1,000 people) (1991/ 1997 ) 49 .3 28 4 . 7In ter na ti on al out go ing te le ph one t ra ffic ( m in pe rs u bscr ibe r)

99 .8 23 0 . 5

Mob ile p hone s (p er 1 ,000 p e op le) 45 .9 53 3 . 9Rad ios (p e r 1 ,000 p e op le) (19 98/ 1998 ) 25 7 . 7 1 ,26 7 . 3Avg, cos t o f loca l p hone cal l (US$ p e r 3 m in s. ) 0 .1 0 .1Te le ph one m a in line s (p e r 1 ,000 p eo ple) 80 .9 59 6 . 8Te le ph one m a in line s, w a it in g ti m e ( ye ars ) 2 .0 0 .0Te lev is ion s e ts ( pe r 1 ,000 p e op le ) 18 3 . 2 66 9 . 1Source : World Development Indicators Database

ExpectationsSo we don’t lose sight of global

relevance of these issues..Data on previous slide implies WHAT?

Expect less economic output Lower educational levels Cause or effect?

Canning Paper“A Database of World Infrastructure

Stocks, 1950–95”, David Canning, World Bank Paper #1929, June 1998

Main stock dataset available on web152 countries, generally 45 yrs

Some countries no data until recently What is/is not included in data?

Measures in Dataset Roads, Paved Roads (km) Railway lines (km) Number of telephones Number of telephone main lines KW electricity generating capacity Some infrastructure quality measures

Condition of roads, Percent dropped calls, electricity system losses

What could this data be used for?

Sample Data - ElectricityUS capacity 80 TW 1950

700 TW 1995 (~10x increase)World capacity 200 -> 2500So what?Do these numbers tell us anything

important?What kind of values would we want

instead?

Population Growth1950 2,556,000,0531960 3,039,451,0231970 3,706,618,1631980 4,453,831,7141990 5,278,639,7892000 6,082,966,429

2010* 6,848,932,9292020* 7,584,821,1442030* 8,246,619,3412040* 8,850,045,8892050* 9,346,399,468

Canning Paper Econometric study of infrastructure stocks as

related to: Economic growth Population Change Investment

‘Full report’ available on web: http://www.worldbank.org/html/dec/Publications/

Workpapers/WPS1900series/wps1929/wps1929-abstract.html (bottom of this page)

Conclusions Non-transportation infrastructure stocks tend to

increase 1:1 with population Increase more than 1:1 with per-cap GDP

Geographic factors appear to affect provision of non-trans in poor countries But not in rich countries

Transport. Infras. increases less than 1:1 with population Increases with income only after threshold reached

Do these conclusions surprise us?

Life Cycle Costing andReliability

Life Cycle Costing (LCC) Mentioned earlier in course Is a tool to assist decision makers in

managing ‘total costs’ of projects Includes design, construction, 4R’s (repair,

rehabilitation, replacement, reconstruction), user costs, disposal Converted into ‘present value’ costs

Generally an “economic-only” (costs only) framework Others (around CMU and elsewhere) have added

consideration of energy/environmental

More Background ISTEA (1991) suggested LCC for

pavement, bridge, tunnel projectsFHWA in 1996 linked funds availability

to use of LCC in major projects Why might you not want to use LCC?

How does this differ from Benefit-Cost Analysis?

Initial CostsUsually site preparation and

constructionShould consider ‘user costs’ (traffic, etc)Where to get data - current/completed

projects similar in design/scope

4R’s and Salvage CostsAre dependent on technology and

materials choices E.g. depth of pavement affects useful life Should not exclude costs that seem ‘too

small’ - you don’t know ‘how small’ until total costs estimated!

Salvage - potential value of materials at end-of-life (e.g. scrap steel, asphalt, etc)

User (Delay) CostsConsideration of opportunity cost of

time for drivers when inconvenienced due to infrastructure downtime E.g. congestion, re-routing around road Should also consider vehicle operating

delay cost (fuel, etc).A cost/vehicle-hour estimate used

$12-$25 for cars/big trucks gets used

Examples (No User Costs) Project B: Construction $350k Prevent. Maint. @ Yr 8

$40k Major Rehab @ Yr 15

$300k Prevent. Maint. @ Yr 20

$40k Prevent. Maint. @ Yr 25

$60k Salvage@ 30 $105k NPV $610k

Project A:Construction $500kPrevent. Maint. @ Yr

15 $40kMajor Rehab @ Yr 20

$300kSalvage@ 30 $150kNPV $705k

What’s Missing?Note LCC for infrastructure generally

does not consider any ‘pure benefits’ of using it

Its presumed that all alternatives would yield similar/equal value

This is usually the case, but could be affected by design or budget constraints (e.g. a 2 vs 4-lane road or bridge)

An Energy Example Could consider life cycle costs of people using

electricity in Texas Assume coal-fired power plants used Coal comes from Wyoming

Option 1 (current): coal mined, sent by train to Texas, burned there

Option 2: coal mined, burned in Wyoming into electricity, sent via transmission line to Texas

Which might be cheaper in cost? What are components of cost that may be relevant? Are there other ‘user costs’?

Reliability-Based Management From Frangopol (2001) paper

“Funds are scarce, need a better way” Have been focused on “condition-based” Unclear which method might be cheaper

Bridge failure led to condition assessment/NBI methods Which emphasized need for 4R’s Eventually money got more scarce

Bridge Management Systems (BMS) born PONTIS, BRIDGIT, etc. Use deterioration and performance as inputs into economic

efficiency measures

Current BMS FeaturesElements characterized by discrete

condition states noting deteriorationMarkov model predicts probability of

state transitions (e.g. good-bad-poor)Deterioration is a single step functionTransition probabilities not time variant

Reliability Assessment Decisions are made with uncertainty

Should be part of the decision model Uses consideration of states, distribution

functions, Monte Carlo simulation to track life-cycle safety and reliability for infrastructure projects

Reliability index use to measure safety Excellent: State 5, >= 9, etc. No guarantee that new bridge in State 5! In absence of maintenance, just a linear,

decreasing function (see Fig 1)

Reliability (cont.) Not only is maintenance effect added, but

random/state/transitional variables are all given probability distribution functions, e.g. Initial performance, time to damage, deterioration

rate w/o maintenance, time of first rehab, improvement due to maint, subsequent times, etc..

Used Monte Carlo simulation, existing bridge data to estimate effects

Reliability-based method could have significant effect on LCC (savings) Why?