Investment decision-making under risk (reliability) and uncertainty for infrastructure asset management

Risks and uncertainties are inevitable in engineering projects and infrastructure investments. Decisions about investment in infrastructure such as for maintenance, rehabilitation and construction works can pose risks, and may generate significant impacts on social, cultural, environmental and other related issues. This report presents the results of a literature review of current practice in identifying, quantifying and managing risks and predicting impacts as part of the planning and assessment process for infrastructure investment proposals. In assessing proposals for investment in infrastructure, it is necessary to consider social, cultural and environmental risks and impacts to the overall community, as well as financial risks to the investor. The report defines and explains the concept of risk and uncertainty, and describes the three main methodology approaches to the analysis of risk and uncertainty in investment planning for infrastructure, viz examining a range of scenarios or options, sensitivity analysis, and a statistical probability approach, listed here in order of increasing merit and complexity. Forecasts of costs, benefits and community impacts of infrastructure are recognised as central aspects of developing and assessing investment proposals. Increasingly complex modelling techniques are being used for investment evaluation. The literature review identified forecasting errors as the major cause of risk. The report contains a summary of the broad nature of decision-making tools used by governments and other organisations in Australia, New Zealand, Europe and North America, and shows their overall approach to risk assessment in assessing public infrastructure proposals. While there are established techniques to quantify financial and economic risks, quantification is far less developed for political, social and environmental risks and impacts. The report contains a summary of the broad nature of decision-making tools used by governments and other organisations in Australia, New Zealand, Europe and North America, and shows their overall approach to risk assessment in assessing public infrastructure proposals. While there are established techniques to quantify financial and economic risks, quantification is far less developed for political, social and environmental risks and impacts. For risks that cannot be readily quantified, assessment techniques commonly include classification or rating systems for likelihood and consequence. The report outlines the system used by the Australian Defence Organisation and in the Australian Standard on risk management. After each risk is identified and quantified or rated, consideration can be given to reducing the risk, and managing any remaining risk as part of the scope of the project. The literature review identified use of risk mapping techniques by a North American chemical company and by the Australian Defence Organisation. This literature review has enabled a risk assessment strategy to be developed, and will underpin an examination of the feasibility of developing a risk assessment capability using a probability approach.

Polyurethane (PU) scaffolds prepared by solvent casting/particulate leaching (SCPL) combined with centrifugation

This article reports an enhanced solvent casting/particulate (salt) leaching (SCPL) method developed for preparing three-dimensional porous polyurethane (PU) scaffolds for cardiac tissue engineering. The solvent for the preparation of the PU scaffolds was a mixture of dimethylformamide (DFM) and tetrahydrofuran (THF). The enhanced method involved the combination of a conventional SCPL method and a step of centrifugation, with the centrifugation being employed to improve the pore uniformity and the pore interconnectivity of scaffolds. Highly porous three-dimensional scaffolds with a well interconnected porous structure could be achieved at the polymer solution concentration of up to 20% by air or vacuum drying to remove the solvent. When the salt particle sizes of 212-295, 295-425, or 425-531 µm and a 15% w/v polymer solution concentration were used, the porosity of the scaffolds was between 83-92% and the compression moduli of the scaffolds were between 13 kPa and 28 kPa. Type I collagen acidic solution was introduced into the pores of a PU scaffold to coat the collagen onto the pore walls throughout the whole PU scaffold. The human aortic endothelial cells (HAECs) cultured in the collagen-coated PU scaffold for 2 weeks were observed by scanning electron microscopy (SEM). It was shown that the enhanced SCPL method and the collagen coating resulted in a spatially uniform distribution of cells throughout the collagen-coated PU scaffold.

