Mobilizing Resources to Manage Risk

1
Mobilizing Resources to Manage Risk Pursue
Opportunities
2
EMBARQ

• A catalyst for socially, financially, and
  environmentally sound solutions to the problems
  of urban mobility

3
EMBARQ

• A center within World Resources Institute, an
  independent non-profit research and policy
  organization
• Founded in May 2002 by WRI with a 5 yr grant from
  Shell Foundation
• Additional EMBARQ contributors include
• Hewlett Foundation
• Netherlands Ministry of Foreign Affairs
• Asian Development Bank
• Energy Foundation
• Blue Moon Fund
• US Environmental Protection Agency

4
EMBARQs Strategy

• Work with politically and financially empowered
  decision makers
• Form strategic public-private partnerships
• Inject business DNA into government/NGO
  projects or a Disciplined Drive for Quality
• Learn from corporate sectors mistakes and
  successes to save time and money in public sector
• Reduce risks and costs by good project planning
  and management techniques

5
EMBARQ in Mexico

• From theory to practice

6
EMBARQs Strategy
GENERAL MEXICO CITY

• GDF
• Shell Hewlett Foundations
• Vehicle manufacturers
• World Bank
• MOU with City Gov to create CTS-Mexico and to
  cooperate on sustainable transport

• Work with politically and financially empowered
  entities
• Form strategic public-private partnerships

1
2
7
EMBARQs Strategy
GENERAL MEXICO CITY

• Partnered with national government, other NGO
  and numerous private companies to implement
  solution set
• Orientation
• Opportunity Framing
• Risk Analysis
• Decision Road Maps
• FAST Diagrams

• Form strategic public-private partnerships
• Inject Business DNA to obtain best outcomes

3
4
8
Integrated solutions for Mexico City

• Bus Rapid Transit
• Technical advisory services to city on
• Design and infrastructure
• Institutional/Organizational Reform
• Negotiation with service providers
• Diesel Retrofit
• Test potential emissions reduction for heavy
  diesel
• Introduction of top-of-the-line technologies
• Test Clean Fuels and Buses
• Secured donations/loans from MNC
• Identify best-performing fuel/engine combinations
  for Mexico City conditions

9
Bus Rapid Transit
More than just lines on a map!

• Systematic Reorganization of Surface Transport
• Rapid implementation, stable finances still
  possible
• Reliable (mostly private) operators, relatively
  transparent regulations,
• Potential for integration with other modes (smart
  cards)
• Backbone of Integrated Mass Transit System
• Friendly to other modes
• Clearly branded and popular (High customer
  satisfaction)
• Can be integrated with State of Mexico transit
  services
• Priority to the Client
• Speed through protected lanes, traffic signal
  synch.
• Greater comfort and security on board, smoother
  ride
• Reliability and high frequency, with pre-paid
  fares
• Health impacts baseline and with corridor

10
Scaling Up Mexico City
LB
G. A. MADERO
Metro light rail
L7
L6
L5
L4
L6
AZCAPOTZALCO
Insurgentes BRT corridor
L2
LB
L8
VENUSTIANO CARRANZA
MIGUEL HIDALGO
L 1, 5, 9, A
CUAUHTÉMOC
L1
L4
L9
IZTACALCO
Future BRT corridors
BENITO JUÁREZ
ÁLVARO OBREGÓN
L7
LA
L8
L2
COYOACÁN
IZTAPALAPA
L3
TLÁHUAC
TLALPAN
XOCHIMILCO
11
Retrofitting Mexico Citys Diesel Fleet

• Exhaust retrofit of existing heavy vehicles 90
  less PM, 20 less NOxwith catalyst-based diesel
  particulate filters
• Used cleanest diesel available (lt15 PPM)
• Careful testing to pick best buses to retrofit
• Competitive bidding for equipment

12
Testing for best engine/fuel combo

• Advanced Systems Maybe Now, Maybe Later
• Fuel cells Feedstock and infrastructure main
  uncertainties cost is high
• Hybrid showed lowest emissions, fuel use, but not
  best value
• Clean diesels (with ultra low sulfur fuel) likely
  the most cost-effective option
• CNG buses good emissions performance but will
  require system change - a high hurdle

13
Tractor trailers 75,000
Light trucks 19,000 Buses 30,000
Other 9,100 Passengers
32,000
14
Anatomy of a Train Wreck
Why large projects fail in cost-efficiency
performance

