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Challenges and Opportunities forInnovation in the Public WorksInfrastructure- Volume I

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Federal Infrastructure Strategy Program

June 1993 IWR Report 93-FIS-2

Federal Infrastructure Strategy Reports

This is the second in a series of interim reports prepared to support the Federal InfrastructureStrategy Initiative, a 3-year program to explore the development of an integrated multi-agency Federalinfrastructure strategy.

The Federal Infrastructure Strategy is a dynamic program involving many Governmentdepartments and agencies. The series of reports which chronicle the strategy's development reflect thedesire to publish interim documentation as results become available. Theses documents will be usedto facilitate the dialogue within the Federal and non-Federal infrastructure communities as policydeliberations continue.

The program will culminate with a final report to be published at the end of 1993. The interimdocumentation contained herein is not intended to foreclose or preclude the program's finalconclusions and recommendations. Within this context, comments are welcome on any of thesereports.

This report documents the results of an in-depth study and workshop which developedmethods which could be applied to overcome barriers to innovation and the use of innovativetechnology within the nation's public works infrastructure.

.The. first report published as part of the Federal Infrastructure Strategy Program was:

The Federal Infrastructure Strategy Program: Framing the Dialogue - Strategies. Issues"and Opportunities (IWR Report 93-FIS-l.

The next. three reports planned for publication as part of the program are:

.... Challenges and Opportunities for Innovation in the Public Works Infrastructure,Volume II (IWR Report 93-FIS-3)

.. . ... . Infrastructure in the 21st Century Economy: A Review of the Issues and Outline of aStudy of the Impacts of Federal Infrastructure Investments (IWR Report 93-FIS4); and

Federal Public Works Infrastructure R&D: A New Perspective (IWR Report 93-FIS-5).

"For further information on the Federal Infrastructure Strategy, please contact Robert A.Pietrowsky, Program Manager at:

Institute for Water ResourcesCasey Building

7701 Telegraph RoadFort Belvoir, VA 22060-5586Telephone: (703)-355-3073

The Federal Infrastructure Strategy study team includes Cameron E. Gordon, Economic StudiesManager and James F. Thompson, Jr., Engineering Studies Manager. The program is overseen by Dr.Eugene Z. Stakhiv, Chief, Policy and Special Studies Division, and Kyle Schilling, Director of theInstitute. Reports may be ordered by writing (above address) or calling Arlene Nurthen, IWRPublications, at (703) 355-3042.

THE FEDERAL INFRASTRUCTURE STRATEGY PROGRAM

CHALLENGES AND OPPORTUNITIES FOR INNOVATION

IN PUBLIC WORKS INFRASTRUCTURE

VOLUME I

AccesiooM For

NTIS CRA&IDTIC TAB El

Prepared by UWai.'nouccd UJustification

Moonja P. KimDiego Echeverry ByD...........

Guruprasad N. Rao Distributi~ii

Availability CodesU. S. Army Construction Research LaboratoryP.O. Box 4005 Dist Special

Champaign, Illinois 61820-1305

for A-iU.S. Army Corps of EngineersInstitute for Water Resources

Water Resources Support CenterCasey Building

Fort Belvoir, VA 22060-5586

June 1993 IWR Report 93-FIS-2

S 5 0 4 0

FOREWORD

This report was prepared for the U.S. Army Corps of Engineers Institute for Water Resources aspart of a 3-year program to explore the development of an integrated Federal infrastructure strategy. Thisprogram, The Federal Infrastructure Strategy, was initiated as one of the President's budget items forFiscal Year (FY) 1991 and approved by Congress. The U.S. Army Corps of Engineers (USACE) wasselected to act as program facilitator, and other various Government departments and agencies areparticipating. The program is overseen by the USACE Directorate of Civil Works, and the Institute forWater Resources (IWR) has detailed management responsibility.

This report, the first of several planned in-depth studies of various complex infrastructure issues,focuses on the topic of innovation in the management of public works infrastructure. Innovativeapproaches will be essential to successfully address the numerous problems facing the public worksinfrastructure. However, little effort has been dedicated to identify and promote mechanisms to effectivelytransfer technological and management innovations from Government research centers to the nation'spublic works infrastructure.

On 3-4 March 1992, the U.S. Army Construction Engineering Research Laboratories (USACERL),Champaign, IL, conducted a workshop on the challenges and opportunities of promoting innovation inthe public works infrastructure. The workshop, "Challenges and Opportunities for Innovation in PublicWorks Infrastructure," included participants from academia, Government, and industry. This two-volumereport is a product of that workshop. Volume 1 summarizes the findings of an extensive literature searchon innovation and infrastructure. Volume 2 comprises the proceedings of the workshop, includingtranscripts of the papers presented, discussion summaries, and related resources. The report also includesthe authors' recommendations, based on the findings of the literature search and the workshop.

The authors would like to express their deep sense of gratitude to all who participated in theworkshop: Prof. Arthur Baskin, University of Illinois; Dr. James A. Broaddus, Construction IndustryInstitute (CII); Mr. Joel Catlin, American Water Works Association (AWWA); Prof. J.M. De La Garza,Civil Engineering Dept., Virginia Polytechnic Institute and State University; Prof. John P. Eberhard,Carnegie-Mellon University; Mr. Michael B. Goldstein, Dow, Lohnes & Albertson; Dr. Francois Grobler,USACERL; Prof. Neil Hawkins, University of Illinois; Dr. Andrew C. Lemer, Building Research Board;Prof. Stephen Lu, University of Illinois; Mr. Carl Magnell, Civil Engineering Research Foundation(CERF); Mr. Benjamin Mays, Government Finance Officers Association; Mr. William D. Michalerya,Center for Advanced Technology for Large Structural Systems, Lehigh University; Prof. FredMoavenzadeh, Center for Construction Research and Education, Massachusetts Institute of Technology(MIT); Prof. Joe Murtha, University of Illinois; Mr. Thomas Napier, USACERL; Prof. Peter Nowak, Dept.of Rural Sociology, University of Wisconsin; Mr. Charles Seemann, from Deutsch, Kerrigan & Stiles; Dr.Louis R. Shaffer, USACERL; Mr. Kyle Shilling, IWR; Mr. Jesse Story, Federal Highway Administration;Mr. Richard A. Sullivan, American Public Works Association (APWA); Mr. Jim Thompson, IWR; Mr.Jeff Walaszek, USACERL; Prof. Michael Walton, Transportation Research Board (TRB); Prof. ThomasD. White, Purdue University; and Mr. Ronald Zabilski, Stone & Webster Engineering Corp. It was anhonor to have hosted, interacted with, and learned from them. All of them have made an impressivecontribution toward helping the nation harness innovation in the imposing cause of dealing withinfrastructure challenges.

The authors gratefully acknowledge the opportunity given by IWR to address this vital issue.Special thanks are due to Mr. Kyle Schilling, Director of IWR, and Mr. Lim Vallianos and Mr. JamesThompson, project monitors.

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CONTENTSpage

FOREWORD iiiLIST OF TABLES AND FIGURES viiEXECUTIVE SUMMARY ix

INTRODUCTION ................................................... I

2 BARRIERS TO INNOVATION ......................................... 5Cultural Values and Social Perception 10Governmental Structure and Regulations 11Risk and Liability 16Public and Private Partnership 18Funding 19Size and Type of Infrastructure Projects 21Education, Research, and Technology Transfer 22

3 THE PROCESS OF INNOVATION DIFFUSION ........................... 25The Rogers Model 25The Shaffer Model 28The Tatum Model 29The NASA Model 30Toward a Model for the Public Works Infrastructure 31

4 PERSPECTIVES FROM WORKSHOP PARTICIPANTS ..................... 33Cultural Values and Social Perceptions of Innovation and lnfrastructure 33Government Structure and Regulations 33Risk and Liability 35Public and Private Partnerships 35Funding 36Size and Type of Infrastructure Projects and Facilities 36Education, Research, and Technology Transfer 36

5 ANALYSIS AND RECOMMENDATIONS ............................... 39Six Top Barriers to Innovation 39A National Technology Transfer Process 42Federal Initiative for Innovation in the Public Works Infrastructure 45Independent Technology Evaluation Center 47Key Tasks for National Coordination of Infrastructure R&D 47Systematic Transfer of Existing Technologies 48

REFERENCES 55

ABBREVIATIONS AND ACRONYMS 59

V

TABLES

Number Page

A Barriers to Innovation Transfer x

B Comparison of Models for Generating and Disseminating Innovation xvii

1 Barriers to Innovation and Possible Methods to Overcome Them 6

2 Barriers to Innovation Transfer 40

3 Comparison of Models for Generating and Disseminating Innovation 50

FIGURES

A Strategy for Public Works Infrastructure R&D and Technology Transfer (IRTM xiii

B Proposed Mechanism for Delivery of Currently Available Technology (DCAT) xix

I Japanese Process for Introducing R&D Technologies Into Practice for PublicWorks Projects 15

2 Technology Transfer Phases 43

3 Strategy for Public Works Infrastructure R&D and Technology Transfer (IRTT) 46

4 Proposed Mechanism for Delivery of Currently Available Technology (DCAT) 51

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EXECUTIVE SUMMARY

This report was prepared for the Federal Infrastructure Strategy Initiative, a 3-year program toexplore the development of an integrated Federal infrastructure strategy. The program was initiated asone of the President's budget items for Fiscal Year (FY) 1991 and approved by Congress for executionby the U.S. Army Corps of Engineers (USACE) Directorate of Civil Works. The Corp's Institute forWater Resources (IWR) has detailed management responsibility under the direction of Dr. Eugene Z.Stakhiv, Chief, Policy and Special Studies Division and Mr. Robert A. Pietrowsky, Program Manager.As an initial effort of this program, IWR tasked the U.S. Army Construction Engineering ResearchLaboratories (USACERL) to conduct an in-depth study and workshop on innovative approaches tomanaging the nation's public works infrastructure.

The objective of this report is to summarize the proceedings of the workshop, "Public WorksInfrastructure Innovation: Barriers, Opportunities, and Challenges," and provide recommendations on howto enhance the transfer of innovative technology and management practices to improve the decliningcondition of the nation's public works infrastructure. Innovative approaches will be essential to addressthe problems facing the public works infrastructure. However, little effort has been dedicated to identifyand promote mechanisms to effectively transfer technological and management innovations fromGovernment research centers to the nation's public works infrastructure.

