A case for TERA- Technology Evaluation & Rating Agency

A case for TERA- Technology Evaluation & Rating Agency to allow intellectual capital to improve efficiency of our capital investments in logistics infrastructure . B.Rajaram FIE., FNAE

Abstract: Mckenzie estimates $500 b as the funding needed for logistic infrastructure of India in next decade. Our PM mentions a figure of $ 1 trillion. The space of opportunity to innovate is huge. But surprisingly Mckenzie envisages the age old systems and solutions in use by other developed countries. When those countries created their infrastructure it was not from debt, but from capital free of any attached cost. Today we need debt to create. Old generation solutions remained mainly product centric and not based on totality of service. The modal splits and transfers queer the pitch. Individually each of the proucts like metro rail or high speed network, deliver well, but for the user the total point to point quick transit gets more often than not, denied. The intellectual capital and innovation in logistic infrastructure is denied to the society by the blinkered old world wisdom of governments adopting only the same old generation technology, being risk-averse . This leads to a lose-lose situation of infrastructure development adding to the increasing drain on economy, in terms of subsidies or cross transfer of costs to lucrative real estate, instead of acting as catalyst. In this paper a solution to address this problem is proposed through creating a TERA, Technology Evaluation and Rating Agency, which will allow innovative technology to complement capital deployment. Further a case is made for specifying user requirements in service and performance terms, rather than product centric approach. Case studies of a new world which can emerge having high speed transit, low cost environmental and people friendly metro rails, sea-ports and airports, with substantial savings in energy to the tune of 50 to 70% are described. It is all a matter of policy initiative, which can open flood gates of private investments because, now, they become attractively being viable financially, without cash support from the government and unleashes the leveraging intellectual capital of the world. The technology should be brought back to center stage to get many orders higher returns , saving billions of dollars in creating more efficient logistics infrastructure. Policy imitative to create a couple of TERA's is the immediate need.

1. Introduction

Countries like US as well as India are in dire need of improving their transport infrastruture but unlike China, who are funding entire development of high speed rail networks, roadways and hydro-electric projects totally from internal funding without debt, others lack this luxury. Debt funding and private enterprise bringing in capital is necessary for both India and USA. Efficiency of the capital employed becomes extremely critical in such a case. For China, it does not matter. Reckless external debt funding with continuing losses in operations of such mega -infrastructure projects will become a ticking bomb causing the economy to get melt down, hurting the society many orders more than the benefit it would deliver to the society.

Infrastructure is to serve our purpose; we are not here to serve infrastructure.

2. Dimensions in developing the infrastructure:

2.1 To develop infrastructure, defining goals clearly for design of technology , finance and project management form the three important critical dimensions. The additional layer covering all the three dimensions is innovation.

2.2 Defining requirements: We do the first mistake in defining our requirement in product- terms rather than in desired service terms. The ususal words are Creating Dedicated Freight Corridors, High Speed rail networks, or Metro Rail for city--- typical assumption that, that must be the solution to our problems.

2.3 In fact after spending the funds and creating such networks, quite often, we find the transit time from point to point remains unsatisfactory. After traveling at high speed, the bridging from the arrival point to destination remains a challenge in many a city and it takes abnormally long time. Then the modal split to change from walking to a road transport, then to rail, then back to walking, to access a road transport unit, to cover the last mile, all add to frustrating longer transit time.

2.4 Metro rail in a city acts more as an aggregating agent to get masses to travel, creating terminal congestion and dispersal problems and for a commuter still the point to point transit times remains unsatisfactory, with modal splits along the travel process.

2.5 Airports too bring in passengers at high speeds but face the same challenge of long transit times for each individual to reach his own destination. Again, air travelers face the long waiting time at airport in congested ques for security checks and baggage handling prior to boarding.

2.6 We are all conditioned to accept these methods of delivery of service as unavoidable, because we blocked our minds to design systems based on products and not based on what actually what we desire for.

1. Old generation technologies:

2. Technologies evolved under public funding of old generation, which never had any need to efficiently use capital, because in olden days capital was free of cost, are not fit for modern world where capital has cost attached.

3. Further in older generations think on command control mode, and these technologies which evolved in yester years are not too sensitive to concerns of land requirements, displacement of people, habitats, or businesses.

4. Similarly carbon print and energy consciousness with need to be environment friendly approach , all are more on paper and TINA ( There is no alternative) , approach for development is taken. This emanates from product centric thinking. So environmental damage is taken as inevitable. Some marginal mitigation measures, more as an eye wash, are considered adequate to satisfy the law; but not in spirit. Forced under authority, the public were expected to accept without demur as in olden days.

5. Energy conservation by itself is a very important consideration for the sustenance of the planet. This concern was not too critical for the technologies developed almost 50 to 100 years ago. Interestingly we keep doing the same thing even today. Obviously putting shiny glass and steel cover over coaches, does not change the basic rail based trains of a metro. It is still the age old railway. Non-renewable sources of energy were very liberally used in older generation technologies. With pressure from the society, marginal improvements are incorporated in the same old technology claiming improvements in savings of the order of 2 ot 3 %. But major re-design and change over to alternate mode of transport is generally not attempted . Cosmetic improvements only thus obtained in real terms.

