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Stephane Larocque Consulting Practice Leader, Impact Infrastructure A DECISION MAKING FRAMEWORK FOR SUSTAINABLE INFRASTRUCTURE DEVELOPMENT 1 ST INTERNATIONAL CONFERENCE ON TRANSPORT & HEALTH July 7 th, 2015

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ECONOMIC EVALUATION OF INFRASTRUCTURE PROJECTS 2

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Financial Analysis (FA): An assessment of the impact of an option on the decision-making organization's own financial costs and revenues. Life-Cycle Cost Analysis(LCCA): A process for evaluating the total economic cost of an asset by analyzing initial costs and discounted future expenditures, such as operations, maintenance, and repair over the service life of the asset. Does not account for benefits. Cost Effectiveness Analysis (CEA): An assessment of the costs of alternative options, which all achieve the same objective. The costs need not be restricted to purely financial. The costs are framed as a ratio to a parameter. Multi-Criteria Analysis (MCA): Establishes preferences between options by reference to an explicit set of objectives that the decision-making body has identified, and for which it has established measurable criteria to assess the extent to which the objectives have been achieved. Quantitative, not monetary. Cost-Benefit Analysis (CBA): An assessment of alternative options, which quantifies in monetary terms as many of the costs and benefits of a proposal as feasible, including items for which the market does not provide a satisfactory measure of economic value. COMMON TYPES OF FORMAL DECISION FRAMEWORKS 3

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TRIPLE BOTTOM LINE ANALYSIS Triple Bottom Line Analysis promotes decision-making armed with relevant information from a variety of PERSPECTIVES: Includes Financial, Social and Environmental Impacts; Considers costs and benefits based on multiple criteria; Addresses multiple, conflicting objectives; Provides clear, defensible, well-documented results; Identifies key risks; and Incorporates uncertainty in costs and benefits. Sustainable development is typically defined as the pattern of development that meets the needs of the present without compromising the ability of future generations to meet their own needs 4

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SUSTAINABLE RETURN ON INVESTMENT ANALYSIS SROI combines best-practices in CBA, financial analysis, and LCCA methodologies, augmented by: Accounting for uncertainty using state-of-the-art risk analysis techniques EconomicSocial Environmental Triple Bottom Line Business Case 5

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SROI FRAMEWORK OVERVIEW 6

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SUSTAINABLE RETURN ON INVESTMENT (SROI): TRIPLE BOTTOM LINE VALUATION FRAMEWORK Monetary valuation of Triple Bottom Line Best economics methods Proven method in multiple contexts Applicable for program, project level decisions Accounts for Risk and Uncertainty Systematic process for calculating and comparing benefits and costs of a project to justify an investment or compare projects. The SROI process accounts for a projects triple bottom line its full range of financial, environmental, and social impacts. 7

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THE TRIPLE BOTTOM LINE FRAMEWORK SROI adds to traditional financial analysis the monetized value of non-cash benefits and externalities 8

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MONETIZING SOCIAL AND ENVIRONMENTAL IMPACTS DATA SOURCES FOR SOCIAL COST OF CARBON (CO 2 ) Includes (but not limited to): Changes in net agricultural productivity; Human health impacts; Property damage from increased flood risk; and The value of ecosystem services due to climate change 163 peer-reviewed values of the Social Cost of Carbon collected by HDR (1991- 2013) Range of values addresses the large degree of uncertainty found within and among CO 2 estimation studies 9

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MONETIZING SOCIAL AND ENVIRONMENTAL IMPACTS SOCIAL COST OF GREEN HOUSE GASES 10

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Need to Automate & Standardize 11

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THE SROI PROCESS IS COMPLEX Probabilistic Assessment: Establishing Ranges for Inputs and Produce Risk-Adjusted Outcomes Monte Carlo Analysis: repeated random sampling to compute or iterate the project cost or schedule many times using input values selected at random from the probability distributions of possible costs or durations, to calculate a distribution of possible total project cost or outcomes. 12

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CASE STUDY 1: Capital Metro Austin, Texas - USA 13

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AUSTIN CAP METRO ALTERNATIVES ANALYZED 14

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AUSTIN CAPITAL METRO IMPACTS MONETIZED 15

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AUSTIN CAP METRO RESULTS 16

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FREE BUSINESS CASE EVALUATOR EXCEL BASED AND FULLY DOCUMENTED 17

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Introducing AutoCASE 18

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CASE STUDY 2: New York City Transit New York, New York - USA 19

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DEMO OF AUTOCASE MONETIZED TBL SOFTWARE NEW YORK CITY TRANSIT CASE STUDY 20 NYCT Mother Clara Hale Bus Depot Harlem, New York Comprehensive business case on the green roof and related features associated with a $262 million bus depot Cloud based AutoCASE software used to evaluate the green roof Prove automated cost benefit and risk analysis as a substitute for expensive custom studies Calculates present day financial + social + environmental returns in dollar units allocated across five different stakeholders groups. This sustainable project was more expensive from a financial perspective, however, the social and environmental benefits made up for that extra cost.