Why Smart Infrastructure Often Looks Like a Unicorn

By Peter Torrellas

Peter is a Fellow at the Center for Neighborhood Technologies and has held the position of Chief Technology Officer at Siemens Infrastructure & Cities. His portfolio included Logistics, Aviation, Passenger and Freight Rail, Ports, and Road and City Mobility. Peter has close to 20 years of experience in innovation and infrastructure and began his passion for making our infrastructure smarter almost a decade ago by successfully designing and delivering over $500M in software, hardware and IT technology for New York City’s transportation infrastructure.

Dec 18, 2014 | Urban Sustainability | 1 comment

After years of working inside bigger and older companies (like Siemens) and also leading edge boutique technology companies (like Optym), I’ve found that one problem related to working with cities stands out from all the others.

Cities, in general, have not yet realized that deploying technology to improve infrastructure can only be done efficiently when multiple cities join forces with each other. Cities must learn to collaborate with one other. They must partner with many actors — not just public sector entities. Lastly, they need standards by which to assess the technological maturity and the “smartness” of their urban infrastructure.

Urban infrastructures (e.g. buildings, transportation, energy, and water systems) are beginning to incorporate some of the technologies which have been nurtured by the Internet’s growth (e.g, cloud, mobile, etc.). Those cities making such moves have a clear goal in mind: to meet a growing list of critical needs facing city dwellers.

When choosing technology solutions for their built infrastructure, government leaders often require “tailored solutions” from vendors – but the cities are using procurement procedures which have been designed for “off the rack solutions”. This means that the private sector is being asked to develop highly customized solutions which are often higher risk, lower in profitability, and difficult to transplant to other cities (without considerable additional cost).

If the public sector and the private sector joined forces; if they work to improve the capability of adopting new infrastructure technologies; if they increase the number of options available to cities; if they provided common requirements — then cities would find that they had available a critical mass of “good enough” needs, essentially creating a real and quantifiable market. Cities would be empowered to solve their infrastructure needs, to do it with lower costs and lower execution risks, and to with a much higher degree of market efficiency, thereby smoothing the way to finding viable solutions.

Which begs the question that I’ve spent years working to answer: how do we go about accomplishing this?

Searching for the Holy Grail is not always fun, especially whenever it involves an earnest effort to address these challenges. In my own experience, there are two areas that stand out:

1) The “newness” of the opportunities presented by these new technologies begs for updated methods. The best solutions for cities will not likely come from traditional top-down prescriptions, nor from a 20-year “Master Plan”. No single segment of a metropolitan network can effectively and efficiently execute sustainable change. The incoming technologies change everything!

We need an agile and iterative collaboration of diverse constituents in the city’s network, one which is highly focused. It must be tasked with measurable and actionable frameworks for decision-making. While all cities are unique, the solutions which work best for cities are often the same. Technologies of various kinds can be (and are being) leveraged for use in the build-out of smarter urban infrastructures. By “smart” I mean optimizing operational cost; throttling capacity; providing new and better services; improving the relationship of our infrastructures to the natural environment.

Cities must take the lead to coordinate public, private, academic and philanthropic actors. They must leverage the lead public-sector technologists (e.g. CIOs and CTOs) in order to analyze the technologies used across the infrastructure. Many technologies used across these elements are become similar, and that is a trend which will only increase. These infrastructure elements are often interdependent, but they’re being handled separately. I have personal experience leading teams – in water, transportation, buildings, energy, public safety, urban planning, finance, and technology — where the attempt is made to solve problems together. I leave these projects amazed to find how much we all learned from each other and how much additional value. Perhaps a “swat” team should be created on the state level to accelerate learning and to improve execution.

2) The types of technologies being leveraged for cities include both the software and sensor technologies which are now moving out of the Enterprise and out of the Internet and into Infrastructure and Manufacturing. This is, in my view, the technical key to utilizing previously unavailable efficiencies and to obtaining the benefits at a marginal cost.

Sadly, cities often frame their infrastructure needs independently. How cities prescribe and procure solutions is, frankly, anachronistic. It leaves the cities (and other participants in the “urban ecosystem”) at a significant disadvantage, at a time when we need each other the most.

Consider what’s happening with water treatment. There are approximately 30,000 of these systems in the USA. Let’s assume we want to make these water treatment systems become “smarter”. There’s currently no standard to determine what “smarter” means. This makes it hard to know if a water system is technologically in Kindergarten or if it has a Master’s degree. If a particular water system is second grade, it’s unclear if that system needs a high school education or a doctorate to accomplish the long-term goals. How to procure the solutions needed to increase “smartness”?

Solving this problem requires a formal “requirements framework” which outlines the needs for each major infrastructure segment (water, mobility, buildings, energy). And then imagine that this “requirements framework” was jointly agreed and developed by a critical mass of key public and private constituents. The framework would, ideally, recognize the variance in the maturity/capability of different urban infrastructures. The framework would take into account the fact that different maturity/capability levels are needed in order to reach city goals.

In addition to the framework, a useful measurement system would help to verify and iterate progress. Many of the KPI’s used today to measure city sustainability address the results derived from sustainable practices (i.e. air and water quality). Once a common standard is in place it becomes possible to augment these measures. The goal is to improve the technological maturity of each urban infrastructure system (e.g., water, rail, energy). Technology is a key driver that determines how fast and how far a city will get on the road toward achieving sustainability. There are additional drivers, of course. Two of the important ones are fiscal feasibility and the political will to change.

When the cities can quantify the smartness of technology and when they deepen collaboration, four benefits flow to cities:

  1. Improving the returns on capital and equity:

Quantifying the benefits in terms, which a city values (including cost) helps to connect the economics of sustainability with the critical business case for change. Quantifiable economic benefits are essential to making the argument for funding big changes. Those who want to measure the progress need metrics in order to quantify the true capacity of the city’s resources, the true costs of operations, and the efficiency of the infrastructure. Quantifying also makes it possible for the public to assess initiatives – since they can now count the full return on investment.

  1. Fueling Innovation via PPP’s

Quantifying economic and environmental benefits allows financial markets to create new investment opportunities using financial innovations. Supporting the relationship between cities and the financial markets.

This would assist those Savvy city leaders who seek the opportunity to combine “smart infrastructure” projects, which reduced cost (liberating a percentage of OPEX). They want projects that increase revenue (e.g., through fair collection or improved utility metering). They also want projects that are crucial to the next stage of urban economic development (e.g., a new BRT line).

  1. Focusing Non-Public Capital:

When cities work together to quantify their combined needs, it opens the flood gates of private capital. Investors are ready to fund projects which are dedicated to solving cities problems. Investors (whether it be large institutions or venture capitalist and their startups) have insights which will be crucial to attracting new resources.

  1. Reducing execution risk:

Standardized urban solutions significantly reduces the cost and the execution risks associated with of implementing new or large-scale technology-driven upgrades to infrastructure.

Discussion

Leave your comment below, or reply to others.

1 Comment

  1. Saibal

    Dear Peter,

    Very much liked what you said. We are actually practicing the points in our city renewal projects. I would also like to add here two points :
    1. That a territorial/regional scale of analysis (and modelling) of would help and go a long way in developing baselines and targets (performance indicators) and finding the right projects for PPP .
    2. That cities are also product of political influences and sometimes things change unexpectedly – specially when renewal projects takes long time in planning and execution

    Reply

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