This report is presented in two volumes. Volume I is based on findings from an extensive literaturereview performed to identify the barriers, incentives, and opportunities for the promotion of innovationin the public works infrastructure. Volume 2 comprises the proceedings of the workshop "Challenges andOpportunities for Innovation in the Public Works Infrastructure," conducted on 3-4 March 1992 at the U.S.Army Construction Engineering Research Laboratories, Champaign, IL. This workshop convened a groupof distinguished experts on the topic to discuss vital issues related to innovation and infrastructure anddevelop recommendations for promoting innovation in the management and sustainment of the nation'spublic works infrastructure. Participants included experts from academia, Government, and industry.

This report focuses on four critical areas of concern. First, it examines barriers to infrastructureinnovations and innovation adoption processes. Second, a model for a national strategy on InfrastructureResearch and development (R&D) and Technology Transfer-the IRiT model-is proposed forimplementation. Third, based on short-term recommendations extracted from the IRTr model, the processof technology dissemination is examined in detail, with a review of models for technology transfer (or"innovation diffusion"). Finally, it recommends a mechanism for the transfer of currently availableinnovative approaches by incorporating and expanding three technology transfer models: The Rogersmodel, the Shaffer model, and the NASA (National Aeronautics and Space Administration) model.

From a survey of current literature, seven major categories of barriers were selected for discussion:(1) cultural values and social perceptions, (2) Governmental structure and regulations, (3) risk and liability.(4) public and private partnership issues, (5) funding, (6) size and type of infrastructure projects. and(7) education and research systems, and technology transfer. The workshop presentations and group dis-cussions generated similar list of barriers. A list of six barriers developed from both the literature surveyand workshop discussions is shown in Table A. These barriers are considered the most critical based uponboth their importance and the practicality of methods available to penetrate them. Both importance andpracticality must be considered together because it is essential to address all areas where positive resultscan be obtained quickly. These six barriers are discussed in the paragraphs that follow.

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Table A: Barriers to Innovation Transfer

Barrier ] Methods to Overcome

Lack of a Federal initiative (focus) for Create a comprehensive Federal initiative todefining the policy and vision for national establish a national infrastructure policy that will:infrastructure technology (R&D). (1) Act as a catalyst for innovation; (2) Keep

abreast of international R&D for newDiverse and fragmented governmental structure technologies; (3) Foster intergovernmentaland private sector organizations dealing with partnerships between State and local governmentsinfrastructure; fragmented R&D efforts to oevelop improved fiscal and political tools forthroughout the nation, promoting innovation.

Inadequate technology transfer mechanisms. Develop adequate technology transfermechanisms and commit necessary resources to

Lack of public- and private-sector R&D support them; greater leadership from all levelscooperation; lack of R&D partnerships between of Government in support of R&D programs, andthe public and private sectors. development of incentives to reward R&D invest-

ment by the private sector.

Lack of public awareness. Active partnership with community groups;building awareness and support groups;

Public opposition; discordance with widespread communicate with Congress; create mechanismscultural values; -not invented here" syndrome; to resolve controversy; effective education relatedemphasis on short-term benefits, not long-term to key technologies and relevant research;benefits to the nation. communicate the importance of innovation in a

national context.

Complexity of regulations. Developing flexible standards to accommodatetechnological and design innovation; regular

Governmental technical standards and review and appropriate revision of regulationsregulations are complex and sometimes affecting major technologies.contradictory; increasing rate of legalchallenges; obsolescence of regulations.

Reluctance to innovate for fear of legal Risk-sharing to encourage innovation; peerliability, evaluation of innovation; demonstrations of

innovation, adequately monitored and docu-Conservative approaches intended to reduce mented; dissemination of the findings of thepotential risks; highly visible and publicized demonstrations to all potential users.failures are penalized while successes gounrewarded; reluctance of financial institutionsto fund infrastructure projects with unusualpotential risks.

Inadequate organizational management for Promote top management commitment; nurtureinnovation adoption. active change agents; empower active technology

gatekeepers and technology transfer task forces;Resistance to innovation that did not involve the comprehensive user training programs; promoteuser in defining the problem and specifying the Total Quality Management (TQM) of all thesolution; resistance to change; lack of flexibility processes in innovation and technology transfer;in regulations; emphasis on short-term, high- innovative financing of public works projects.visibility results; tendency to cut funding for"unglamorous" public works programs in favorof more visible programs.

X

Lack of a Federal Initiative Responsible for Infrastructure Policy and Vision. One of the mostcritical barriers is the lack of direction at the Federal level to guide the national technology strategy forthe nation's public works infrastructure. When such an initiative is created with a sense of responsibilityas national catalyst for infrastructure R&D and technology transfer, many barriers could be quicklyovercome. Although this will not be a simple task, there are signs of a growing consensus in thisdirection. Examples include (1) a similar recommendation in a 1991 Office of Technology Assessmentreport, (2) a recent workshop conducted by the National Science Foundation on civil infrastructure systemsresearch, and (3) growing recognition that revitalization of public works infrastructure must be a topresearch thrust, as discussed at the National Civil Engineering Research Needs Forum, sponsored by theCivil Engineering Research Foundation. This Federal initiative should ensure a comprehensive andintegrated approach to design and construction that eliminates the antagonistic relationships motivated bythe present fragmented approach. It would need to develop intergovernmental partnerships with State andlocal governments to develop improved fiscal and political tools for promoting innovation.

Inadequate Technology Transfer Mechanisms. An inadequate innovation and technology transfermechanism, which results in the lack of R&D partnerships between the public and private sectors. Thisbarrier creates a vicious cycle: opposition to new ideas or technologies because of a reluctance to tryinnovative approaches that do not have a proven track record. Overcoming this barrier would requiredevelopment and support of an effective technology transfer mechanism to bridge the gap between thepublic and private sectors. Such a mechanism would include elements such as a readily accessibleinformation clearinghouse and other support for diffusion of information among peers.

Lack of Public Awareness. Another key barrier is the lack of public awareness of the impact ofnational infrastructure on the nation's economy and quality of life. This barrier could be overcome bypartnerships with community groups, awareness committees, and support groups. This would includecreation of a mechanism to address controversies over innovative approaches. Expert panels, referees, andsupport for better education related to key technologies and meaningful research are three possibilities.Penetrating this barrier will also require effective communication of the importance of innovation in anational context.

Complexity of Regulations. This barrier includes increasingly stringent Government technicalstandards and regulation, which frequently result in complex, contradictory, or obsolete regulations thatinhibit technological innovation. We recommend that the newly established central entity should considerthe integrity of all relevant regulations and simplify them.

Legal Liability. Reluctance to innovate due to fear of liability was a prominent idea both in theliterature survey and workshop presentations. The general consensus of the workshop participants wasthat this reluctance is a major problem, but difficult to attack. A concrete recommendation is not feasiblewithout a central entity responsible for innovation and technology transfer. However, if such an entitytakes strong leadership in promoting better integration of laws, regulations, and national needs, this barriercould become less formidable.

Inadequate Organizational Management for Innovation Adoption. To address inadequateorganizational management for promotion and adoption of innovation, a strong effort must be made topromote commitment to innovation and technology transfer among top management in both the public andprivate sectors. Technology transfer task forces should be established at the organization level, and shouldinclude active change agents and technology gatekeepers. Penetrating this barrier will also require theestablishment of comprehensive user training programs.

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It clear that many obstacles impede the development and application of a nationwide technologytransfer process. As mentioned in the literature and by workshop participants, the major barrier is the lackof a national entity or catalyst for R&D and technology transfer for the public works infrastructure. Thismakes it difficult to effectively identify and respond to the nation's public works needs through R&D.The current approach is fragmented, lacks vision, and suffers from insufficient interdisciplinarycooperation. This fragmentation amounts to a very inefficient use of the nation's R&D resources. Manyopportunities for synergy and leveraging of research efforts are missed. In addition, there are strongdisincentives to innovation that reduce the possibilities of demonstrating and implementing newtechnologies. These disincentives include various material and intangible risks incurred by innovators,and a lack of funds to demonstrate, implement, and use innovations.

To understand the approaches required to overcome the numerous barriers, a model was developedto represent an effective approach for developing and implementing a national R&D and technologytransfer strategy for the U.S. public works infrastructure. The model, shown in Figure A, is proposed toprovide an integrated approach to establish national infrastructure strategy and vision. There is an urgentneed for a well planned and consistent strategy for transferring innovation to potential users in the publicworks infrastructure. This technology transfer effort should help close the gap that exists betweenproviders of new technologies and the agencies responsible for operating and maintaining public worksinfrastructure. Key elements of the recommended approach are:

1. National Catalyst for Public Works Infrastructure R&D and Technology Transfer- A centralized and integrated effort of Government, academia, and private industry topromote coordinated R&D and technology transfer- An agency of the Federal Government.

2. Independent Evaluation Center- An independent testing and evaluation capability, to promote the demonstration andindependent evaluation of innovative technologies- Based on peer review by professional scientific, technical, and engineering societies- Risk sharing through a formal and credible approval mechanism.

3. Dissemination Centers- Cornerstone of a coordinated, aggressive effort to disseminate innovative technologies- Facilitator of technology transfer.

4. User Communities- Public agencies that design, construct, and maintain public infrastructure facilities- Private-sector organizations that work with the public sector or serve functions parallel tothose agencies in the private sector.

Longer-term actions should be directed towards constructing a Federal initiative that will haveenough nationwide influence to lead R&D and technology transfer efforts for the public works.infrastructure. As shown in Figure A this initiative should be responsible for coordinating and managingintermodal (cross-cutting) public works infrastructure R&D and technology transfer, and should assumea leading role in partnerships with university, industry, and Government laboratories. As recommendedin the workshop discussions, this Federal catalyst for R&D should not be a separate new bureaucracy,but should use existing processes, programs, and administrative structures whenever possible.

