PRINCIPLES OF INFRASTRUCTURE Case Studies and Best Practices Hideo Nakamura, Kotaro Nagasawa, Kazuaki Hiraishi, Atsushi Hasegawa, KE Seetha Ram, Chul Ju Kim, and Kai Xu ASIAN DEVELOPMENT BANK INSTITUTE MITSUBISHI RESEARCH INSTITUTE, INC. PANTONE 281C PRINCIPLES OF INFRASTRUCTURE Case Studies and Best Practices Hideo Nakamura, Kotaro Nagasawa, Kazuaki Hiraishi, Atsushi Hasegawa, KE Seetha Ram, Chul Ju Kim, and Kai Xu © 2019 Asian Development Bank Institute and Mitsubishi Research Institute, Inc. All rights reserved. First printed in 2019. ISBN 978-4-89974-107-7 (Print) ISBN 978-4-89974-108-4 (PDF) This publication was jointly prepared by the Asian Development Bank Institute (ADBI) and the Mitsubishi Research Institute (MRI). The views in this publication do not necessarily reflect the views and policies of the Asian Development Bank Institute (ADBI), its Advisory Council, ADB’s Board or Governors, or the governments of ADB members, or MRI or its subsidiaries. It was originally published in the Japanese language as インフラストラクチャー 概論 by Nikkei Business Publications, Inc. (Nikkei BP) on 22 July 2017. ADBI and MRI acknowledge Nikkei BP and the authors for their kind permission to prepare an English edition and to freely use copyrighted material from the original book. The coherence of the translation with the original text is the responsibility of the editors and translation team. Neither ADBI nor MRI guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. ADBI uses proper ADB member names and abbreviations throughout and any variation or inaccuracy, including in citations and references, should be read as referring to the correct name. By making any designation of or reference to a particular territory or geographic area, or by using the term “recognize,” “country,” or other geographical names in this publication, ADBI and MRI do not intend to make any judgments as to the legal or other status of any territory or area. Users are restricted from reselling, redistributing, or creating derivative works without the express, written consent of ADBI. ADB recognizes “China” as the People’s Republic of China. Note: In this publication, “$” refers to US dollars. Asian Development Bank Institute Mitsubishi Research Institute, Inc. Kasumigaseki Building 8F 10-3, Nagatacho 2-chome 3-2-5, Kasumigaseki, Chiyoda-ku Chiyoda-ku Tokyo 100-6008, Japan Tokyo, 100-8141, Japan www.adbi.org www.mri.co.jp/english/index.htm Contents Tables, Figures, and Boxes iv Acknowledgments vii List of Contributors ix Preface to the English Edition xii Preface xiii Introduction 1 1 Various Infrastructure Systems and Their Development 7 2 Principles for Infrastructure Development 69 3 Infrastructure Commercialization and Business Entity 127 4 Infrastructure Planning and Decision Making 195 5 Development of Infrastructure 251 6 Operation and Maintenance of Infrastructure 273 7 International Cooperation for Developing Infrastructure Projects 335 Afterword 390 Index 397 iii Tables, Figures, and Boxes Tables 3.1 Financing Methods for Infrastructure Business 186 4.1 Contents Described in Infrastructure Investment Plans 203 4.2 Calculation Example of NPV and FIRR 220 4.3 Investment Criteria for Profitability 220 4.4 Methods of Sensitivity Analysis 222 4.5 Transaction Base Table 224 4.6 Input Coefficient Table 225 4.7 Inverse Matrix Coefficient Table 225 4.8 Investment Criteria for Economic Efficiency (Economic Analysis) 230 4.9 Methods of Multi-Criteria Evaluation 236 4.10 Example of a Pairwise Comparison Table 239 4.11 Example of Weight Calculation for Each Evaluation Category 240 5.1 Type of Contract by Method of Deciding Payment Amount 263 5.2 Type of Contract by Payment Method 263 5.3 Characteristics of Private Finance Initiatives 270 6.1 Current Status of Infrastructure in the United States Evaluated by the American Society of Civil Engineers 276 6.2 Examples of Risks Related to Infrastructure Business 300 7.1 The Sustainable Development Goals (SDGs) 339 7.2 Sectoral Share of Official Development Assistance (2014) 340 7.3 Classification of Economies by Income Level and Infrastructure Development 350 7.4 Strategic Transport Infrastructure Needs until 2030 360 7.5 Asia’s Total Infrastructure Investment Needs by Sector, 2010–2020 361 7.6 Characteristics of Infrastructure Markets in Newly Emerging/Developing Countries 363 7.7 Examples of Employing Institutional Designs and Strategies for Infrastructure Associated Business in the Railway Sector 378 7.8 Japanese Experiences on Urban Systems 382 Figures 1.1 Location of Lingqu and Grand Canal 12 1.2 Road Network of the Roman Empire 14 iv Tables, Figures, and Boxes v 1.3 Geographical Changes of the River Channel of Tone River (Japan) 20 1.4 Areas Below Sea Level in the Netherlands (Dark Green Areas) 23 1.5 Cassini Map: First Topographic Map of an Entire Country (France) 27 1.6 Underground Power Lines in Urban Areas (Tokyo) 55 2.1 Noto