Infrastructure

Infrastructure projects include a wide range of facilities that generally support a large number of local users and include:

• Airports
• Marine facilities
• Landfills and waste disposal
• Water and waste water treatment plants
• Hospitals

Infrastructure projects are often developed as public projects that are managed by governments or government agencies but can also be privately built projects that make money from user fees or tolls. Or they can be developed as public-private partnerships (P3). Infrastructure projects have unique challenges, including managing multiple users of the facility and the potential for safety and security concerns associated with the public use of the facilities.

Sustainability can be a challenge for these projects because they will provide a public benefit for the public at large, and so project teams tend to assume that the broader and long-term benefits counterbalance the short-term construction pains. It is often assumed that public good will be sufficient to overcome the resistance of the people living closest to the facility. Developing strong sustainability programs for infrastructure can be important in avoiding a not-in-my-backyard (NIMBY) response from the local community.

Linear infrastructure

Linear infrastructure projects are a specific type where the facility is built to connect locations together, including:

• Roads, highways, and bridges
• Power lines
• Pipelines (water, sewage, oil)
• Rail lines
• Public transportation (subways, rapid transit)

In many ways, linear infrastructure projects are similar to standard infrastructure projects except that they will have multiple stakeholders and a greater reach of environmental and social impacts along the route. This raises the complexity of integrating sustainability into the project because many communities will be impacted, and there will be both winners and losers along the route of the infrastructure. They can bring a flow of goods, services, and people that stimulate the local economy. At the same time, linear infrastructure can bring social disruptions, noise, and pollution. Integrating sustainability into these projects can help to better manage both negative and positive impacts.

Energy Facilities

Another type of infrastructure project is an energy facility that is used to create electricity for the grid or thermal energy for district heating, including:

• Thermal power plant (coal, oil, natural gas)
• Renewable energy (wind or solar farm)
• Hydroelectric facility
• Nuclear power plant

Energy facilities have unique challenges related to location selection. There is a balance between putting the facility near the people who will use the energy but far enough away to mitigate impacts from the energy production. The selection of an ideal project location could look at the best location from an energy production perspective (close to water for cooling or best wind/ solar resource), minimization of energy transmission requirements, availability of local labor, environmental impacts, risk and disaster response, and climate resilience.

Energy facility projects will often include a related linear infrastructure project, such as power lines. These further complicate the challenges of integrating sustainability. Like infrastructure projects, energy facility project teams need to keep in mind the difference between the overall benefit of the energy facility versus the local impacts to the environment and people living in the local community.

Industrial Facilities

The development of large industrial facilities has many of the same challenges as infrastructure projects but has the additional challenge in that the project is typically for the benefit of a corporation rather than a government project that will provide a public benefit. The wide range of industrial facilities include:

• Chemical plants
• Refineries
• Smelters
• Large manufacturing facilities

Industrial facilities have a number of unique challenges, such as choosing a location that balances access to infrastructure (roads, rail lines, ports, water, and power), availability of skilled local labor, environmental impacts, and climate resilience. Large industrial facilities often include their own infrastructure projects within the overall project such as pipelines, road and rail transport, marine ports, water treatment, power plants, and landfills.

Resource Extraction

Resource extraction can include both nonrenewable and renewable resource projects where there is a large impact on the local community and environment, such as a new forestry development. Resource projects include:

• Mining and quarrying
• Off-shore oil and gas facilities
• On-shore oil and gas drilling and fracking
• Forestry

Resource extraction projects have a number of unique challenges associated with the depletion of finite resources, royalties for access to the resources, and managing within the constraints of the location of the resource as opposed to being able to select a location for the facility. Project sites are often in remote areas where the potential for large impacts on the local community is high both from a positive perspective (jobs, skills development, and economic development) and from a negative perspective (social disruption, environmental damage, waste management, and impacts on health).

Resource extraction projects often include their own infrastructure projects within the overall project such as pipelines, road and rail transport, marine ports, water treatment, power plants, waste disposal, and landfills. Resource extraction may also incorporate large industrial projects like mineral processing facilities at a mine site.

Self-Perform

In a self-perform structure, the owner manages all aspects of the project themselves and hires contractors and consultants as required to deliver specific pieces of work that the owner's team cannot handle themselves. This structure is typical where the project is an expansion of an existing facility or a new facility for a large organization that has a strong capacity for project delivery.