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Advancement of a Federal infrastructure initiative can be accomplished by expanding theresponsibilities of a number of existing Federal programs. Four options are proposed:

1. Existing institutions such as the Office of Science and Technology Policy (OSTP) couldhe utilized to manage a Federal infrastructure R&D initiative, while the Federal Coordinating Council forScience, Engineering and Technology (FCCSET) could he used to coordinate it. The FCCSET has beenan effective planning tool twords improving the coordination and eflicient use of Federal R&D resources.Interagency research and education efforts brought together under FCCSET include the High PerfoirmanceComputing and Communications, Advanced Materials and Processing, Biotechnology Research, AdvancedManufacturing R&D, and the U.S. Global Change Research Program. Although the FCCSET cannotmanage the Federal R&D programs, the OSTP could be empowered to implement the infrastructure R&Dpolicy and vision developed in coordination with the FCCSET. Because the OSTP and FCCSET arecomponents of the Executive Branch, their effectiveness is somewhat limited by the lack of a comparableintegrated R&D review process within the Congress. Therefore, if a complementary Congressional reviewprocess was introduced into the Office of Technology Assessment and the OSTP and the FCCSET wereempowered to plan and coordinate Federal R&D programs, a proactive comprehensive infrastructureinitiative could become a reality.

2. The existing framework of the Federal Laboratory Consortium could be used to identifyregional R&D centers of expertise for the various infrastructure technologies wthin the Federal Laboratorycommunity. These laboratories could be empowered to identify and prioritize R&D needs, and develop,evaluate, and demonstrate new infrastructure technologies.

3. A central agency could be assigned to organize and manage the overall initiative. Anumber of Federal agencies have experience in managing infrastructure related R&D programs that involvepartnerships among Government, academia, and industry. Three agencies with cross-cutting multi-discipline infrastructure experience are the National Institute of Standards and Technology, U.S. ArmyCorps of Engineers (USACE), and the National Science Foundation (NSF). The USACE has experiencein directing the Construction Productivity Advancement Research program (CPAR), and the NSF operatesthe Engineering Research Centers.

4. Another alternative could be a partnership between government bodies, academia, andindustry. As proposed in the previous section, major technology transfer assistance could be provided bytechnology information dissemination centers. These dissemination centers could evolve from beinginformation providers into active facilitators of technology transfer. Their role would be to assist andsupport the implementation of innovations, including training for the users of the innovative techniques.Currently, Columbia University, MIT, and other prominent research institutions have proposals to developnational infrastructure centers involving a partnership of universities with State and local governmententities. These proposals could be the basis for establishing these and other organizations as nationalfacilitators of technology transfer.

There is precedent among the nation's most successful global competitors for such an initiative.Japan's national process for introducing and transferring new technology includes an important role forits Public Works Research Institute, under direction of the Ministry of Construction. That process appearsto provide effective coordination for Japan's public works projects.

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Major support for a national technology transfer process would be required from an independentevaluation center. Such a center would coordinate peer evaluation of new concepts and demonstrationprojects. Literature review and workshop participants indicated that the testing and demonstration of newconcepts and new technologies are central to a successful technology transfer process. In particular, testsand demonstrations help mitigate risk by proving innovative techniques before they are marketed. Theevaluation of tests and demonstrations is much more valuable and credible if performed by independentand well respected experts. The National Academy of Engineering, with active participation ofprofessional associations (such as APWA, AWWA, the American Society of Civil Engineers IASCE], andthe American Society for Testing and Materials [ASTM]) may be a good candidate for the role ofindependent evaluator.

Dissemination centers would be the means for actively transferring innovations tested and assessedby the independent evaluation center. These disseminaticti centers should evolve from mere informationproviders to active facilitators of technology transfer. Their role would be to assist and support theimplementation of innovations. This would include training for the users of the innovative methods andtechnologies. Some universities are known to be interested in establishing similar centers, and have thepotential to become national facilitators of technology transfer.

The other key role in a national technology transfer process would be filled by the user communitiesthat design, construct, maintain infrastructure, and renew. This element of the model needs to be veryactive by communicating its needs and requirements to the independent evaluation center. Users wouldalso need to provide dissemination centers meaningful feedback on the use and delivery of innovativemethods and technologies.

Since the scope of the proposed approach is so large, it may take a long time to implement evensmall elements of it. For example, it would probably require years of major effort by the FederalGovernment to establish a central R&D catalyst and an independent evaluation center. However, thereare a number of short-term goals toward which immediate actions can be taken to begin applying thismodel for national strategy to promoting innovation in public works infrastructure.

The short-term goal of this approach should be the establishment of dissemination centers, withspecial attention to the interaction between the centers and the users at the highlighted arrow in Figure A.Research and experience show that much innovative technology developed with public funding is readilyavailable but unknown to potential users. Delivering currently available technologies to appropriate userswould produce an immediate benefit for the nation. Efforts toward the short-term goal would includedevelopment of an inventory of innovative technologies, and transfer of these technologies via dissemina-tion centers. To accomplish this, it is necessary to develop a model of available technology transfermechanisms so the process can be facilitated efficiently. A review of available models of the process ofinnovation diffusion provides insights into various potential approaches. Although these models explicitlyaddress areas beyond the public works infrastructure, they provide important insights on the factors thatinterfere with or favor innovation adoption. Three models are particularly helpful for understandinginnovation adoption and technology transfer: Rogers' pioneering research (1983) in innovation diffusionarea, the Shaffer technology transfer model (1985), and the NASA model for delivery or transfer ofcurrently available technology (1991).

The Rogers model is constructed from the perspective of the social scientist studying innovationdiffusion as a social activity. Rogers addresses the adoption of innovations both by individuals andorganizations. He proposes that there are six major stages in the development of new technology by anindividual: (1) recognition of a need to stimulate research activity, (2) development of fundamentalscientific knowledge through application of basic research to solve a specific problem, (3) adjustment ofthe new technology to the specific constraints of its intended users, (4) production, packaging, marketing,

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and distribution of the technology, (5) adoption or rejection of the technology by users, and (6) assessmentof the success of the adopted innovation in meeting the intended need.

Rogers also proposes five stages for how the potential individual user learns about a new technologyand applies it in practice: (1) information about the new technology must be available to the potentialindividual user, (2) the user develops a positive opinion about the new technology, (3) the user adopts thetechnology, with participation by a change agent in demonstrating the benefits of the new technology, (4)the technology is applied in practice, and (5) the implemented technology is widely adopted or rejectedby the user community, depending on its results for the first users.

Rogers asserts that organizations go through different stages than individuals in adopting newtechnology: (1) the organization continuously seeks innovative methods or technologies that might solveits needs, (2) an identified need is matched with existing innovation, (3) the innovation is reinvented tomeet the organization's specific needs, (4) as the innovation is implemented, its applicability and usebecomes clear to members of the organization, and (5) the innovation becomes part of the organization'sstructure.

The Shaffer model (1985) focuses directly on technology transfer, which he defines as the processhy wlhich R&D solutions are created and transferred to users to solve technological needs. It is noteworthythat Shaffer's model emphasizes communication with users from the time a problem is identified throughthe development and implementation of a solution. Shaffer has identified the necessity of respondingeffectively and efficiently to user needs by proposing a demand-driven R&D process. This model identi-fies seven different phases: (1) problem identification, (2) survey for existing solutions, (3) research andprototype, (4) test and evaluation, (5) development, (6) decision to adopt, and (7) implementation.

At the Stennis Space Center in Mississippi, NASA deveioped a six-step model for transferringexisting technology to the commercial market: (1) problem identification, classification, and priority, (2)problem and technology matching, (3) market survey, (4) technology demonstration partner identification,(5) technology demonstration, and (6) feedback.

A comparison of the different various steps of the three models is summarized in Table B. Thesethree models are highly similar, but each has a slightly different emphasis. The Rogers model emphasizesthe perspective of the organization that desires to adopt the technology. The Shaffer model covers thewhole process, from inception of research ideas to the implementation. The NASA model addresses thetransfer of existing technology to the commercial market.

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To develop a mechanism for the transfer of currently available innovative technologies, an expandedmodel that emphasizes delivery is proposed. This model is called the DCAT (Delivery of CurrentlyAvailable Technology) model, and is displayed in Figure B. It incorporates features of the Rogers,Shaffer, and NASA models.

The DCAT model is enhanced to include the promotion of innovation and existing technology thatis not used widely in the public works infrastructure. This model is an attempt to provide detailed stepsfor integrating related efforts in a way that complements each other to promote the delivery oftechnologies that are under-utilized or under-recognized.

Step 1 of the proposed model for innovation and technology transfer is to identify, clarify, andprioritize the user's needs. This corresponds to the first step of both the Rogers and Shaffer models.Another element of step I is the matching of the need with existing technology. This step is missing fromShaffer's model, but may be considered implicit in the act of problem identification. However, the authorsconsider it important to include this step as a separate one to highlight the importance of exploiting exist-ing innovation to avoid "reinventing the wheel," which represents a major waste of effort and resources.

As noted above, Step 2 of this model is to adjust any existing innovative method or technology tomeet the need clarified in Step 1. This is necessary when a perfectly applicable technology is not alreadyavailable. This step may require minor changes to an existing technology. If it is necessary to make amajor effort to modify the existing technology, the benefit will need to be measured against the cost ofthe required changes.

Step 3 is to evaluate market potential. It may be advisable to perform this evaluation concurrentlywith Step 2, because it may not be worthwhile to continue working on adjustmentof an existing technology if there is no market potential for doing so. In this context, lack of marketpotential means lack of potential users of the innovation. This is not to say that basic research isunnecessary, but for public works infrastructure the need to implement appropriately modified existingtechnologies is more urgent for improving the state of the declining national infrastructure.

Step 4 is to conduct small-scale preliminary testing, either in the research setting or a small numberof test sites. For this step, it would be ideal if the independent evaluation center described previously wereestablished to provide independent evaluation and peer review. Assuming that establishment of an evalua-tion center will take some time, it will be necessary to rely on professional scientific, technical, andengineering societies or potential users for evaluation of innovative technologies.

Step 5 is to identify demonstration partners willing to try to support use of the innovative methodor technology. This partner will act as a champion of the new technology-a change agent within the usercommunity.

Step 6 is to clarify and refine the innovation or technology to satisfy the needs of the potential user.

Step 7 is to establish demonstration projects using information collected in Steps 5 and 6. The sizeof the demonstration will depend on the estimated benefits of the new technology. The greater theexpected benefits, the larger the scale of the demonstration should be to credibly prove the technology,so it will be more widely distributed and accepted.

