Mulungushi University

School of Science, Engineering and Technology

Department of Engineering

CIE 572 – CIVIL INFRASTRUCTURE

MANAGEMENT, MAINTENANCE AND
REHABILITATION
(Pre-requisite – Non)
FIFTH Year 2nd Semester– Civil Engineering

Lecturer: Michael M. Kopulande

BEng (Civil), MSc Eng. (Struct), MSc. (Infra. & Mgt), MEIZ, R.Eng.
 2. NEEDS ASSESSMENTS, IMPACTS, FINANCING
AND PERFORMANCE INDICATORS
Factors affecting the demand and supply of
public works services
• Asset management is defined as a systematic process of maintaining, upgrading, and
operating physical assets cost effectively, while facilitating more organized, logical
approach to decision-making.
• The asset management approach incorporates the economic assessment of trade-
offs among alternative investment options, and uses this information to help make
appropriate economic investment decisions.

• More widely, it can include return on investment, maximizing economic efficiency,

accountability, and opportunity costs, with the focus mainly on infrastructure assets,
such as highways, bridge, water system, etc (FHWA, 1999).

• Infrastructure asset management is a methodology for programming infrastructure

capital investments and adjusting infrastructure service provision to fulfill established
performance, considering the life-cycle perspective of infrastructure (Garvm, 2001).
• As infrastructures approach their design lives, there is an increasing
demand for new construction, rehabilitation, maintenance, and
repair projects to create and/or extend the design life, so that the
potential for loss of function or clown time can be minimized.
• With the recent increasing need for infrastructure rehabilitation,
the need for an effective infrastructure management system under
budgetary constraints is crucial.
• As the major methodology to support the decision-making for
optimal fund allocation.
• The demand forecasting tool can assess the impact of inadequate
routine maintenance and deferred capital maintenance.
• While widely used for its implementation in the design phase of
infrastructure assets in transportation, housing, and utilities (i.e.,
electricity, water) asset management.
• Accordingly, the forecasting methodology is decisive in
infrastructure asset management, which can allow asset managers
to better allocate the limited funds to the area needing it the most
• A practical working definition of asset management is
embodied in knowing the following about the
infrastructure:
• a) What you have
• b) What condition it is in
• c) What the financial burden will be to maintain it at a
targeted condition
• Stated more formally, asset management refers to a set of
processes or activities addressing the proactive management
of capital assets and/or infrastructure as follows:
• • Maintaining a systematic record of individual assets (an
inventory) with regard to acquisition cost, original and
remaining useful life, physical condition, and cost history for
repair and maintenance.
• • Having a defined program for sustaining the aggregate body
of assets through planned maintenance, repair, and/or
replacement
• • Implementing and managing information systems in support
of these elements
WATER INFRASTRUCTURE
• Old sewer pipes have led to sewer failures leading to
costly repairs, and sewers not meeting the demand - may
face overflow problems, which could cause health and
environmental hazards.
• Most of the water utilities are currently a ~step behind" in
the management of sewer systems, as municipalities
have traditionally addressed the design, construction,
maintenance, and rehabilitation of sewer systems on a
~crisis-based" approach.
• Which means sewers are not built and/or rehabilitated
until a major failure (i.e., overflow, collapse) occurs.
• Such defensive management practice leads to inefficient
use of funds and causes more frequent sewer failures,
which end in difficult and costly repairs.
• In order for municipalities to be a step ahead" in the
management of sewer systems, they will need to predict the
future sewer demand, so that they can devise a maintenance
plan to prevent any major failures before it occurs.
• Due to the limited funds, one of the most difficult and crucial
tasks in managing an aging sewer infrastructure is the
prioritization of maintenance and repair expenditures
• In order to accomplish the difficult task of efficient allocation
of funds in rehabilitation of sewer systems, it is important to
forecast future sewer demand to identify problematic areas
and develop necessary management schemes.
 FACTORS AFFECTING
DEMAND
• 1. ECONOMIC GROWTH
• 2. POPULATION GROWTH
• 3. NEED TO MODERNISE
• 4. NEED FOR EFFICIENCY AND RELIABILITY
• 5. INFORMATION TECHNOLOGY
• 6. THE NEED TO REPLACE AGING INFRASTRUCTURE
 FACTORS AFFECTING SUPPLY

