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PDW - Infrastructure Meets Business AOM 2009, August 7, Chicago

Closing the Capability Gap: Strategic Planning in Infrastructure Sectors Hagen Worch & Jochen Markard. PDW - Infrastructure Meets Business AOM 2009, August 7, Chicago.

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PDW - Infrastructure Meets Business AOM 2009, August 7, Chicago

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  1. Closing the Capability Gap:Strategic Planning in Infrastructure SectorsHagen Worch & Jochen Markard PDW - Infrastructure Meets Business AOM 2009, August 7, Chicago

  2. Provide services of fundamental societal importance High political attention  high degree of regulation  multiple objectives  publicutilities / providers Based on complex physical assets / networks Capital intensity  natural monopoly  regulation Capital durability  long payback periods  inertia Challenges Massive investment needs Security and quality of supply Environmental impacts Liberalization, privatization Infrastructure Sectors

  3. Challenges Small units  inadequate size to exploit economies of scale Lack of capabilities ( strategic management) Financial situation of municipalities Multiple political objectives Suggested solution Privatization, but ... ... not a feasible option for many stakeholders & shareholders ... PPPs with ambiguous results Public Utilities

  4. Long time horizons, system character, various regulations Scenario analysis to address the high level of context uncertainty Multiple objectives Discursive and participatory approach: involving relevant stakeholders Systematic assessment of objectives & trade-offs Economic Performance vs. Environmental concerns vs. Autonomy Inertia & path-dependency Elaborate broad spectrum of strategic options Synthesis Evaluation of the feasible options regarding their suitability to meet the objectives under different scenarios Strategic Planning Approach

  5. Three WWTP cases differ regarding their objectives Bern Limited company with 10 muncipalities as shareholders Management influence on strategic planning: high Main objective: economic Kloten-Opfikon Cooperative association between 2 muncipalities Management influence on strategic planning: medium Main objective: environmental Dübendorf Cooperative association between 3 muncipalities Management influence on strategic planning: low Main objective: autonomy Case Study Analysis

  6. Optimization Structure Process Communal satellite plants Utilization of by-products Non-communal satellite plants Vertical Integration Multi-utility services New Business Fields All wastewater related services Treatment plant & sewer network Treatment plant Within the region of activity Outside the region of activity Geographic Growth Dimensions of Strategic Decision Making

  7. Case Study Results Bern Optimization Structure B Process Communal satellite plants Utilization of by-products Non-communal satellite plants Vertical Integration Multi-utility services B B B New Business Fields All wastewater related services Treatment plant & sewer network Treatment plant Within the region of activity Outside the region of activity B Geographic Growth

  8. Case Study Results Kloten-Opfikon Optimization Structure K Process Communal satellite plants Utilization of by-products Non-communal satellite plants Vertical Integration Multi-utility services K K K New Business Fields All wastewater related services Treatment plant & sewer network Treatment plant K Within the region of activity Outside the region of activity K Geographic Growth

  9. Case Study Results Dübendorf Optimization D Structure D Process Communal satellite plants Utilization of by-products Non-communal satellite plants Vertical Integration Multi-utility services D D D New Business Fields All wastewater related services Treatment plant & sewer network Treatment plant D Within the region of activity Outside the region of activity Geographic Growth

  10. Optimization Bern Vertical Integration Main objective: Economic New Business Fields Geographic Growth B K Optimization Kloten-Opfikon B K Vertical Integration K B B K Main objective: Environmental New Business Fields K Geographic Growth Optimization K B Dübendorf D Vertical Integration D Main objective: Autonomy D D D New Business Fields D Geographic Growth Case Study Results

  11. Strategic planning in public utilities Dealing with high uncertainty in utility sectors Developing and extending strategies … Capacity building Extending the organizational capabilities & skills (professionalization) Moving toward higher efficiency of service provision … according to the objectives of the utilities & stakeholders Specific patterns of change emerge - Improving Performance of Public Infrastructure Services - Patterns of Change Contingent on Objectives Overall Results and Conclusions

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