Framework for investment decision-making under risk and uncertainty for infrastructure asset management

A study has been conducted to investigate current practices on decision-making under risk and uncertainty for infrastructure project investments. It was found that many European countries such as the UK, France, Germany including Australia use scenarios for the investigation of the effects of risk and uncertainty of project investments. Different alternative scenarios are mostly considered during the engineering economic cost-benefit analysis stage. For instance, the World Bank requires an analysis of risks in all project appraisals. Risk in economic evaluation needs to be addressed by calculating sensitivity of the rate of return for a number of events. Risks and uncertainties of project developments arise from various sources of errors including data, model and forecasting errors. It was found that the most influential factors affecting risk and uncertainty resulted from forecasting errors. Data errors and model errors have trivial effects. It was argued by many analysts that scenarios do not forecast what will happen but scenarios indicate only what can happen from given alternatives. It was suggested that the probability distributions of end-products of the project appraisal, such as cost-benefit ratios that take forecasting errors into account, are feasible decision tools for economic evaluation. Political, social, environmental as well as economic and other related risk issues have been addressed and included in decision-making frameworks, such as in a multi-criteria decisionmaking framework. But no suggestion has been made on how to incorporate risk into the investment decision-making process.

Road Asset Management Investment

Australias civil infrastructure assets of roads, bridges, railways, buildings and other structures are worth billions of dollars. To effectively manage road infrastructures, road agencies firstly need to optimise the expenditure for data collection whilst not jeopardising the reliability in using the optimised data to predict maintenance and rehabilitation costs. Secondly, road agencies need to accurately predict the deterioration rates of infrastructures to reflect local conditions so that the budget estimates can be accurately calculated. Finally, the prediction of budgets for maintenance and rehabilitation must be reasonably reliable.

Stem cell regulatory gene expression in human adult dental pulp and periodontal ligament cells undergoing odontogenic/osteogenic differentiation

Introduction During development and regeneration, odontogenesis and osteogenesis are initiated by a cascade of signals driven by several master regulatory genes. Methods In this study, we investigated the differential expression of 84 stem cell–related genes in dental pulp cells (DPCs) and periodontal ligament cells (PDLCs) undergoing odontogenic/osteogenic differentiation. Results Our results showed that, although there was considerable overlap, certain genes had more differential expression in PDLCs than in DPCs. CCND2, DLL1, and MME were the major upregulated genes in both PDLCs and DPCs, whereas KRT15 was the only gene significantly downregulated in PDLCs and DPCs in both odontogenic and osteogenic differentiation. Interestingly, a large number of regulatory genes in odontogenic and osteogenic differentiation interact or crosstalk via Notch, Wnt, transforming growth factor β (TGF-β)/bone morphogenic protein (BMP), and cadherin signaling pathways, such as the regulation of APC, DLL1, CCND2, BMP2, and CDH1. Using a rat dental pulp and periodontal defect model, the expression and distribution of both BMP2 and CDH1 have been verified for their spatial localization in dental pulp and periodontal tissue regeneration. Conclusions This study has generated an overview of stem cell–related gene expression in DPCs and PDLCs during odontogenic/osteogenic differentiation and revealed that these genes may interact through the Notch, Wnt, TGF-β/BMP, and cadherin signalling pathways to play a crucial role in determining the fate of dental derived cell and dental tissue regeneration. These findings provided a new insight into the molecular mechanisms of the dental tissue mineralization and regeneration

Developing a rural land investment performance index for New Zealand

Agricultural production is one of the major industries in New Zealand and accounts for over 60% of all export trade. The farming industry comprises 70,000 entities ranging in size from small individual run farms to large corporate operations. The reliance of the New Zealand economy to the international rural sector has seen considerable volatility in the rural land markets over the past four decades, with significant shifts in rural land prices based on location, land use and underlying international rural commodity prices. With the increasing attention being paid to the rural sector, especially in relation to food production and bio-fuels, there has been an increasing corporate interest in rural land ownership in relatively low subsidised agricultural producing countries such as New Zealand and Australia. A factor that has limited this participation of institutional investors previously has been a lack of reliable and up-to-date investment performance data for this asset class. This paper is the initial starting phase in the development of a New Zealand South Island rural land investment performance index and covers the period 1990-2007. The research in this paper analyses all rural sales transactions in the South Island and develops a capital return index for rural property based on major rural property land use. Additional work on this index will cover both total return performance and geographic location.

