Transcript Nuno Gil

Developing Infrastructure for
Evolvability: Integrating Modularity
and Safeguards In Design
Nuno Gil
Manchester Business School (on sabbatical)
Global Research Awardee (Royal Academy of Engineering)
CRGP, Stanford University (visiting scholar)
©
NunoGil,
GilManchester Business School
© Nuno
MBS
2006
NUS, 2009
Victorian sewerage system, London
19th century, River Thames was practically an open sewer
After The Great Stink (cholera epidemic) of 1858,
Parliament decided to create modern sewerage system
Joseph Bazalgette, civil engineer, designed system that
diverted waste to Thames Estuary, totalling almost 160 km
underground sewers fed by 720 km of main sewers
20th century, major improvements made to system
Bridge over River Tagus, Lisbon
Built between 1962 and 1964
Suspension bridge, double deck, 2277m
In 1999, $1.4m project to install secondary suspension
cables, widen roadway; install dual track railroad
Infrastructure meets Business
Infrastructure Gap is Massive
– population growth, migration towards cities, deteriorated
infrastructure, globalization of supply chains
Governments worldwide recourse to private-sector
capital due to constrained budgets and ideology
– sale of state-owned infrastructure companies
– private finance initiatives
– infrastructure increasingly attractive to pension funds,
private investors, family houses
Infrastructure Design for Evolvability
Acknowledge tension between profit-seeker and
public interest
– Affordability/caps on user fees limit capital investment
– Long delivery times + operational longevity =>
uncertainty
– Bias towards capital cost instead of life-cycle costs
Evolvable design: design infrastructure to last, i.e.,
capable to accommodate economically change
over time while limiting capital investment upfront
…from so simple a beginning endless forms
most beautiful and most wonderful have
been, and are being, evolved.
Evolvability
Darwin’s theories in evolution and variability
Evolvability: an organism’s capacity to generate variation
(Kirschner and Gerhart 98)
– Weak linkage, minimal dependencies among processes
– Exploratory mechanisms, processes that can tolerate change
– Surviving lineages diversified by maintaining core of conserved
sequences and functions (vital processes) and modifying others
Product/System Design Modularity
Modularity: generate design architectures that can flex to
change (Ulrich 95, Baldwin and Clark 00)
architecture, decouples functional modules
standard rules, govern interfaces
tests, verify modules will work together
but modularity does not come for free (Ethiraj and Levinthal 04)
and can come with penalty in performance (Fixson and Park 08)
Options Thinking
modularity builds options in design (Baldwin and Clark 97)
option, the right but not the obligation to choose course of
action (Merton 73)
– design with built-in options is more tolerant of uncertainty
– high potential value is conditional on success/ limited loss
conditional on failure
– option purpose: stage delivery; switch use; grow capacity
– options ‘on’ projects AND options ‘in’ projects (Wang and de Neufville 2005)
Research Site: £4.2bn T5 Development
Heathrow airport, project promoter BAA plc.
EXISTING
TERMINAL
TERMINAL 4
TERMINAL 3
TERMINAL 2
TERMINAL 1
CAR PARK
?
PHASE 2
PHASE 1
Baggage System
Train System
- Aircraft Stands
Conceptualization
Start construction
Open phase 1
Open phase 2
Mid 90s
Dec 01
Mar 08
2012
Analysis
Two major determinants of decision to build options
– Perceived likelihood that option may be exercised
high likelihood increases attractiveness of upfront investment
long-range timeframes to exercise option put off
– Degree to which design is/can be modularised
how much does it cost to build option?
how much does it cost to exercise option?
how much would it cost otherwise ?
standard designs increase chances ‘to get it right’
Functional Modules Available ex-ante
Functional modules with standardised designs tend to be
available when group of qualified suppliers is limited
(modular clusters) (Baldwin and Clark 97)
Modularize architectures
Physically decouple functional elements:
– Physically decouple concourse space across 3 buildings: allows to
stage delivery (stage option)
– Physically decouple roof and façade from interior floor plate
superstructure: allows to delay interior design (delay option)
Build safeguards in designs
Safeguard: provisions needed to embed option in integral
design (or enhance option built in modular design)
– Passive safeguarding: mostly design provisions (secure space)
– Active safeguarding: build in physical provisions (additional tunnel)
Likelihood of Option Exercising
High
Low
Mapping of Built-in Options
Attractiveness of Safeguarding
Design Decision Tree (Gil 07)
Is likelihood low on whether
option will be ever exercised (e.g.,
stage-option vs. growth-option)?
Yes
Are product designs with
modular architectures
available ex-ante?
Yes
No
Are product designs with
modular architectures
available ex-ante?
No
Yes
Low Active Safeguards
Not worthy to safeguard Can modular product
Invest on delivery of
Expect marginal increase architectures be reached
physical interfaces to
project ex-post?
in exercising costs
enhance embedded
options
Yes
No
E.g., Lift and ramp pits
Mutually exclusive
Investments
Invest on modularization
and passive safeguards
to limit exercising costs
E.g., Airfield space for
taxiways
Passive safeguarding
Check implication to
option value stemming
from likely escalation of
exercising costs
E.g., Secure space
alignment to extend train
tunnel beyond T3
No
Can modular product
architectures be reached
project ex-post?
Yes
No
Moderate Active Safeguards
Invest on delivery of physical
interfaces to limit integration
costs
E.g., Car park and terminal
Mezzanines; MARS stands
High Active Safeguards
Invest on delivery of
physical structures to embed
options and limit exercising
costs
E.g., Train tunnel extension
to T3
What’s next?
Process of design for evolvability
Infrastructure design for ‘future-proofing’
Building option fees in public procurement
contracts