Satoyama Airport 86 2.2 Den-en-toshi Line and Tama Garden City 93 2.3 Nihonbashi 95 2.4 Revival Plan for Outer Moat of Edo Castle 96 2.5 Remodeling Plan for Stuttgart Central Station 100 2.6 Stuttgart 21 Project 101 2.7 Discussion, Permission, and Authorization on Multilevel Crossing Projects 103 2.8 Delay from the Plan (National Road Renovation Projects) 112 2.9 Delay from the Plan (Railway and Tramway Projects) 112 2.10 Conceptual Plan of Dokai Bay Railroad 116 2.11 Plan of Chitosegawa Drainage Canal 117 2.12 Route of Narita Shinkansen 119 2.13 Allocation of Airports in Kyūshū (Japan) and Netherlands 122 3.1 Typology of an Infrastructure Business Entity 130 3.2 Typology of Parks 142 3.3 Bay Area Rapid Transit Network (San Francisco Bay Area) 190 4.1 Flow from Making an Investment Plan to Implementing Investment 197 4.2 Tangible Effects and Intangible Effects 208 4.3 Effects Included in Financial, Economic, and Comprehensive Evaluation 208 4.4 Classification of Effects of Infrastructure Investment and Public and Private Viewpoints 210 4.5 Four-Step Model 217 4.6 Example of One Parameter Sensitivity Analysis and Best-Case and Worst-Case Analysis 222 4.7 Calculation Process of Project Effects (Flow Effects) 227 4.8 Example of Evaluation System 237 4.9 Example of Comprehensive Evaluation Applied at the Time of Privatization of Highway Public Corporations 241 5.1 Type of Bid and Contract and their Scope 261 5.2 Various Bid and Contract Types (Type of Bidder Selection) 269 5.3 Project Implementation Type by CM Method (Pure CM) 272 6.1 Maintenance and Replacement Cost of Infrastructure Evaluated by MLIT 276 vi Tables, Figures, and Boxes 6.2 Ledger Information System of Tokyo Metropolitan Government Bureau of Sewerage (Example of a Screen) 278 6.3 Reduction of Life Cycle Cost Using Long-Life Method (Example of Sewerage) 280 6.4 Gas Facility Management GIS (Mapping System) by Tokyo Gas 281 6.5 Maintenance Information Database of Hanshin Expressway 284 6.6 Road and Structure Maintenance Support System: InfraDoctor of Metropolitan Expressway 285 6.7 “Chiba-Repo” (Chiba Citizen Collaborative Report) 286 6.8 Example of Risk Mapping: Risk Factors and Response Policy 301 6.9 Risk Management System Example 301 6.10 “Tokyo Mega Loop” Rail Network 323 7.1 Contents of Official Development Assistance 344 7.2 Targets of Official Development Assistance and Other Official Flows 346 7.3 Eastern Seaboard Development (Thailand) 358 7.4 Infrastructure Market until 2030 for Telecom, Land Transport, Water, and Electricity 359 7.5 Urban Population and Urban Population Rate in Asia 380 7.6 Business Scheme of Sydney Harbor Tunnel (Australia) 384 Boxes 1.1 Temples and Churches as Infrastructure 18 1.2 Goethe’s Faust and Other Reclamation Works 25 1.3 Public Lavatories as Infrastructure 41 1.4 Two-Stage Disaster Prevention 59 7.1 Multilateral Development Banks’ Development Assistance 341 7.2 Asian Development Bank’s Strategy 2030 342 7.3 Introduction of the New Development Bank 347 7.4 Asian Development Bank Estimation of Investment 347 7.5 Asian Development Bank Estimation of Infrastructure Needs in 2017 361 7.6 Asian Development Bank Risk Guarantee Mechanisms 368 7.7 Indonesia Case 371 7.8 Afghanistan Case 372 7.9 Thailand Case 373 7.10 Housing in the People’s Republic of China 381 7.11 High Speed Rail in Taipei,China 386 Acknowledgments It was 24 November 2017 when I was asked for help from K. E. Seetha Ram. He said he would like to translate his former teacher’s book with the help of his young students in the Department of Civil Engineering at the University of Tokyo. He asked me to recruit the students, and he promised to proofread their translations. Although the book was written simply, its 400 pages cover a wide range of infrastructure topics from history to mathematical analysis. Although it seemed quite difficult to complete, amazingly, as many as 11 students raised their hands. With the help of the coauthors, their preliminary translation was finally completed in 9 months by the end of September 2018. We would like to thank Naoto Yokozawa, in charge of Chapter 6, who was the first to complete a massive chapter in a month; also to Aoi Watanabe, who worked on parts of Chapter 2 while on a short stay in New Zealand; to Kotaro Hamada, in charge of the Preface and parts of Chapters 2 and 3, who took great care in his work and handled sections others were unable to complete; to Rika Idei, in charge of Chapter 7, who advised us using her professional experience and completed her parts while working on her doctoral thesis; to Pei Yuxiang, in charge of Chapter 1, who is Chinese but surmounted the challenge of the most cultural and historical chapter; to Yoko Ito, in charge of Chapter 4, who checked each sentence carefully with the coauthor, Atsushi Hasegawa; and to Ryo Ito, in charge of Chapter 3, who translated the most difficult parts full of Japanese technical terms.