Developing Infrastructure for Evolvability: Integrating Modularity and Safeguards In Design Nuno Gil

1. Developing Infrastructure for Evolvability: Integrating Modularity and Safeguards In DesignNuno Gil Manchester Business School (on sabbatical) Global Research Awardee (Royal Academy of Engineering) CRGP, Stanford University (visiting scholar) © Nuno Gil MBS 2006 © Nuno Gil, Manchester Business School NUS, 2009

3. Victorian sewerage system, London • 19th century, River Thames was practically an open sewer • After The Great Stink (cholera epidemic) of 1858, Parliament decided to create modern sewerage system • Joseph Bazalgette, civil engineer, designed system that diverted waste to Thames Estuary, totalling almost 160 km underground sewers fed by 720 km of main sewers • 20th century, major improvements made to system

5. Bridge over River Tagus, Lisbon • Built between 1962 and 1964 • Suspension bridge, double deck, 2277m • In 1999, $1.4m project to install secondary suspension cables, widen roadway; install dual track railroad

6. Infrastructure meets Business • Infrastructure Gap is Massive • population growth, migration towards cities, deteriorated infrastructure, globalization of supply chains • Governments worldwide recourse to private-sector capital due to constrained budgets and ideology • sale of state-owned infrastructure companies • private finance initiatives • infrastructure increasingly attractive to pension funds, private investors, family houses

7. Infrastructure Design for Evolvability • Acknowledge tension between profit-seeker and public interest • Affordability/caps on user fees limit capital investment • Long delivery times + operational longevity => uncertainty • Bias towards capital cost instead of life-cycle costs • Evolvable design: design infrastructure to last, i.e., capable to accommodate economically change over time while limiting capital investment upfront

8. …from so simple a beginning endless forms most beautiful and most wonderful have been, and are being, evolved.

9. Evolvability • Darwin’s theories in evolution and variability • Evolvability: an organism’s capacity to generate variation (Kirschner and Gerhart 98) • Weak linkage, minimal dependencies among processes • Exploratory mechanisms, processes that can tolerate change • Surviving lineages diversified by maintaining core of conserved sequences and functions (vital processes) and modifying others

10. Product/System Design Modularity • Modularity: generate design architectures that can flex to change (Ulrich 95, Baldwin and Clark 00) • architecture, decouples functional modules • standard rules, govern interfaces • tests, verify modules will work together • but modularity does not come for free (Ethiraj and Levinthal 04) • and can come with penalty in performance (Fixson and Park 08)

11. Options Thinking • modularity builds options in design (Baldwin and Clark 97) • option, the right but not the obligation to choose course of action (Merton 73) • design with built-in options is more tolerant of uncertainty • high potential value is conditional on success/ limited loss conditional on failure • option purpose: stage delivery; switch use; grow capacity • options ‘on’ projects AND options ‘in’ projects (Wang and de Neufville 2005)

12. Research Site: £4.2bn T5 Development Heathrow airport, project promoter BAA plc. Conceptualization Mid 90s Start construction Dec 01 Open phase 1 Mar 08 Open phase 2 2012

13. Analysis • Two major determinants of decision to build options • Perceived likelihood that option may be exercised • high likelihood increases attractiveness of upfront investment • long-range timeframes to exercise option put off • Degree to which design is/can be modularised • how much does it cost to build option? • how much does it cost to exercise option? • how much would it cost otherwise ? • standard designs increase chances ‘to get it right’

14. Functional Modules Available ex-ante • Functional modules with standardised designs tend to be available when group of qualified suppliers is limited (modular clusters) (Baldwin and Clark 97)

15. Modularize architectures • Physically decouple functional elements: • Physically decouple concourse space across 3 buildings: allows to stage delivery (stage option) • Physically decouple roof and façade from interior floor plate superstructure: allows to delay interior design (delay option)

16. Build safeguards in designs • Safeguard: provisions needed to embed option in integral design (or enhance option built in modular design) • Passive safeguarding: mostly design provisions (secure space) • Active safeguarding: build in physical provisions (additional tunnel)

17. Mapping of Built-in Options Likelihood of Option Exercising Low High

18. Attractiveness of Safeguarding

19. Design Decision Tree (Gil 07)

20. What’s next? • Process of design for evolvability • Infrastructure design for ‘future-proofing’ • Building option fees in public procurement contracts