6. However, people have become more aware and socially conscious and the world peer pressure and communication spread with access to legal processes, are proving to be nuisance to the old world governance and a thumbs down to natural arrogance of wealthy investors, who are in a hurry to launch the project, and put capital to use as fast as possible. The more businesses and habitats that they have to dislodge, the more time it would take adding to costs now. But old world technologies did not account for this resistance in the society. Time over run with cost over run hurts. There is pain also involved in society for accommodating these old technologies for so called benefit of the larger society. But pain is pain for those who suffer loss of their dream house or business.

7. Even out side the city, the land has become precious and few owners to day are willing to hand over easily. Times are changing. The delays hurt the projects. Added costs leave a bitter taste. Some times even the project gets abandoned. Sea ports particularly face the wrath of the fishermen and displacing the villages from the water front is truly painful for both sides, the developer and the villagers.

4.0 Private Funding

4.1 With dwindling public funding, the governments look more and more for private participation in all the sectors of infrastructure development. Even defence equipment, apart from railways and metros are now looking for private enterprise.

4.2 Till now only for efficiency in financing with innovation and project management the private enterprise is accepted but in the matter of technology the government forces their views, even though they may not be fully equipped to do so. Willy nilly, the lobbies of the existing established technology selling multi-national companies exploit this loop hole, and effectively force the hand of the government , who in turn make it their agenda for the private partner to deliver.

4.3 The governments are comfortable with old generation capital intensive and cost-insensitive technologies fit for zero-cost funds, as their chosen ones, merely for the comfort it gives them, that they are not taking any risk. Famously government servants are risk-averse. Talk of managing a risk is a far cry to their psyche. This has to be addressed in a rational manner.

1. Blocking Innovation :

2. The freedom to innovate in technology and realise much higher order of efficiency in use of capital, is thus blocked by the government either knowingly or unknowingly. Since the gap funding required gets reduced now with private enterprise taking up the development and bearing the major part of the expenditure, as compared to what the government would have spent, the bureaucrats in the government are comfortably pushing this model.

3. But this model is now reaching its saturation and yielding diminishing returns because, even the gap funding the government is unable to assure, and is forced to raise debt to meet this requirement.

4. The private enterprise too is not feeling too comfortable with a fundamentally financially unviable inefficient technology, needing prop from the government and the inevitable continuing government's restrictive role in their day to day working, by virtue of gap funding, which generally will be short of need, and eternal negotiations continue.

5. The dimension of technology innovation is neglected very badly today, more because of fear of some unknown area of knowledge. Tested and proven systems only are encouraged but innovation is simply dismissed both by the government as the giver of permissions and private enterprise too, seeing the difficulty of pushing a new innovation as their agenda, through the staid bureaucracy, firmly risk-averse.

6. This is acting as disincentive for putting to any use the intellectual capital of our country. We are wasting the same.

1. Need for intellectual capital :

2. So we are losing in two ways- promoting ill fitting old generation technologies which did not care much for capital cost nor environment, and at the same time killing any initiative to adopt more suitable modern technologies innovated to to protect environment and also improve efficiency of capital employed, with higher safety standards.

3. If we are able to combine intellectual capital with finance, then the capital use can be leveraged to deliver much higher order of quality and performance with financially viable solutions.

4. But in case of financial instruments, innovation is encouraged and the instruments are cleared because of independent assessing and rating agencies, giving a confidence rating which allows the market to accept without going in to the complexity of the structure of the instrument per se.

5. We need to have similar organised independent agency in private sector, with appropriate tools for evaluating any emerging technology and allocate a structured rating, like for financial instruments.

1. Technology Evaluation and Rating Agency (TERA) :

2. For innovative technology solutions, this agency will work on retainer-ship basis, for getting any technology evaluated, and allot a rating of confidence regarding technical feasibility, safety and cost of implementation based on a set of parametric study by a multi-disciplinary team with no-conflict of interest , just as we do in allocating a rating to a debt instrument. Such a rating will enable the infrastructure developers and financial institutions to collaborate and also raise funds from the market with more assurance than we do to day.

3. Every technology can be broken in to sub-systems and further to component level, and examined, if by bench marking process they function properly by themselves. If every component satisfies the existing codal provisions, and the sub-systems are already functioning in different configuration some where else, then the reconfigured system can be assessed by examining the interfacing between the sub-systems and through simple bench marking with comparable systems, one can arrive at a weighted rating of confidence level.

4. In fact TUV Rheinland Germany did the same to our Skybus and concluded that there is minimum risk of any failure, and infact very high order of success, even before testing. Same with Dr Abdul Kalam and his team of scientists who concluded Skybus was safer and feasible. Actual tests proved their assessment too.

5. But convoluted opinions of old technology pushers made use of the risk-averse psyche of bureaucracy, to put fears and blocked the Skybus. The loss is of the order of thousands of crores to the country. So a TERA rating would be objective and will change the way we take such serious investment decisions for developing infrastructure.

