Toward a new multi-partner Indonesian

infrastructure institute

Institutions and better

infrastructure

Dr Colin Duffield

Agenda

1. Objective

2. Involvement in projects and Indonesia

3. Global infrastructure outcomes

4. Model of successes and reality

5. Best practice thinking – the depth of the business proposition for investment

6. Concluding remarks

Objectives

We seek to answer the following high level questions:

1. Can an independent infrastructure institute assist in overcoming Indonesia’s infrastructure issues?

2. Is now the time to establish such an institute?

3. What tasks would such an institute undertaken and what authority would it have?

What sort of infrastructure are we talking about?

Shaping Infrastructure - Major roads - Ports - Freight routes - Planning and land use plans, including

industrial hubs - Energy grid - Choice of strategic infrastructure

technology, e.g. telecommunications

Following Infrastructure - Arterial roads - Hospitals - Schools - etc

Characterised as complex and requires integration with other services.

Best optimised by responsible Departments and delivery Agencies

International approaches

Country approach Leadership and thought leadership

Underpinning driver Comments

Control – Centralised planning

Central Agency – input from specialists as required

Master plan Requires strong leadership and authority

Strategic direction (e.g. decrees, policy, frameworks, guidance

Involvement from all key stakeholders to identify and optimise investments

Value for money investment in a timely manner

Requires complex process and procedures that facilitate innovation

Market driven Company initiated – typically focused only at project level

Profit Potential of monopolistic outcomes due to IP protection

China

US

AUS

EU

Conceptual models for infrastructure planning

EU decisions

Working parties

Country input

Research actions Local decision

(including expert advice)

Concept, engagement

Funding policy

Local legislation

Governmental decisions

Departmental Agency …….

Advisory (non-political)

Indonesian process

Project level complexity

Complexity of finance

NZ approach

A reference/advisory group provides technical and other advice to the project team as required.

“The Quality Team”

Members of the reference/advisory group have specific expertise that may not be required on a full-time basis and is called on as needed.

• Management of quality plan

• Setting the quality standards

• Audit of the deliverables as required

NZ: Note programme group and advisory group

Appraisal and Evaluation in Central Government (UK)

• The purpose of the UK Treasury Green Book is to ensure that no

policy, programme or project is adopted

• without first having the answer to these questions:

• ❑ Are there better ways to achieve this objective?

• ❑ Are there better uses for these resources?

Infrastructure Australia

Infrastructure Australia advises governments, investors and infrastructure

owners on a wide range of issues. These include:

• Australia's current and future infrastructure needs mechanisms for financing

infrastructure investments, and policy, pricing and regulation and their

impacts on investment and on the efficiency of the delivery, operation and

use of national infrastructure networks.

• Infrastructure Australia's focus is on assisting Australian governments to

develop a strategic blueprint for unlocking infrastructure bottlenecks and to

modernise the nation's economic infrastructure.

• Infrastructure Australia reports regularly to the Council of Australian

Governments through the Federal Minister for Infrastructure and Transport.

The General

Australian PPP

process

Investment Lifecycle

Direction

• Service strategy

• Asset strategy

Concept & feasibility

• Strategy assessment

• Options analysis

• Problem definition

• Solution definition

• Benefit definition

Validation & planning

• Business case

• Procurement strategy

Implementation

• Planning & scheduling

• Delivery

• Contract Management

• Asset reporting

Operation

• Functional operation

• Maintenance

• Disposal

• Benefit reports

Better business case structures

A business case provides the necessary support on which to make decisions for the

approval and or funding (p17 IEPG). The decisions need to be informed by:

The government policy and priority context in which the investment proposal is

made;

the financial and socio-economic impacts of the proposal on the State;

the degree of confidence that the Government can have in the proposal being

successfully implemented to achieve its objectives within the stated budget,

timeline, management structure, financial agreements etc; and

the relative “value for money” that the proposal has against other proposals being

made to Government.

Lifecycle Stages

• Need

• Strategic assessment

• Options

• Business case

• Acquisition/Procurement

• Delivery

• Operation/maintain

• Disposal/extension/upgrade

Starting point: Identification

Analysis framework

Adaption of systems thinking – relates to authority

Thoughts on best practice

• No one system is used universally

• Independent input and critique is a common thread

• Whole of life thinking is important and this is consistently

outworked via comprehensive strategic thinking that is developed

through a ‘business case’

• The style of system – eg master plan, strategic direction, market

lead, informs the authority and reporting arrangements for

independent input

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