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Step 8 is to develop a marketing communications plan for the new technology once the demon-stration projects are going well and have good support from the demonstration partners. To ensuresuccessful delivery of the innovative technology, it is very important to communicate the availability ofthe product to potential users. Good commercial products can fail due to inadequate marketingcommunications. Another element of Step 8 is to develop plans to identify and communicate with keydecisionmakers. This step can be considered part of the marketing process, but it was separated tohighlight the importance of recognizing the impact of these decisionmakers on the adoption of newtechnology. These decisionmakers are often political appointees or elected officials who tend to valueshort-term, high-visibility results. To convince key decisionmakers to support a new technology, it isnecessary to help make them aware of it or support changes in their current performance standards to putmore importance on achieving long-term benefits. A third element of Step 8 is to collect feedback fromusers at demonstration sites to identify potential problems and develop suitable processes to transfer thetechnology.

Step 9 involves adopting the technology and developing implementation strategies. Rogers calledthis step routinizing. To routinize, it is necessary to establish effective implementation strategies. Withoutthis step, a new technology will not be used routinely.

Step 10 is to develop incentives for using the technology. These incentives can be designed for useat various levels. For example, Federal, State and local governments could offer tax incentives and low-interest loans, while private companies could establish suitable programs to encourage employees to usethe new technology. A second element of Step 10 is to develop a training, support, and maintenance planfor the new technology. A third element of Step 10 is to develop a packaging and commercialization planto enhance delivery to the user community at large.

Step I I is to implement and provide continuing support of the new technology.

Step 12 is to collect feedback from users periodically and improve the technology as required byuser needs.

Application of this model as a mechanism to deliver currently available innovative methods andtechnologies for public works infrastructure will greatly facilitate technology transfer, and wider use ofGovernment-sponsored R&D products. To support the DCAT mechanism, dissemination centers shouldbe established for various infrastructure areas, such as: (1) highways and bridges, (2) mass transit, (3)aviation, (4) water supply, (5) water resources, (6) solid waste, (7) hazardous waste, (8) communications,(9) power and energy, and (10) public buildings. Each center could immediately start collecting updatedinformation on user needs and potentially applicable technologies that already exist, then develop improvedprocesses for delivering it to potential users. An effective way to communicate information on availabletechnologies to appropriate potential users may be through development of computer-based informationsystems containing information on available technologies not currently in wide use by public worksentities. Improved on-line access to this type of information could alleviate one of the barriers identifiedat the workshop by Nowak-the scarcity or unavailability of information about pertinent innovations. Eachcenter could be located at universities, Government research centers, or private industry partners, but goodcoordination would be necessary to continuously collect all available information on innovative methodsand technologies. Strong coordination will also be necessary for uniform adoption of the 12-step DCATprocess as appropriate.

The authors are confident that technology dissemination centers, as described in this report, will behighly successful in delivering available technologies to potential users by following the 12 steps outlinedin Figure B.

xx

The main body of this report (Volume 1) compiles and summarizes expert knowledge on the subjectof barriers to innovation and technology transfer in the public works infrastructure. Major barriers thathinder the application of innovation in practice are identified and prioritized. Recommendations areprovided to assist in developing a national strategy for promoting the use of innovative methods andtechnologies in public works infrastructure and to help quickly deliver currently available-but not welldistributed--technologies to appropriate users.

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CHALLENGES AND OPPORTUNITIES FOR INNOVATION IN THEPUBLIC WORKS INFRASTRUCTURE: VOLUME I - LITERATURESURVEY, WORKSHOP SUMMARY, AND RECOMMENDATIONS

1 INTRODUCTION

The U.S. public works infrastructure provides an essential platform for most of the nation's social,economic, and political activities. The central role of the public works infrastructure, and the realizationof the need to adequately maintain it, is highlighted by much-publicized infrastructure failures. A recentand costly example is the "flood" that brought political and economic life to a virtual halt in downtownChicago. Part of an obsolete underground transportation system, now used as a path for communicationsand power lines throughout the Loop, collapsed and became flooded by the Chicago River. Criticalinfrastructure systems and facilities were damaged or rendered inoperable. Subway lines, streets, andnumerous public and private buildings were shut down for days or weeks, dramatically affecting allaspects of life in the city. By estimates that are still not complete, the damage so far is valued at $1billion. The disruption of normal activities in some areas was expected to continue for weeks or months.This event, while unique in magnitude, highlights the central role of the infrastructure to everyday life.

Although essential to the nation's health, the public works infrastructure has not received adequateattention in recent years. This is clearly illustrated by the decline of investment in public works--fromalmost 4 percent of the Gross National Product (GNP) in the mid-1960s to less than 3 percent in 1985.1If this trend continues, a public works infrastructure barely sufficient to meet current needs will fail inperforming its function. This failure will become a serious drag on economic prosperity and drive downthe nation's basic quality of life. For example, traffic congestion in major U.S. cities cost the nation anestimated $30 billion annually.2

The 1980s were an important decade for the realization of the severe problems that affect thenation's public works infrastructure, and for the building of a consensus to address these problems. Inthe early 1980s, several studies brought to public attention important and timely concerns about the healthof various infrastructure systems and facilities. 3 '4 These and other initial studies were followed byinterest from different sectors. This interest developed into a general consensus on the magnitude of theproblem, resulting in reports of national scope proposing much-needed corrective actions (and the initiationof a few of these proposed actions.)5 '6 '7 The effort to build momentum for action has continued intothe 1990s.8,

9

"2 "Fragile Foundations," National Council on Public Works Improvement (February 1988).

"2 "Delivering the Goods: Public Works Technologies, Management, and Financing," Office of Technology Assessment(April 1991).

"- "America's Infrastructure-A Plan to Rebuild," Associated General Contractors of America (Washington, DC, 1983).4 Choate, P., and S. Walter, "America in Ruins: Beyond the Public Works Pork Barrel," Council of State Planning Agencies

(Washington, DC, 1981).5 "Infrastructure for the 21st Century," National Research Council (Washington, D)C, 1987).6 "Fragile Foundations," National Council on Public Works Improvement (February 1988)."7 "Construction and Materials Research and Development for the Nation's Public Works." Office of Technology Assessment

(June 1987)."8 "Transferring Research into Practice: Lessons from Japan's Construction Industry." Civil Engineering Research

Foundation. Japan International Research Task Force (November 1991).Y "Delivering the Goods: Public Works Technologies, Management, and Financing," Office of Technology Assessment

(April 1991).

One of the key recommendations for enhancingthe condition of the public works infrastructure isto encourage the utilization of new technologies. 0,r1,12 Technology and innovation can play amajor role in extending the life of public works facilities and substantially lowering their costs. A recentreport by the Congressional Office of Technology Assessment (OTA) emphasizes that no Federal agenchas focused on R&D programs to make public works agencies more productive and cost effective.1

This report also pointed out that State and local public works agencies benefit from R&D products onlyafter a very long process of development, evaluation, and modification. This length of time, coupled withthe lack of investment in public works R&D, make this area unattractive for researchers. The result isa large gap between infrastructure needs and R&D to address those needs. This report responds to theneed to fill these gaps through an attempt to identify (1) the obstacles that challenge the successfulgeneration and dissemination of innovative technologies, and (2) the opportunities that exist to promoteinnovation in the construction, management, and sustainment of the public works infrastructure.

The term irmovation in this report is used with broad meaning. A successful innovation is definedas a product, process, or procedure introduced into the marketplace to significantly reduce cost or time,to improve quality, or to increase service to the public. Innovation can originate from a variety of sources,such as public or private R&D centers. Another important source of innovation originates in actualpractice-practitioners in the field often develop innovative solutions to the problems they identify. Areasof innovation are as varied as the problem areas that exist in practice, including management, standards,products, materials, methods, and finance. Furthermore, innovation is relative to the potential user.Anything that is new to the potential user is considered an innovation, even if it has existed unused onthe shelf for many years.

In this report, the term public works infrastructure is also used with broad meaning. The authorsdefine public works infrastructure as any system under public responsibility to provide support fortransportation (highway, rail, waterways, air, etc.), water supply and distribution, power generation anddelivery, communications, and waste collection, treatment, and disposal. Public works infrastructure alsoincludes environmental remediation services, since infrastructure is inseparable from the environment intowhich it is integrated.

Although it is difficult to estimate %.ith certainty the impact innovation could have in rendering thepublic works infrastructure more efficient and effective, there are numbers that hint at the potential thatexists. The California Department of Transportation has concluded that cost savings directly attributableto R&D products in practice total between 2.8 and 5.4 times the amount invested in R&D. 14 Thereturn on R&D investment for selected innovations successfully adopted into daily, use by the Armyamounts to $37 for each dollar invested in the R&D phase of these products. It is clear thatinnovation can have a dramatic impact in reducing the effort and resources required to build and maintainthe public works infrastructure.

However, the United States is not taking advantage of the full potential benefit of innovation.Comparisons with other industrialized nations have been made in some areas of research spending.

10 'Transferring Research into Practice: Lessons from Japan's Construction Industry," Civil Engineering Research Founda-

t Japan International Research Task Force (November 1991).M I"Fragile Foundations." National Council on Public Works Improvement (February 1988).

12 "Delivering the Goods: Public Works Technologies. Management, and Financing," Office of Technology Assessment(April 1991).

13 "Delivering the Goods: Public W'rks Technologies, Management, and Financing," Office of Technolopy Assessment(April 1991).

"14 'Report of Facility Research Accomplishments," California Department of Transportation (February 1987).I Shaffer. L.R.. "Research and Technology." Constructor (February 1992).

2

Figures provided by the American Road and Transportation Builders Association (ARTBA) indicated in1989 a U.S. commitment of $2 million for research on intelligent vehicle and highway systems, comparedto a $750 million investment in Europe and $700 million in Japan. 16 In addition to the fundamentallack of investment, there is a problem transferring any innovations that are developed into practice. Therate at which innovations are adopted in the United States is very slow, with more than 20 years requiredin many cases to reach most users.