The role of timber plantations in UK Investment portfolios

Although timber plantations and forests are classified as forms of agricultural production, the ownership of this land classification is not limited to rural producers. Timber plantations and forests are now regarded as a long-term investment with both institutional and absentee owners. While the NCREIF property indices have been the benchmarks for the measurement of the performance of the commercial property market in the UK, for many years the IPD timberland index has recently emerged as the U.K. forest and timberland performance indicator. The IPD Forest index incorporates 126 properties over five regions in the U.K. This paper will utilise the IPD Forestry Index to examine the performance of U.K. timber plantations and forests over the period 1981-2004. In particular, issues to be critically assessed include plantation and forest performance analysis, comparative investment analysis, and the role of plantations and forests in investment portfolios, the risk reduction and portfolio benefits of plantations and forests in mixed-asset portfolios and the strategic investment significance of U.K. timberlands.

The role of timber plantations in U.K. investment portfolios

Although timber plantations and forests are classified as forms of agricultural production, the ownership of this land classification is not limited to rural producers. Timber plantations and forests are now regarded as a long-term investment with both institutional and absentee owners. While the NCREIF property indices have been the benchmarks for the measurement of the performance of the commercial property market in the UK, for many years the IPD timberland index has recently emerged as the U.K. forest and timberland performance indicator. The IPD Forest index incorporates 126 properties over five regions in the U.K. This paper will utilise the IPD Forestry Index to examine the performance of U.K. timber plantations and forests over the period 1981-2004. In particular, issues to be critically assessed include plantation and forest performance analysis, comparative investment analysis, and the role of plantations and forests in investment portfolios, the risk reduction and portfolio benefits of plantations and forests in mixed-asset portfolios and the strategic investment significance of U.K. timberlands.

The true cost and performance of individual residential property investment and the implication on real estate agency practice

Investment in residential property in Australia is not dominated by the major investment institutions in to the same degree as the commercial, industrial and retail property markets. As at December 2001, the Property Council of Australia Investment Performance Index contained residential property with a total value of $235 million, which represents only 0.3% of the total PCA Performance Index value. The majority of investment in the Australian residential property market is by small investment companies and individual investors. The limited exposure of residential property in the institutional investment portfolios has also limited the research that has been undertaken in relation to residential property performance. However the importance of individual investment in residential property is continuing to gain importance as both individuals are now taking control of their own superannuation portfolios and the various State Governments of Australia are decreasing their involvement in the construction of public housing by subsidizing low-income families into the private residential property market. This paper will: • Provide a comparison of the cost to initially purchase residential property in the various capital city residential property markets in Australia, and • Analyse the true cost and investment performance of residential property in the main residential property markets in Australia based on a standard investment portfolio in each of the State capital cities and relate these results to real estate marketing and agency practice.

The role of rural land in mixed asset investment portfolios

Rural land has not always been considered as a major long-term investment with both institutional investors and absentee owners in countries such as U.K. and Australia. Although rural land is included in both single asset and mixed asset portfolios in the U.S, it is not at the same levels as either commercial or industrial property. Rural land occupies over 50% of the total area of Australia, and comprises over 115,000 economic farm properties (excludes rural residential, hobby farms and rural lifestyle blocks. However, less than 1.6% of the total economic farm numbers are actually owned by corporate or institutional investors. This low level of corporate involvement in the Australian rural property market has limited both the investment performance research and inclusion of this rural land type in both property and mixed asset investment portfolios. In the U.S. rural land is also the most extensive real estate type based on total area occupied. The United States Department of Agriculture statistics (1998) show that in 1997 there were 2.06 million farms in the U.S., covering 968 million acres, with a total value of $912 billion and generating an annual income of $202 billion. The level of corporate ownership of farms in the U.S. is also higher than the level of corporate farm ownership in Australia. This high level of institutional ownership in rural land in U.S has provided the opportunity for the rural property asset class to be analysed in relation to it’s investment performance and possible role in a mixed asset or mixed property investment portfolio.

