Futureproofing Complex Infrastructure Projects Using Real Options

Abstract

Existing project performance measures in the infrastructure sector focus on the construction performance (time, cost, quality) and pay less attention to lifecycle performance. The consequence of this shortsighted perspective is that decisions taken early lead to poorer solutions. Infrastructure that should last centuries quickly becomes inadequate, leading to costly reconfigurations. Real options reasoning can help managers to overcome this issue by unlocking lifecycle performance thinking in complex infrastructure projects. Real options reasoning enables managers to explore the value of flexibility by employing futureproofing strategies during the development process. From the analysis of interviews with experts in healthcare infrastructure, we observed that projects that led to obsolescence were developed using tight design briefs and were focused on capital targets, and decision-makers were less invested in the concept of futureproofing. On the other hand, projects that were futureproofed followed a loosely defined design brief and shifted focus toward whole-life targets. We make five recommendations for futureproofed infrastructure.