This report consists of two volumes. Volume I summarizes the challenges and opportunities forinnovation in the public works infristructure identified through an extensive literature survey. Thisliterature survey addressed (1) specific barriers and potential challenges for innovation in the public worksinfrastructure and (2) recognized models of the process of generating and adopting innovations. Addi-tionally, Volume I includes the authors' recommendations for overcoming the challenges and effectivelyexploiting the opportunities to promote innovation in the construction, management, and sustainment ofthe public works infrastructure.

Volume 2 of this report consists of the proceedings and working group discussions of a workshopheld on 3-4 March 1992 at the U.S. Army Construction Engineering Research Laboratories (USACERL)to discuss the promotion of innovation in the public works infrastructure.

16 "Transportation Infrastructure." Panelists' remarks at "New Directions in Surface Transportation" Scmin:ir. I T'It,1General Accounting Office (December 1989).

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2 BARRIERS TO INNOVATION

This chapter reviews literature that focuses on barriers and potential opportunities for innovation inthe public works infrastructure. The wide diversity of barriers and opportunities identified in the literatureindicates that this topic may be approached from many different perspectives, with different focuses. Thisreport classifies the identified barriers and opportunities in a manner parallel to the approach used in theNational Research Council report, "Infrastructure for the 21st Century.'17 Seven categories areaddressed:

1. Cultural values and social perception-the way society's values and perceptions affect infra-structure and the ability to innovate.

2. Governmental structure and regulations-the three levels of government (Federal. State, andlocal) responsible for public works infrastructure influence innovation through their structureand regulations.

3. Risk and liability-the major disincentives to the adoption of innovation.

4. Public and private partnership-a synergy that can foster innovation.

5. Funding-financial barriers and opportunities that substantially affect innovation in the publicworks infrastructure.

6. Size and type of infrastructure projects-how the unique aspects of infrastructure facilities canaffect innovation.

7. Education, research, and technology transfer-issues related to the training and education ofpublic works leaders and personnel, the development of innovations through R&D, and thetransfer of those innovations into practice.

The literature describes many barriers to and opportunities for innovations. This report identifiesa cross-section of the perspectives most important and pertinent to the area of public works infrastructure.

A summary of the most pertinent barriers identified in the literature, and suggested methods forovercoming them are shown in Table 1. Discussion of each category follows.

17 -Infrastructure for the 21st Century," National Research Council (Washington. D)C. 1987).

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Table I

Barriers to Innovation and Possible Methods to Overcome Them

I. CULTURAL VALUES AND SOCIAL PERCEPTION

Barriers

Conflict With Values. Rejection of technologies discordant with widespread cultural values (e.g.,tendency of "throwaway society" to favor disposal over recycling).

Foreign Ideas. Misplaced civic pride-the "not invented here" syndrome. The reluctance to adopt newideas that originate in other countries.

User Involvement. Resistance to innovation not involving the user in defining the problem andspecifying the solution.

Traditional Culture. Fundamental cultural world-views (e.g., oriental culture's profound emphasis onlong-term perspectives as opposed to western culture's increased emphasis on short-term benefits tosociety rather than long-term goals.

Organizational Inertia. Resistance to the "trauma" of change, "comfort" of the status quo, limitedresources for change, lack of flexibility in regulations.

Lack of Public Awareness. Public is uninformed about infrastructure and its contribution to daily lifeand the economy.

Public Opposition. Disagreement on the value of a particular innovation by experts or interest groups(e.g., opposition to fluoridation of water by some scientists and citizens).

Methods to Overcome

"* Adopt innovations compatible with widespread values and perceptions."* Create centers for dissemination of innovation."* Frame public dialogue about innovation in a national context rather than associating it withspecific regions or localities."* Implement comprehensive user-training programs, conducted by professionals."* Launch public awareness programs to explain the benefits of long-term planning."* Foster "change agents" to champion innovative technologies."* Foster public awareness through basic and continuing education programs."* Pursue active partnership with community groups in capital development programs forinfrastructure.a Create mechanisms to resolve controversy over innovation (e.g., expert panels, referees).

2. GOVERNMENTAL STRUCTURE AND REGULATIONS

Barriers

Diversity of Interests. With more than 80,000 local governments responsible for infrastructure,developing a research agenda with a broad impact is difficult.

Lack of Facility Standardization. Inhibits large sales volumes, which is a disincentive for theprivate sector to innovate.

Regulatory Constraints on Local Government. Funding and procurement by local governments isregulated by Federal and State governments, often making the process unnecessarily inflexible.

Contracting and Low-Bid Requirements. Discourages innovation in the procurement of goods andservices, and restricts flexibility of innovative contractual approaches.

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Table I (Cont'd)

Complexity of Regulations. Regulations are complex and sometimes contradictory, which often leadsto an increase in litigation related to innovation.

Obsolescence of Regulations. Codes regulating major technologies may not keep up with advancesin those technologies, often inhibiting innovation.

Lack of Profit Motive in Public Sector. Private business innovates to increase profits, so there is anincentive for risk. Public agencies have no mission to make a profit, so they have no financialincentive to innovate, but must visibly assume responsibility for failed innovations.

Migration to Private Sector. Skilled Government personnel capable of implementing and managinginnovation are continuously moving into the private sector seeking higher wages.

Political Agendas. Frequent emphasis on short-term, high-visibility results by elected officials,compounded by lack of continuity of elected officials directly responsible for public worksinfrastructure.

Methods to Overcome

"* Implement diffusion networks to effectively communicate innovations among public works agencies."* Standardize facility regulations that encourage quality improvement though economies of scale."* Form intergovernmental partnership to help State and local governments to develop better fiscaland political tools for promoting innovation."* Promote a life-cycle costing perspective to competitive bidding."* Develop performance-based specifications that allow innovation in the designed solutions."* Require policymakers to clarify and simplify regulations, and resolve conflicts between regulations."* Require periodic review and revision of regulations that affect major technologies."* Foster organizational cultures that are compatible with change, and train personnel to understandthe importance of innovating.E Make the public sector workplace more challenging by encouraging innovation, and introducemonetarv awards for success.0 Performance appraisal of politically elected officials to reflect their accomplishments inimplementing long-term infrastructure strategy.

3. RISK AND LIABILITY

Barriers

Fear of Liability. Public works agencies, designers, contractors and financial institutions resort toconservative approaches to reduce potential risk.

Cost Controls. Rigid cost controls help reduce cost overruns, but can discourage the adoption ofinnovations for fear of incurring cost overruns.

Consequences of Failure. Failures are highly visible while successes often go unnoticed.Government agencies are more likely to penalize failed innovation than to reward successful ones.

Reluctant Lenders. Financial institutions are reluctant to fund public works with significant risks(e.g., environmental projects where regulations and scientific knowledge change rapidly).

Inadequate Demonstration. Risk aversion makes it difficult to set up field demonstrations, resultingin a vicious cycle of opposition to innovation due to reluctance to try innovations without any trackrecord.

7

Table I (Cont'd)

Methods to Overcome

"* Test and evaluate innovations by neutral organizations to ensure public safely and acceptance.* Implement risk-sharing analysis techniques to determine a balanced and fair distribution of risk for

all participants (designer, public works agency, manufacturer, contractor, etc.).

"* Formulate Federal policies for technical evaluation that guarantee benefits of innovation.

"* Provide incentives for successful innovators (e.g., cash awards, publish reports on successes, etc.).

"* Share financial risks between lender and Government."* Promote thorough demonstrations and test projects to prove effectiveness of innovation, then

encourage implementation in other similar applications.* Offer low-interest loans, tax incentives, and advantageous terms on Government contracts to make

R&D more potentially profitable to the private sector.

4. LACK OF PUBLIC AND PRIVATE PARTNERSHIPS

Barriers

Lack of Partnerships Between Public and Private Sectors. Opportunities for synergy andleveraging of resources are being missed.

Lack of Leadership. Government is not taking the lead to promote partnerships with academia and

private industry.

Lack of Incentives. Potential partners have few compelling reasons to cooperate.

Methods to Overcome

"* Create incentives for cooperation among Government, academia, and private business."* Build consensus about technological needs common to all members of user community.

5. FUNDING

Barriers

Capital Development. Much of the public works infrastructure is administered by locW governments,

but they typically do not have the fiscal power to generate the funding required to apply innovativetechniques.

Scarcity of Funds. Severe budget constraints are aggravated because public works programs are

frequent candidates for budget cuts in favor of other more visible programs.

Methods to Overcome

* Encourage funding innovations, such as special financing districts, exactions (required contribution

to a public jurisdiction by developers or owners), independent public corporations to finance,

construct, and operate public works facilities, and public/private partnerships.

a Consider partial or total privatization of some areas in infrastructure development or management.

* Empower local governments to generate funding in proportion to their level of responsibility.

Table I (Cont'd)

6. SIZE AND TYPE OF INFRASTRUCTURE PROJECTS

Barriers

Cost. Extreme size, area, or required lifespan of facilities make innovation difficult or expensive.

Flexibility Concerns. Infrastructure has not been designed with expansion or changing needs in mind.

Quantification of Benefits. Lack of knowledge about expected costs and benefits because ofuniqueness or complexity of infrastructure facility.

Methods to Overcome

"* Develop standardized butflexible approaches to construction based on regional needs."* Conceive and develop public works infrastructure with more focus on flexibility, expandability, andinnovation.* Quantify expectea costs and benefits of innovation on unique projects through a well designedinnovation demonstration program.

7. EDUCATION, RESEARCH, AND TECHNOLOGY TRANSFER

Barriers

Lack of Training. Low national priority on education and training for infrastructure construction,management, and sustainment.

Fragmented R&D. Little coordination among various public and private organizations conductinginfrastructure R&D in relative isolation, and addressing relatively narrow concerns.

Technology Transfer Gap. Academic and Government research centers fail to widely disseminatetheir products to public works agencies.

Lack of Incentives. Little incentive Lo promote R&D efforts focused on support of local governmentinfrastructure issues.

Methods to Overcome

* Create a national agenda for R&D in public works infrastructure area to promote better use of R&Dfunds.* Promote strong university programs and student interest in infrastructure engineering andtechnology.* Promote infrastructure R&D that addresses integrated (cross-cutting) issues (e.g., Federal effort toidentify new technologies that offer best potential return on investment, strategies to develop andwidely implement beneficial new technologies).* Adopt innovations from other sectors (e.g., manufacturing, aerospace) into design, construction, andoperation of public works.E Develop effective technology transfer mechanisms and commit the necessary resources to supportthese mechanisms (e.g., peer diffusion, accessible, comprehensive information clearinghouse)."* Purchase innovations developed overseas and adapt to U.S. needs."* Develop incentives to encourage greater R&D investment by the private sector.