Role of timberland in us investment portfolios

Timberland is now regarded as a long-term investment with both institutional investors and absentee owners. This paper utilises the NCREIF Timberland index to examine the performance of US timberland over the period of 1987-1999. US timberland was found to provide significant risk reduction and portfolio diversification benefits in the portfolio resulting from the low risk and low correlation with stocks and bonds. Timberland was also found to make a significant contribution to a portfolio of stocks, bonds and real estate, particularly at low to midrange portfolio risk levels.

The role of self-efficacy in dental patients’ brushing and flossing: Testing an extended Health Belief Model

Objective: In an effort to examine the decreasing oral health trend of Australian dental patients, the Health Belief Model (HBM) was utilised to understand the beliefs underlying brushing and flossing self-care. The HBM states that perception of severity and susceptibility to inaction and an estimate of the barriers and benefits of behavioural performance influences people’s health behaviours. Self-efficacy, confidence in one’s ability to perform oral self-care, was also examined. Methods: In dental waiting rooms, a community sample (N = 92) of dental patients completed a questionnaire assessing HBM variables and self-efficacy, as well as their performance of the oral hygiene behaviours of brushing and flossing. Results: Partial support only was found for the HBM with barriers emerging as the sole HBM factor influencing brushing and flossing behaviours. Self-efficacy significantly predicted both oral hygiene behaviours also. Conclusion: Support was found for the control factors, specifically a consideration of barriers and self-efficacy, in the context of understanding dental patients’ oral hygiene decisions. Practice implications: Dental professionals should encourage patients’ self-confidence to brush and floss at recommended levels and discuss strategies that combat barriers to performance, rather than emphasising the risks of inaction or the benefits of oral self-care.

Comparing "socially responsible" and "sustainable" commercial property investment

Purpose – The purpose of this paper is to set out to explore the similarities and differences between jargon used to describe future-focussed commercial building product. This is not so much an exercise in semantics as an attempt to demonstrate that responses to challenges facing the construction and property sectors may have more to do with language than is generally appreciated. Design/methodology/approach – This is a conceptual analysis which draws upon relevant literature. Findings – Social responsibility and sustainability are often held to be much the same thing, with each term presupposing the existence of the other. Clearly, however, there are incidences where sustainable commercial property investment (SCPI) may not be particularly socially responsible, despite being understood as an environmentally friendly initiative. By contrast, socially responsible assets, at least in theory, should always be more sustainable than mainstream non-ethically based investment. Put simply, the expression of social responsibility in the built environment may evoke, and thereby deliver, a more sustainable product, as defined by wider socially inclusive parameters. Practical implications – The findings show that promoting an ethic of social responsibility may well result in more SCPI. Thus, the further articulation and celebration of social responsibility concepts may well help to further advance a sustainable property investment agenda, which is arguably more concerned about demonstrability of efficiency than wider public good outcomes. Originality/value – The idea that jargon affects outcomes is not new. However, this idea has rarely, if ever, been applied to the distinctions between social responsibility and sustainability. Even a moderate re-emphasis on social responsibility in preference to sustainability may well provide significant future benefits with respect to the investment, building and refurbishment of commercial property.

Use of micro-ATR/FTIR imaging to study heterogeneous polymer oxidation by direct solvent casting onto the ATR IRE

A technique is described whereby micro-ATR/FTIR imaging can be used to follow polymer degradation reactions in situ in real time. The internal reflection element (IRE) assembly is removed from the ATR objective and polymer is solvent cast directly onto the IRE surface. The polymer is then subjected to degradation conditions and molecular structural changes monitored by periodically replacing the IRE assembly back in the ATR objective and collecting spectra which can be used to construct images. This approach has the benefit that the same part of the sample is always studied, and that contact by pressure which might damage the polymer surface is not required. The technique is demonstrated using the polymer Topas which was degraded by exposure to UVC light in air.