• 1. ECONOMIC STAGNATION
• 2. FINANCING REGIMES AND METHODOLOGIES
• 3. ASSET ACQUISITION AND MANAGEMENT STRATEGIES
• 4. PUBLIC PROCUREMENT PROCESSES
IMPACT OF INFRASTRUCTURE
ON ECONOMIC DEVELOPMENT

• IS IT ECONOMIC GROWTH THEN INFRASTRUCTURE

DEVELOPMENT OR INFRASTRUCTURE GROWTH THEN ECONOMIC
DEVELOPMENT
• The need to achieve successive annual economic growth has
often been the driving factor for investment decisions in
PUBLIC INFRASTRUCTURE for many countries around the
world .
• Both developed countries and developing countries alike do
justify the expenditure of public resources on infrastructure, as
being a pre-requisite for economic growth.
• Governments have used this as justification to borrow from
multi-lateral development banks and pension funds for onward
investment into infrastructure development with the hope of
repaying the loans from the improved tax revenues due to
heightened economic activity.
• For developed countries, the expenditure on transport has
been justified as that which is needed to ensure that their
economies remain competitive and helps achieve enhanced
productivity which in turn leads to economic growth
• Developing countries on the other hand invest in
infrastructure to open up areas of productivity, enhance
connectivity between the production and market regions,
as well as, enable easy and cost effective transportation
of goods and people from outlying areas thereby creating
economic growth poles
• Failure to achieve the intended objective of the
investment, particularly where the use of public capital is
involved, results in not realising value for money
 WHAT FACTORS ENABLE
INFRASTRUCTURE CONTRIBUTE
TO ECONOMIC GROWTH
• RELIABLE INFRASTRUCTURE
• INTER-CONNECTED INFRASTRUCTURE
• RESILIENT
• ROBUSTNESS
• VALUE FOR MONEY
• ABILITY TO REDUCE THE COST OF DOING BIZ
• ADEQUACY
END!
 INFRASTRUCTURE FINANCING:
STRATEGIES FOR FINANCING PUBLIC INFRASTRUCTURE
 RISK IDENTIFICATION AND
ANALYSIS

• QUESTION: HOW MUCH DEBT AND HOW MUCH

EQUITY IN SPV?
• ANSWER: IT DEPENDS UPON PROJECT INHERENT
RISK.
 Financial Risk Mitigation
• Capital Markets Instruments : Hedging
• Examples:
• • Foreign currency swaps : for what period?
• • [Interest rate swaps : for what period?]
• • Commodity swaps or hedges
• Points to note:
• • Nature of contract ? Potential lack of flexibility?
• • Costs? Long-term swaps can be very expensive to re-
negotiate
• • Availability? Long-term swap market can be illiquid
• • Swaps are Contingent Liabilities, sometimes described in
Notes to the Balance Sheet of counterparties [& sometimes
not!].
FUNDING STRUCTURES
 PROJECT APPRAISAL
QUANTITATIVE ANALYTICAL
TOOLS
DISCOUNTED CASH-FLOWS
[“DCF”]
COST-BENEFIT ANALYSIS –
Possible impacts
• • Environment
• • Social
• • Climate change
• • Technological development
• • Transfer of technology
• • Decongestion / congestion
• • Population growth
• • Economic growth
• • Connectivity
• • Employment
• • Displacement
• • Ambiance
• • Quality of life
• • Public safety
CASH-FLOW MODELS
CASH-FLOW ANALYSIS
Case Study
 INFRASTRUCTURE
PUBLIC Vs. PRIVATE FINANCE
PPP VS. CONVENTIONAL FUNDING?