9

Cultural Values and Social Perception

New technologies that are in conflict with widespread values or perceptions have much moredifficulty being adopted. For example, there is a historical tendency for Americans to favor disposal overrecycling. Although this attitude is changing, it still interferes with the adoption of innovations based onreuse (maintenance, repair, recycling, etc.) rather than new construction.1 Another cultural factor thatcan interfere with the adoption of new technologies is civic pride.19 Sometimes referred as the "notinvented here" syndrome, civic pride can produce a reluctance to adopt new ideas that originate in othercountries. This can be compounded by the reluctance of public works officials to adopt innovations inwhich they did not participate in defining the problem or specifying the solution.20

In comparison with western culture, oriental cultures are more inclined to accept short-termhardships to bring long-term benefits. In oriental nations this cultural value clearly promotes investmentin new technologies, even when short-term payoffs are not expected. 2 1 In contrast, the United Statesand other western nations tend to consider the short-term payoff at least as important as long-term benefits.

Organization theory shows that every social organization includes elements that oppose change andcause organizational inertia. These include resistance to the trauma (real or perceived) of change, vestedinterest in the status quo, limited resources devoted to innovation, lack of flexibility in procedures orregulations. These factors can originate from within a public works agency or within a community facingpossible change.

Another factor that interferes with innovation is the lack of public awareness. The public isgenerally uninformed about the infrastructure and its central role in the nation's economy and quality oflife. Public awareness usually comes only from the painful experience of infrastructure failures (watershortages and boil orders resulting from the rupture of water mains, traffic gridlock due to road failure,etc.). This lack of public awareness is detrimental to innovation in the construction, management, andsustainment of the public works infrastructure. Public support is essential to secure adequate funding fornew construction and maintenance of infrastructure facilities.2 2 Public support can also be veryvaluable for securing funds for R&D and the adoption of innovative technologies.

Sometimes, however, the public is aware of a proposed change, but opposed to it. Publicinfrastructure projects, like most other public projects, have high visibility. Also, they are often morecontroversial than private projects, frequently involving public debates and litigation. 23 Public agenciesin charge of managing infrastructure projects are often reluctant to incorporate new ideas because of thishigh visibility and potential public controversy. Controversy can take different forms, such as expertsdisagreeing on the value of a particular innovation or interest groups challenging the Government on aproject's benefits. Innovations publicly perceived to adversely affect a community's quality of life areespecially prone to controversy. An example that clearly illustrates how public perception of aninnovation can delay its implementation is the fluoridation of water supplies. Although it was recognizedfor many years that water fluoridation is an effective way to prevent tooth decay, its widespreadimplementation took several years and much effort. The blocking of this innovation is attributed by Little

"18 .Infrastructure for the 21st Century," National Research Council (Washington. DC, 1987).19 "Dynamic Technology Transfer and Utilization: The Key to Progressive Public Works Management." American Public

Works Association, Editors: Cohn, M.M., and M.J. Manning (1974).lu Zaitman, G., and R. Duncan, "Strategies for Planned Change," John Wiley and Sons (1977).21 "Transferring Research into Practice: Lessons from Japan's Construction Industry," Civil Engineering Research

Foundation, Japan International Research Task Force (November 1991)."4 "Infastructure for the 21st Century." National Research Council (Washington, DC, 1987).23 Sweet, J.. "Legal Aspects of Architecture, Engineering, and the Construction Process." West Publishing Company (1985).

10

to community feelings that the solution was imposed on the public by the Government without adequateexplanation or discussion.2 4 Also, opponents of this innovation included anti-fluoridation scientists.In any case, public works innovations that might be perceived to compromise a community's quality oflife are very likely to face intense opposition from both the public and political leaders.

Cultural and social obstacles to innovation in the public works infrastructure can be addressed inseveral ways. As noted by Rogers, it is easier to adopt innovations compatible with existing culturalvalues and perceptions. Also, in order to overcome the social and organizational inertia thwarting inno-vation, a catalyst (also called a change agent [by Rogers] or champion (by Tatum]) is instrumental. 2 5

There are examples of successful building of public support for public works infrastructure. Thecity of Phoenix, AZ, has repeatedly been successful in securing public support for bond issues that financepublic works projects. The key to this support is the existence since 1957 of a citizens' bond committeerepresenting a cross-section of the population. This committee is instrumental in communicating needsto the public, securing public support for bond issues, and monitoring spending of the monies raised.26An alternative approach, used successfully in other communities, is the active involvement of communitygroups in the capital development program. Participating groups actively help define the short- and long-term reuirements of the community, promote public awareness, and build support for infrastructureissues.2 Both approaches have been shown to be successful in helping to manage controversy andopposition to innovation. Another approach, proposed by the National Research Council, is to addressexisting controversies through the creation of special resolution mechanisms, such as expert panels,referees, etc.2 8

Governmental Structure and Regulations

The management of the public works infrastructure involves all levels of government: Federal,State, and local. The public works user community, consisting of more than 80,000 local governmentunits, is clearly a diverse and fragmented group. Diversity in terms of size, needs, goals etc. is a majorobstacle in developing a research agenda of national scope and broad impact.29,30'31 Oneexample is the lack of attention, until recently, to intermodal transportation R&D. 32 '33 Anotherobstacle to innovation arising from this fragmentation is the lack of standardized facility design. The lackof standards suppresses sales volume, which removes a major incentive for private-sector suppliers toinnovate.

34

24 "Factors Relating to the Implementation and Diffusion of New Technologies: A Pilot Study," Arthur D). Little, Inc. (Vols

I, H, and Ill, Cambridge, MA, 1979)."25 Infrastructure for the 21st Century," National Research Council (Washington, DC. 1987).26 "Good Practices in Public Works," American Public Works Association Research Foundation (1988).27 .'Good Practices in Public Works," American Public Works Association ". vrch Foundation (1988).28 "Infrastructure for the 21st Century," National Research Council (Washiigtoi, DC, 1987).29 Feller, L., and P.E. Flanary, "Diffusion and Utilization of Scientific and Technological Knowledge Within State and Local

Governments," National Aeronautics and Space Administration (January 1979).30 "Infrastructure for the 21st Century," National Research Council (Washington, DC, 1987).31 "Delivering the Goods: Public Works Technologies, Management, and Financing," Office of Technulogy Assessment

(Apnl 1991).32 "Delivering the Goods: Public Works Technologies, Management. and Financing," Office of Technology Assessment

(April 1991).33 Prendergast, J., "A New Era in Transportation," Civil Engineering, American Society of Civil Engineers (New York. April

1992 ")."4"Infrastructure for the 21st Century," National Research Council (Washington, DC, 1987).

11

The fragmented responsibility for the public works infrastructure is compounded by the regulatoryconstraints affecting local governments. The administrative tools that local governments can use toprocure innovation-funding mechanisms, procurement procedures, contracting, etc.-are controlled andregulated by the Federal and state governments.35 Although controls are justifiable from manyperspectives, they unintentionally inhibit the flexibility that local governments require to take advantageof innovation. OTA describes the distance that exists between Congress and public works entitiesregulated by its legislation, illustrated by the effort and time necessary to reverse adverse sections of 1986tax legislation that limited the revenue-raising ability of local public works entities.

Some Government regulations, such as requirements of competitive bidding or the low-bid approach,impose constraints on innovation. While the low-bid approach for procurement at all Government levelshas effectively helped to maintain fairness and discourage corruption, it can be an obstacle to procuringinnovations from private suppliers.36 As in the case of low-bid procurement, public agencies are alsoregulated in the selection of design professionals. This restricts the flexibility to apply innovativecontractual approaches that have been successfully used in the private sector to address stringent projectrequirements.'

The increased complexity of governmental standards and regulations pertaining to the infrastructureitself can also hinder the ability to adopt innovation. This is a problem particularly when environmentalstandards and regulations are involved. The fragmentation of the regulatory responsibility sometimes isextreme, and even contradictory. For example, communities are often required to comply with the codesand standards of many overlapping jurisdictional authorities. 3 8 Another problem is the increasing rateat which regulations are challenged in court. For instance, about 80 3 Vercent of proposed U.S.Environmental Protection Agency (USEPA) standards go through litigation.

The ability to innovate can he also affected by Government regulation of systems for which keytechnologies have been in steady use for a considerable time. These codes and regulations can easilybecome obsolete as the technology advances. Obsolete regulations may, in turn, interfere with theapplication of innovations if those regulations are not reviewed and revised on a timely basis.40

Another challenge hindering innovation in the public works infrastructure is the absence of a profitmotive. Private entities have compelling financial reasons to continuously enhance their efficiency.Innovation is viewed as a tool for increasing profits through productivity improvements. Also, rewardsfor successful innovation in the private sector directly benefit the innovators as well as their employer,but the consequences of unsuccessful innovations are normally shared across all managerial levels.Neither public-sector agencies, nor their individual employees, historically have had a similar motivationto innovate. Public-sector agencies have not provided a risk-sharing atmosphere. In the public sector,successes tend to be shared with external players (e.g., elected officials, legislative bodies), but theconsequences of unsuccessful decisions are localized to those who propose them. The result ingovernmental bodies is a disincentive to search for innovative techniques for maximizing efficiency.4 1

"35 -Delivering the Goods: Public Works Technologies. Management. and Financing," Office of Technology Assessment(April 1991)."36 "Delivering the Goods: Public Works Technologies. Management. and Financing," Office of Technology Assessment

(April 1991).37 Sweet. J.. 'Legal Aspects of Architectuie. Engineering, and the Construction Process." West Publishing Company (1985).38 'Infrastructure for the 21st Century." National Research Council (Washington. DC, 1987).39 "Delivering the Goods: Public Works Technologies. Management, and Financing," Office of Technology Assessment

(April 1991).40 "Infrastructure for the 21st Century," National Research Council (Washington, DC, 1987).41 Feller. I.. and P.E. Flanary. "Diffusion and Utilization of Scientific and Technological Knowledge Within State and Local

Governments." National Aeronautics and Space Administration (January 1979).