A self-perform project structure can be positive from a sustainability integration perspective as there is little to no disconnect between the goals of the owner and the goals of the project delivery team. The down side is that self-perform project teams can become isolated from emerging trends and may not be fully up to speed on new technologies and new ways of delivering projects. Self-perform teams should be open to innovation from contractors and suppliers so that they can deliver successful projects.

Engineering, Procurement, and Construction Management (EPCM)

One of the most common project delivery structures is engineering, procurement, and construction management (EPCM), where the owner hires an engineering consulting firm to complete the major design and delivery of project components but maintains control over financial management, earning, and maintaining local community support, and most of the sustainability management activities related to regulatory approvals. The EPCM consultant will typically work in close alignment with the owner's team, which provides final approval of major decisions and deliverables.

The EPCM structure can create good alignment between the owner and the EPCM firm for design and finance activities but is not often well-aligned for integrating sustainability. Traditionally, the EPCM firm does not get involved in the initial project approvals and community engagement activities, yet they need to integrate the results of these activities into local procurement, local employment, and communications during construction.

For an EPCM project to successfully integrate sustainability it is important to clearly identify how both organizations are responsible for meeting project commitments and how sustainability will be incorporated into all project activities. Involvement of the EPCM firm typically ends when commissioning is finished. Project contracts should build incentives into project delivery that optimize long-term performance, secure community support, and help to build local capacity in order to maximize local employment and procurement. In other words, identify and utilize innovative solutions that are not part of the EPCM firm's typical, off-the-shelf design solutions.

Engineering, Procurement, and Construction (EPC)

The engineer, procurement, and construct (EPC) project structure, also known as design-build, is a variation on EPCM where the owner hires a consulting firm to complete the full project delivery of the project, including full control over the project construction, and then hands the project over to the owner for operations during commissioning. In the traditional EPC contract, the owner is still responsible for financing and sustainability activities but has less control over procurement and selection of contractors. This is especially true when the EPC contract is structured as a fixed-price contract that provides a strong incentive for the EPC firm to minimize overall costs with no incentive to build or maintain community support.

From a sustainability perspective the EPC project structure can be difficult to integrate environmental and social goals into project delivery. For example, renewable power systems that have a large capital cost but low operating costs may be rejected in favor of traditional hydrocarbon power plants that come with lower capital costs and lower short-term risks. As with EPCM contracts, it is important to clearly identify who is responsible for meeting project commitments, how sustainability will be incorporated into all project activities, and how incentives will be used to optimize long-term performance, maintain community support, build a strong local workforce, and utilize innovative solutions. 

Design-Build-Finance-Own-Operate (DBFOO)

There are a number of different project types that use variations on the concept of design-build-finance-own-operate (DBFOO) contracts depending on who provides financing and how the operations and maintenance contract is structured. DBFOO is often used for infrastructure projects where the owner can hand over all activities to the DBFOO firm to both deliver the project and operate the project over a specified period of time. In a DBFOO contract the owner is still responsible for financing the project and pays the firm in specified installments over the life of the project. The DBFOO firm provides initial project financing and the owner provides a set annual operations payment throughout the operations. The DBFOO firm recovers its investment from these operations payments.

In these contracts, the owner also hands over significant control of project delivery to the DBFOO firm. Therefore, a clear understanding of who will be responsible for sustainability and community engagement is important. The owner and the DBFOO firm need to have a common understanding of the sustainability requirements and expectations so that project success can be realized for both parties. The DBFOO firm may need only a bare minimum of community support to build and operate the project to recover their investment, but the owner may be looking for a higher level of community engagement and acceptance.

One of the key advantageous of a DBFOO contract is that it shifts the time horizon of the typical EPC structure. Now the project development firm has a strong incentive to manage long-term operating costs and community support since they will also be operating the project for a set period of time. The time horizon for DBFOO contracts is longer than EPC contracts but it is still important for the owner to specify project conditions at exit of the contract. This is to prevent the risk that the DBFOO firm will reduce their attention to key environmental and social aspects toward the end of the contract, lose community support, and leave the owner with an asset that requires significant investment to repair and maintain.

Public-Private Partnership (P3)

The use of public-private partnerships (P3s) gained popularity in the 1990s as a way for governments to reduce the tax investment required for infrastructure projects. Similar structures have also been used in resource projects where governments share in the investment in access roads or ports for resource areas and then recover the investment from user fees or tolls on the roads.