6. The government also will have to change their attitude in defining their needs. Get out of dictating technology products but rather focus on service requirements and environment & people friendly aspects.

7. Once we have such a TERA, then the superb capital unique to India, "Intellct" will come in to play in a significant manner, becoming the game changer in the world.

1. New approach of Government :

2. Imagine putting down the requirements for private capital to flow as

1. least time, cost effective, safe & reliable transportation of cargo and people, point to point for the user. ( Note it is not the speed, but service requirement takes precedence)

2. Least energy consumption

3. least subsidy/financial support from the state

4. practically little displacements for people and businesses in the habitats to be served

5. TERA rating to be the acceptable value for the technology adopted to deliver the service.

8.2 The TERA provides fair chance for innovation to succeed, transparency in governance and also the comfort level to the government, and so total focus will be on the service needs with energy conservation and habitat-friendliness.

1. What would happen if TERA is in position?

2. We can have access to the following technologies which are denied by the comand control old world approach to infrastructure development.

3. An address to IIT Techfest 2007 http://www.youtube.com/watch?v=vNlDHvjD6vs is relevant for details.

4. Next generation technologies for transport sector based on Sky wheels technology causes paradigm shift to all rail guided systems, will be now accessible to be used in cities, between cities as well as to link agricultural and industrial production centers, design & construction of air-ports, design & construction of sea-ports both for cargo as well as people.

5. Energy savings and reduction of carbon print:

Powered by Gravity Power Towers, the Skywheels can save 70% of energy used by the presently used technologies.

1. What a city needs can be summarised as: “De-congest and eliminate pollution on roads, Rapid mass transit systems for people, deliver trucks/ containers to manage cargo services, and city house keeping services like keeping the roads clean and clear the garbage.”

2. Sky wheels based system follow roads and in an integrated manner provide all the above services without terminal congestion problems and providing point to point transit with no modal split.

3. Further augmented by gravity power, electrical energy is saved up to 70%, thus being light on cities power demands.

1. Inter-city high speed transit for people and cargo-Skyjet

2. For typical distances of 500 km like Mumbai Goa/ Mumbai- Ahmedabad we can have Skyjet high speed railway at 250 kmph, cutting down travel times to less than 2 ½ hrs, to carry not just people but cargo too like 10,000 containers a day-causing a paradigm shift to transport scene and business models get re-defined. It will prove to be financially viable at current affordable economical rates.

1. 12.0 Sky-wheels based new generation air-port design :

12.1 The new knowledge embedded rail guided system like Sky-wheels, causes a paradigm shift in setting up an airport- the future airport is practically an invisible entity away from habitats but accessible within city at all major habitats.

1. 12.2 The passenger gets into Sky-wheels Unit close to his place of living and gets his boarding card and security clearance, and the sealed secure Sky-wheels unit straightaway takes him to the doorway entrance of the aircraft, seamlessly, and his luggage too reaches the cargo hold.

12.3 There is no need to get out again wait at holding areas in airport.

12.4 You will be floating over green gardens as you approach the air-craft aero-bridge entry point!

12.5 You will not find any major infrastructure near the runways of airports as you see today- no major buildings nor facilities to handle waiting passengers, nor car parking problem! Entire city becomes air-port reception area!

12.6 The savings in time and comfort to passengers can easily be imagined. The economies of airport transport infrastructure and business model again will face sea-change for better. Again a financially viable and better alternative emerges.

1. New generation sea-ports using Sky-wheels concept

2. Handles container and non-containerised bulk material.

3. The sea-port practically becomes invisible as there wont be any need to have vast areas close to shore lines for material handling nor jetties into sea linking land to ship.

4. Actually ships are made to anchor at optimum locations away from land, in sea where required draft is available with least dredging, and the Sky-wheel systems, will have capacity to bridge the unloading and loading operations at ship to modal transfer points like railway yard located outside cities faraway.

5. The savings in terms of avoiding the area development at shore lines, avoiding the expensive jetties, dredging costs, and more than everything the productivity levels for material handling which is at 5 to 6 times more than the current best available systems, will again redefine the ports as we know and make them more efficient at lower capital costs, which translates to beating the competition in the world.

6. The Sky-wheels based sea ports will re-define the cargo business in the world!

CONCLUSION

1. TERA & Intellectual Capital:

2. Exciting opportunity awaits us to open a new world powered by eternal gravity and safer completely automated high speed, least transit time logistics infrastructure for people and cargo by land, sea and air, once with TERA, we are able to over come our diffidence and distrust of innovation. It is suicidal to continue to think and work the same old way repeating the same mistakes.

3. Preserving nature and , conserving energy while improving quality of life becomes reality only if we are able to unleash the unlinted power of innovation using our intellect. It assumes urgency to initiate steps to put in the policy in place quickly, so that our infrastructure deficit can be managed efficiently.

Acknowledgment: The author is grateful to Shri M.N Chaini, President/IMC/Mumbai , who urged and used his influence over me as my good friend forcing me to write out my views for developing High Speed lines and other infrastructure for logistics.