12

Another problem is the constant migration of skilled workers from the public sector to the privatesector in search of higher wages.42 This is creating a serious shortage of public-sector personnel withthe skill and knowledge to implement and manage innovation. Unlike common practice in the privatesector, public works agencies provide little training for personnel to encourage recognition and successfuluse of innovations. This also creates difficulty in public works agencies to develop consensus on whichinnovative technologies offer the most potential benefit. 4 3

Another barrier to innovation arises from the political nature of many public works administrativepositions. The management of the public works infrastructure can be affected by the political agendas ofelected officials. A consequence of this is an emphasis on short-term, high-visibility results.44 Thisneglect of the long-term perspective is compounded by the lack of continuity within elective officesdirectly responsible for the public works infrastructure. 45 These conditions can inhibit investment ininnovations that may have a relatively long payback period.

One way to address these problems suggested by OTA is to promote intergovernmental partnershipsto coordinate infrastructure R&D.4 6 An important goal of intergovernmental partnership should be tohelp State and local governments develop better fiscal and political tools for promoting innovation. It isespecially important to allow local governments to develop innovative alternatives to obtain funding forpublic works projects.

Federal leadership is essential for the establishment of intergovernmental partnerships. As noted bBernstein, there is no central national agency to focus R&D and transfer innovation into the field.4

A study by CERF of Japan's success in incorporating innovations into construction practice found thata major factor is strong leadership in promoting and implementing innovation by government agenciessuch as the Ministry of Construction.4p Key ingredients of Japan's government leadership role includethe following:

1. Development of a bold vision for the future to address problems of serious national ,.ýoncern,2. Identification of major research issues that must be addressed to reach the proposed vision,3. Establishment of a partnership among government agencies, private business, and academia todevelop and implement innovations contributing to fulfillment of the vision,4. Clear definition of the government's role (e.g., financial, technical),5. Coupling innovation and regulatory policy to reduce the potential liability of innovators,6. Development of national strategies to transfer innovations into practice.

42 "IDelivering the Goods: Public Works Technologies, Management, and Financing," Office of Technology Assessment

(April 1991).43 -Delivering the Goods: Public Works Technologies. Management, and Financing." Office of Technology Assessment

(April 1991).Feller. I., and Flanary, P. E., "Diffusion and Utilization of Scientific and Technological Knowledge Within State and Local

Governments," National Aeronautics and Space Administration (January 1979).45 Feller, I., and Flanary, P. E., "Diffusion and Utilization of Scientific and Technological Knowledge Within State and Local

Governments." National Aeronautics and Space Administration (January 1979).46 "[Delivering the Goods: Public Works Technologies. Management, and Financing," Office of Technology Assessment

(April 1991).Bernstein, H. M., "Is Innovative Engineering Becoming Extinct in the U.S.?," American Consulting Engineer (Vol 2, No.

4. 1991).48 "Transferring Research into Practice: Lessons from Japan's Construction Industry," Civil Engineering Research

Foundation, Japan International Research Task Force (November 1991).

13

The leadership role of the government in Japan is also very important in addressing national crises.For example, Japan's government acts as a catalyst to focus innovation and research on specific nationalemergencies, such as the energy crisis.

Leadership by Japan's central government is an essential part of that nation's success in innovation,but the process of innovation in Japan's public works infrastructure involves other important players. Asshown in Figure 1, academia (through representation at the public works research center) and privateindustry are also essential to the process. This partnership reduces risk for all participants and offersincentives for private companies (e.g., tax incentives, low-interest loans). An important ingredient ofJapan's national innovation transfer process is evaluation of R&D products by a neutral organization toensure public safety and acceptance."

Innovation at all Government levels can also be fostered by developing an organizational culturethat encourages innovation. Personnel must be trained to understand, implement, and manage innovativeideas. A partnership between the State of Tennessee and its land grant university offers one example ofhow training can be effectively promoted.5 0 Collins provides examples of innovation at the field levelpromoted by an attitude that encourages developing imaginative solutions to everyday problems. 5 f

APWA has also documented the benefits of positive organizational attitudes toward innovation. Findingsindicate that innovation is promoted in public works agencies where there is a recognition of the valueof new technologies as problem solvers and as solutions to broad challenges. 5 2

The fostering of a positive organizational attitude toward innovation must be accompanied byensuring organizational compatibility with change. This requires effective communication channels,authority patterns, rules, and procedures that facilitate the adoption and use of new technologies. It iscrucial to minimize potential conflicts arising from innovation (e.g., competitiveness between work groups)and to reward innovation at all organizational levels. 53 As previously noted, successful transfer ofinnovation often is driven by a champion of the innovation within the organization. The NationalResearch Council recommends supporting these champions with funding, training, and awards. 54

49 "Transferring Research into Practice: Lessons from Japan's Construction Industry," Civil Engineering ResearchFoundation Japan International Research Task Force (November 1991).

" "elivering the Goods: Public Works Technologies, Management, and Financing," Office of Technology Assessment(April 1991).

51 Collins. W. A., "Innovation: The Key to Local Roads Survival," Engineering 21st Century Highways, ASCE (1988).52 "'Dynamic Technology Transfer and Utilization: The Key to Progressive Public Works Management," American Public

Works Association. Editors: Cohn, M.M., and M.J. Manning (1974)..:' Zaltman, G., and R. Duncan. "Strategies for Planned Change," John Wiley and Sons (1977).

"54 ..Infrastructure for the 21st Century," National Research Council (Washington, DC, 1987).

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Other governmental barriers to innovation (e.g., the competitive-bid procurement process,inflexibility of standards and specifications) can be counterbalanced to some extent by promotingevolutionary changes in the way Government operates. Bernstein proposes the application of a life-cyclecosting perspective in competitive bidding. Tibs perspective can improve the transfer of innovations withsometimes higher initial costs, but offering long-term benefits by reducing operation and maintenanceexpenses. Bernstein also proposes the development of performance-based specifications that allow moreinnovation in the designed solutions.55

Local governments tend mainly to adopt innovations tried and proven by their peers. This tendencysupports the concept of diffusion networks consisting of members with similar goals and interests, asdescribed by Rogers. Organizations such as APWA are instrumental in communicating innovativetechnologies among public works agencies.

Risk and Liability

Risk and liability have become major obstacles to the adoption of innovations in the public worksinfrastructure. This is probably due to the trend in liability suit decisions in recent decades to compensatevictims at the expense of public agencies.56 Consequently, public works agencies tend to avoid projectsthat may include risk of damage to others. Such situations include the adoption of innovations which, ifthey fail, could cause harm to someone.

Risk and liability affect not only the creativity of public works agencies, but also the willingnessto innovate by infrastructure designers, contractors, and financial institutions. Design of public worksfacilities is a fertile area for innovation, but fear of liability works as a disincentive for designers toinnovate. This conservative attitude is compounded by the proliferation of codes and regulations that thedesigner has to follow.5 7

Liability concerns arise in part from the fragmented approach to facility acquisition. Acquisitionof public works facilities is generally split into at least two major phases: the design phase, performedby a design professional (architect/engineer) and the construction phase, performed by a constructioncontractor. To reduce liability concerns, designers normally avoid new techniques that require unusualtechniques or careful construction.5 8 From the construction contractor's perspective, there is frequentlya reluctance to be the first to apply a new technology. Although much more is learned from failures thanfrom successes, it is unlikely that any construction contractor would be willing to be the first toexperiment with unproven innovations on a live job.59

Another liability factor in procurement is funding; design and construction are normally funded withapproaches that offer little flexibility for accommodating cost overruns related to application of innovativetechnologies. At the Federal and State levels a typical funding mechanism is legislative appropriations.At the local level, bonds are an important funding mechanism, and these require voter approval. Publicagencies have a rigid and tightly controlled system to track and monitor project procurement costs. 60

55 Bernstein. H. M.. "Tearing Down Road Blocks to Innovation." American Public Works Association Reporter (February!1992.56 Sweet. J.. "Legal Aspects of Architecture, Engineering, and the Construction Process." West Publishing Company (1985).

57 Sweet. J.. "Legal Aspects of Architecture. Engineering, and the Construction Process." West Publishing Company (1985).58 -Infrastructure for the 21st Century," National Research Council (Washington. DC. 1987).59 ".Transferring Research into Practice: Lessons from Japan's Construction Industry." Civil Engineering Research Foundation.

Japan International Research Task Force (November 1991).60 Sweet. J., "Legal Aspects of Architecture. Engineering, anti the Construction Process." West Publishing Company ( 1985).

16

It is clear that cost control systems are valuable to reduce cost overruns, but they may also discourage theadoption of innovations by failing to distinguish between overruns due to mismanagement and overrunsresulting from the hidden costs or unforeseen complexities of applying an innovative technology.

Private-sector financial institutions play an important role in the funding of many public worksprojects. However, they are frequently reluctant to participate in projects that involve unusual risks. Thisis particularly true of environmental projects, where the continued evolution of regulations and technicalknowledge make the accurate assessment of risk impossible. 6 1

The reluctance to innovate is increased by each failure. With few exceptions, government agenciesare more likely to penalize failures in innovation than to reward successes. This leads to a highly con-servative public works infrastructure management approach, which resists innovation. 62 This is relatedto the fact that infrastructure failures are highly visible, while successes are taken for granted.

Undue aversion to risk further thwarts innovation because it makes it very difficult to set up demon-stration projects to prove innovations in practice. 63 The failure to demonstrate innovations feeds avicious cycle of resistance to innovation: potential users are reluctant to try innovative technologies thathave no track record.

A very promising method of reducing the risk involved in implementing innovative technologiesis to develop a formal infrastructure innovation demonstration program. This involves real-world projectswhere innovative techniques are carefully applied and monitored so (1) the effectiveness of the techniquesis credibly proven and (2) the experience gained in the demonstration facilitates the implementation ofthese techniques in similar projects. Such demonstration projects have usually been structured to minimizerisk to the innovators. The USEPA's Alternative and Innovative Technology Program, a relevantprecedent for infrastructure projects, was operational until 1990. It consisted of an incentive for State andlocal governments to implement innovative techniques in the design and construction of environmentalprojects. The USEPA would absorb a major portion of the risk; in case of failure of the implementedinnovations, the agency would provide up to 100 percent of the cost for repair or replacement.64

Another formal program to demonstrate innovative technologies is incorporated into the IntermodalSurface Transportation Efficiency Act (ISTEA) of 1991. This program provides $50 million todemonstrate new technologies for the construction or operation of high-speed rail systems.65 Anotherbenefit of demonstration projects is to enable the measurement of a new technology's potential costs andbenefits.