Although in theory creating a partnership between the private and public sectors should create the best potential for a well-integrated sustainability program, the public piece of the partnership was typically the government rather than the local community or the general public. As we will discuss later in this chapter, the government and the local community are often two distinct players with diverging interests in the project. In some cases, P3 projects have led to poor sustainability outcomes and in extreme cases a loss of community support, lawsuits, and protests. P3 project teams need to integrate sustainability into project delivery to ensure that they have local community support, ensure that positive opportunities are achieved, and create better projects.

P3 contracts should clearly identify who is responsible for meeting project commitments, how sustainability will be incorporated into all project activities, and how incentives will be used to optimize long-term performance, maintain community support, build a strong local workforce, and utilize innovative solutions.

People-Public-Private Partnership (P4)

As discussed above, the ‘“public” in a P3 agreement is not typically the general public or local community, but the government. As projects continue to evolve and incorporate social responsibility, some projects are adding a fourth “p” representing the local people and creating P4: a people-public-private partnership structure. This type of project structure would help ensure participation and support from the local communities. P4 structures provide an approach that improves attention to and discussion regarding community concerns and potential benefits (i.e. steady revenue from infrastructure, long-term employment for local communities), and provides good risk management for the government, operators, and financial organizations by ensuring that the local community has a seat at the table.

P4 strategies are not well developed yet but they represent a possible solution for economic development infrastructure projects and for portions of resource projects, especially infrastructure (roads, water treatment, and power). P4 structure could provide benefits for the project owner, the government, and the local community.

Summary of Project Structures

There is no project structure that works specifically to ensure sustainability is effectively integrated into project delivery. Each structure has advantageous and disadvantageous that can make integration easier or harder, but each system still requires a well-organized program to integrate sustainability into project management and delivery.

Figure 2.1 summarizes some of the sustainability strategies that can be implemented to counterbalance the difficulties with each of the main project structures discussed above. The table is arranged with the project structures that provide the owner with the highest level of control over the sustainability program at the top and the least control at the bottom. The types of challenges to managing sustainability in each structure are provided, as well as some high-level strategies to help integrate sustainability into the project.

Understanding Time

For project teams the timespan that they consider is essentially the time for project delivery from initial studies to commissioning and handover to the operations team, which typically takes between 5 and 10 years. In addition to this, individual team members may only work on the project for short periods of time, finish their piece of the design or construction, and then move on to the next project. Major projects may also start and stop with changes in personnel on the project team or a change in consulting firms, so that the typical person on a project team might spend only 2 to 3 years on a major project.

The timespan that government personnel will be involved in a project will vary depending on the government and government agency. Civil servants may spend a large part of their career with a single government agency, but politicians work on different timelines depending on when elections are scheduled, so the typical government employee might spend 5 to 10 years involved on a project.

Local communities have a much longer timespan of experience and engagement with a project. Although there may be short-term focus on jobs and economic benefits, there is also a longer-term focus on community success over generations so that their children and grandchildren also see positive benefits from the project.

Understanding Space

The sense of space, location, and geography is also very different between the key players involved in a project. Project teams will typically not be from the local region and in many cases may never even visit the site but complete their design work from maps and drawings of the project site. The project team will have little personal stake in the project outcome other than to build on their experience and have a good project to add to their resume for their next job.

Government workers are usually more connected to the geographical location of the project site but being in the same country or region is not the same as living in the community.

And the local community, by contrast, will experience the project directly through impacts to the economy, traffic, noise, environmental damage, and other social disruptions.

Managing Time and Space

These differences in perception of space and time can have a significant influence on how the project is perceived by each of the key players. For example, changing the timespan and location can affect the perception of risk and the balance between risk and reward. A government agency may view the economic rewards to an entire region or country from jobs and taxes generated by the project as a justification for the project risk. However, the local communities who bear the risk of social disruption and environmental damage may not see the risk-reward balance in quite the same way.

The impact of different perceptions of space can often be seen on major projects that have more than one location and where the project benefits and risks are not evenly distributed across each of the locations. In a linear infrastructure project, for example, the positive impacts are created where the urban center is located but the negative impacts could be felt by communities along the highway or commuter rail route that receives the noise and potential environmental impacts from spills, without getting any of the economic benefits.

The difference in the perception of time can create a difference between a typical transactional (often litigious) approach to relationships seen in major construction projects, where the project team, contractors and consultants are often focused on maximizing their share of a fixed project budget (a zero-sum game) and a cooperative approach to relationships where the project team and the local community focus on building trust-based relationships for long-term, mutually beneficial outcomes.

There is no way to eliminate the differences in perceptions of the project in time and space. At a minimum, project teams must understand the large disconnect between the key players on the project and use that understanding to adjust their approach.