What I really wanted to talk about is “Risk” and particularly this “Levels of Service-Cost-Risk diagram.
And it’s coming out of some work that myself and a colleague Grant Holland who works with me did a few years ago for a ministerial taskforce here in New Zealand.
That’s a bit like a… I guess a congressional inquiry, that sort of thing in the US. And what we recognized is that there’re 3 axes that you operate on.
So there are the levels of service axis, there’s the financial, the cost axis and there’s a risk axis.
Generally, we’re changing on those levels of service cost axis. So if we put more money in, hopefully, the levels of service maintained or improved. If we take money out, then the levels of service may dropdown.
And the thing that I think is quite interesting about this diagram is we’re showing the risk is hidden there. And that presents the problem to us as infrastructure managers and to society in general.
Cause we can’t see it and we can’t see the impact of those costs on levels of service decisions are happening on risks because we don’t think about it and it is hidden.
So here’s an example of Flint water supply. So those of you who are North American, you probably know about Flint.
For other people, so what happened there was the community wasn’t able to pay for its water supply. The Governor of the State of Michigan put an administrator to look after things.
They swapped their water supply source away from an expensive source but a very good source that was coming from Detroit and from the great lakes and they plugged into the local Flint River, which wasn’t such a good water source to save some money.
And they did that. They weren’t supposed to do that. Initially, the plan was there’s going to be a new regional water supply developed. It was a bit behind schedule. They came off the Detroit water. They’ve plugged into the local water supply, which was really not very good quality.
And what happens was, the levels of service went down, the cost went down and that set of transactions over a few years and the hidden risks started coming up.
And so then the next slide here shows what happened. So what happened was they have lead service lines and the water that they were taking from the Flint River was pretty acidic. For whatever reason, they didn’t neutralize it or not enough.
The lead was released into the water supply. People of a pretty low socio-economic status, we’ll actually a lot of people in the town ended up, particularly children, with lead poisoning, well above recommended safety levels.
And what happened from this “level of service-risk-cost” diagram, is we drop the level of service down; we drop the dollars down and suddenly the risk pops up above the threshold of safety and trust.
So they have this big safety issue and lost trust. And the risk was really apparent. The cost is going to be well past ten times more; it might be a hundred times more of the money that was saved over a few years with the change of water supply.
PHOTO CREDIT: Michigan Municipal League via Flickr Creative Commons License