6 6

Bernstein goes further in proposing risk-reduction alternatives to promote innovation. He suggeststhe promotion of legislative measures to reduce the liability of innovators, including (1) caps on liabilityawards, (2) formal peer review to validate and endorse design innovations, and (3) alternative dispute-resolution mechanisms to reduce the cost of litigation. Bernstein also proposes the creation of test andevaluation centers whose mission would be to facilitate the demonstration of new technologies in the field.

61 "Paying for the Progress: Perspectives on Financing Environmental Protection," U.S. Environmental Protection Agency(Fall 1990).

62 Feller, I., and P.E. Flanary, "Diffusion and Utilization of Scientific and Technological Knowledge Within State and LocalGovernments," National Aeronautics and Space Administration (January 1979).

63 .Delivering the Goods: Public Works Technologies, Management, and Financing," Office of Technology Assessment(April 1991).

"6 Delivering the Goods: Public Works Technologies. Management, and Financing," Office of Technology Assessment(April 1991).

65 Prendergast, J.. "A New Era in Transportation," Civil Engineering, American Society of Civil Engineers (New York. April1992d6 ".Infrastructure for the 21st Century," National Research Council (Washington, DC. 1987).

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He also acknowledges the value of bringin~the legal and insurance professions into discussions to identifyimproved mechanisms for risk reduction.?" 6 8

As shown in Figure 1, in Japan's construction sector, innovations are tested and evaluated by neutralorganizations to ensure public safety and acceptance. Only after this testing and certification process arethey approved by Japan's government for practical use.

The National Council on Public Works Improvement (NCPWI) recommends risk-sharing arrange-ments as an encouragement for innovation.69 Risk-analysis techniques can determine a balanced andfair distribution of risk for all participants-designer, public works agency, manufacturer, generalcontractor, etc. In Japan, together with the reduction in risk and liability for the development and testingof new technologies, there are incentives to make R&D attractive and profitable to the private sector. v

These incentives include low-interest loans, tax incentives, and advantageous pricing on governmentcontracts.

Gerwick describes a number of innovations in construction practice developed by a constructionfirm7 1 . He concludes that innovations are always risky and that, quite often, the innovating firm doesnot benefit from them (although the construction industry as a whole tends to benefit from the newtechniques). However, Gerwick clearly indicates that failure to innovate ultimately may cause a con-struction firm to go out of business. Innovation is important for survival in a competitive market. InJapan, R&D investment by contractors is considered essential for success. The construction sector inJapan is highly competitive, but most of the emphasis in competition is on the contractor's pre-qualifications and societal approval, not bid price. Contractor R&D efforts are very important both inJapan's pre-qualification process and for societal approval.72

Lack of Public and Private Partnerships

Solid partnership between Government and private industry is a necessary requisite for the develop-ment of demonstration projects as discussed in a previous section. CERF's study of Japan's success inconstruction innovations identifies a strong partnership among all sectors related to construction, includinggeneral contractors, consultants, government agencies, and academia. Government leadership, togetherwith close cooperation between the public and private sectors, helps foster consensus about newtechnologies.

In the United States there are currently several good examples of cooperation between the publicand private sectors on R&D with good potential to benefit the infrastructure. One is the Construction Pro-ductivity Advancement Research (CPAR) program in which the Federal Government (through the ArmyCorps of Engineers), academia, and the private sector work in partnership to develop innovations to

67 Bernstein, H. M.. "Is Innovative Engineering Becoming Extinct in the U.S.?," American Consulting Engineer (Vol 2. No.4. 1991).

68 Bernstein. H. M.. "Tearing Mown Road Blocks to Innovation," American Public Works Association Reporter (February

199270 "Fragile Foundations," National Council on Public Works Improvement (February 1988)."70 -Transferring Research into Practice: Lessons from Japan's Construction Industry." Civil Engineering Research

Foundation Japan International Research Task Force (November 1991)." Gerwick. B., Jr., "Transferring Construction Innovation Into Practice: Lessons Learned," Excellence in the Constructed

Project, Proceedings of the Construction Congress I (1989).72 "Transferring Research Into Practice: Lessons From Japan's Construction Industry," Civil Engineering Research

Foundation, Japan International Research Task Force (November 1991).

18

enhance construction productivity.73 This program is still small-about $5 million per year--but demon-strates both the feasibility and potential benefits of establishing public/private partnerships in R&D.

The manufacturing sector has also shown that partnerships can be effectively coordinated to promoteR&D. The National Center for Manufacturing Sciences (NCMS) is a nonprofit organization funded bya group of U.S. tool manufacturers and suppliers to promote research and technology transfer. It isnoteworthy that the partners in this effort are competitors. The success of NCMS is based on four factors:(1) addressing common goals, (2) responding to market pull, (3) identifying R&D areas suitable forcooperation among competitors and (4) ensuring support by top management of the member firms byaddressing their strategic goals.74

Another example of successful public/private R&D partnership, the Ben Franklin Partnership, hasoperated in Pennsylvania since the early 1980s. This partnership encompasses cooperative R&D effortsby the private sector and universities. It is funded by the State, with matching funds from the FederalGovernment and private sources. This partnership has been successful in developing profitableinnovations.

75

Funding

There are two major issues related to funding and innovation in the public works infrastructure. Oneis the actual level of funding for all of the steps in the innovation process, from R&D to diffusion andadoption. In comparison to other industrialized nations, the U.S. lags in its investment in innovationdevelopment for infrastructu -. *,oth in the public and private sectors. A recent OTA study concludes thatGovernment spending for infrastructure R&D is inadequate. 7 6 The other funding issue related toinnovation in the public works infrastructure is the potential role of innovative financing mechanisms.Innovative approaches are badly needed to overcome the financial hardships that commonly affect publicworks agencies.

As discussed previously, a large part of the U.S. public works infrastructure is administered andcontrolled by local governments. Local governments typically experience substantial budget difficulties,and do not have the fiscal power to generate the funding required to apply innovative methods andtechnologies.77 Severe budget constraints are aggravated by the fact that public works programs arefrequently targeted for budget cuts for the benefit of more visible programs. Consequently, localgovernments typically have the resources to pursue only modest innovations that result in only marginalchange.7 9 They are often understaffed and lack the financial resources to implement innovations that

"73 Construction Productivity Advancement Research (CPAR) Program," U.S. Army Corps of Engineers (January 1990)."74 "Fragile Foundations," National Council on Public Works Improvement (February 1988)."75 .,Delivering the Goods: Public Works Technologies, Management, and Financing," Office of Technology Assessment

(April 1991).76 "Delivering the Goods: Public Works Technologies, Management, and Financing." Office of Technology Assessment

(April 1991).Feller. I., and Flanary, P. E.. "Diffusion and Utilization of Scientific and Technological Knowledge Within State and Local

Governments." National Aeronautics and Space Administration (January 1979).78 "I)elivenng the Goods: Public Works Technologies, Management. and Financing," Office of Technology Assessment

(April 1991).Feller. I.. and Flanary P. E., "Diffusion and Utilization of Scientific and Technological Knowledge within State and Local

Governments." National Aeronautics and Space Administration (January 1979).

19

require major effort and expense up front. New technologies that require the scrappin• of existingequipment and systems generally encounter high resistance at the local government level."

The trend in public works funding continues to be a reduction in Federal spending creating anincrease in State and local fiscal obligations. However, the ability of local governments to generate fund-ing has not grown in proportion to this increase in obligations. As Collins says, local governmentsare forced "to do more with less". 82 This trend of decreasing public works investment reduces thenation's overall productivity, undermining its international competitiveness.83 The challenge is toreverse this trend and increase investment in the public works infrastructure.

Consequently, it is highly desirable to promote innovation in funding approaches, and examples ofthis type of innovation are documented in the literature. The APWA reports various successful innova-tions in the funding of public works projects.84 Examples include the use of stormwater utilityrevenues to finance operation and maintenance of the stormwater system, and the use of waste as anenergy source. A study performed for the National League of Cities identified a number of otherinnovative financing approaches including special financing districts (geographical partitions to raisemoney from owners for specific projects); exactions (required contribution to a public jurisdiction bydevelopers or owners); independent public corporations to finance, construct, and operate public worksfacilities; and public/private partnerships. 85

User fees are an important source of revenue to help finance the public works infrastructure.However, OTA notes that it is important to maintain a healthy balance of general revenue subsidies, taxes,and other community-wide fundraising alternatives without over-relying on user fees. This balance isinfluenced by factors such as the need to encourage economic development, the user's ability to pay,etc. 86

Funding mechanisms that include private-sector participation are gaining interest. Several successfulenvironment-related private/public partnerships that include major private-sector financial participation aredocumented by USEPA.8 7 These successful cases have in common the achievement of the profit goalsof the private partner, and of the cost and quality goals of the public partner.

80 "Dynamic Technology Transfer and Utilization: The Key to Progressive Public Works Management." American Public

Works Association, Editors: Cohn, M.M., and Manning, M.J. (1974).0' Kane, A. R., "Financing Highways in the 21st Century," Engineering 21st Century Highways, ASCE (1988).82 Collins, W. A., "Innovation: The Key to Local Roads Survival," Engineering 21st Century Highways, ASCE (1988).83 "Delivering the Goods: Public Works Technologies, Management. and Financing," Office of Technology Assessment

(April 1991)."84 "Good Practices in Public Works," American Public Works Association Research Foundation (t988).85 "Financing Infrastructure. Innovations at I --al Level," Apooge Research, Inc., (National League of Cities, 1987).86 "Delivering the Goods: Public Works Technologies, Management, and Financing," Office of Technology Assessment

(April 1991)."87 "Paying for the Progress: Perspectives on Financing Environmental Protection," US Environmental Protection Agency (Fall1990).

20