• Poor front-end loading (early-stage planning)
• Schedule Driven Vs. Decision Driven
• Caught up in company politics
• Ignored best practices Learning curve does not
  curve!
• Inappropriate contracting strategies

15
Ignoring best practices

• Exceptionalism We do it differently here
• Lack of ownership Give me a call when its
  finished
• Inadequate front-end planning Its a fast track
  project
• Corporate arrogance This project is different

16
Risks and Opportunities

• Municipal projects exhibit all of these risks,
  and then some
• They have less access to good practices than
  business, less money to waste, but less incentive
  to be efficient
• Partnership with EMBARQ contingent upon being
  willing to manage risks and opportunities
  collaboratively, using process adapted from Shell
  and other businesses

17
The EMBARQ Process Objectives

• To produce clarity and alignment among the team,
  interest groups, and decision makers about what
  is, in fact, the opportunity
• Identify the main motivation points and success
  factors, as well as the risks and opportunities
• Define the range of efforts necessary to develop
  the opportunity
• Build a road map oriented by decisions and a plan
  to reach success.

18
Why Plan so Carefully?
High
Cost to Change
Ability to influence cost
Ability to influence cost
Low
DEFINE
IDENTIFY EVALUATE
EXECUTE
OPERATE Y MAINTAIN
SELECT
Stage of the project
1 10 100 1000 gt10,000
Investment in 1,000
TiME
19
Defining the Opportunity and the life cycle of a
Generic Project
Identification of the Value
Realization of the Value
Defining the opportunity
20
Good front-end planning
21
The opportunity statement

• The opportunity statement defines what the
  opportunity is and isnt!
• Serves as basis for the design and it will be
  tested as we move forward
• Serves to mantain the teams focus
• Establishes a reference point.
• A good pportunity statement should have the
  following characteristics
• Be logical
• Allow all team members to use it as a reference
• Open enough opportunities to investigate creative
  alternatives
• Be clear and concise to all that read it
• Consider full life cicle.

22
Framing
Opportunity Statement

• By 2007, City X wants to be operating a new, high
  quality BRT, with a trunk-feed design,
  managed/administrated by an independent entity,
  which offers users an improvement in service and
  which creates new business opportunities for the
  incumbents operating in the system today.

2. Where do we want to be?
23
Framing

• Opportunity Statement
• By the end of 2007, a corridor going through the
  city center will be working, taking out stops and
  terminals, improving the space and transport
  circulation aspiring to be of high performance
  and keeping the arrival of people to the center.
  The operation of the corridor will be
  economically sustainable, transcending change in
  government and creating opportunities of private
  investments.

24
Framing

• Definition of success
• Principal Success Criteria
• Restructure of public spaces in the city center,
  starting by removing buses from Such and Such an
  Avenue
• High customer satisfaction
• No more lines of people waiting for
• buses in the city center.

25
Risk Analysis the TECOP Concept

Infrastructure Project Tecnology
Technical
Budgets Costs Economic Model Financing
Economic
Contracts Commercial Model Marketing
Commercial
Structure Responsabilities Procedures
Organizational
Government Interested Groups Employment
Politic
26
Process
How do we get there?
Where are we?
Where do we want to go?
Define the opportunity
Risks
Limits Decisions made Pressuposts
The Risks
Management of Interest Groups
27
Decision Road Map
TIME
OBJECTIVE
KEY DECISIONS
DECISION MAKERS
DELIVERABLES
28
The most recurring risks

• Prioritizing the project (assign project manager
  full time)
• Prioritizing the project (mayor gives it
  sufficient budget and attention)
• Exclusive focus on technological
• Time to define financial model vs time to execute
  the project
• Resistence to change (incumbent operators, street
  vendors, users, etc)

29
Thank You Nancy Kete 28 March
2006 www.embarq.wri.org
30
Sustainable Transport Solutions
Operate Maintain
Execute
Define
Select
Identify Assess
Diagnose
Problems are now well defined
A portfolio of solutions to be implemented
Decide to Go
Ready to start up

• Typical EMBARQ Solution Set
• Mass Transit - BRT typically, and/or
• transit system business model restructuring
• Non-motorized transport
• Transport demand management
• Traffic engineering
• Retire, Replace, or Retrofit for emissions
  control
• Transport oriented development
• Policy reforms to enable any of the above

• Typical Diagnosis
• Outputs
• Emissions Inventory
• Indicators
• Preliminary assessment
• of transit system quality