Handling future uncertainty: Strategic planning for the infrastructure sector

The technical components of infrastructure systems are planned and designed to operate over time periods of 25 to 40 years. However, the context conditions under which an infrastructure organization operates can change drastically and unpredictably over this extended time frame, due, for example, to population developments, new regulations or emerging technologies. Several studies on the future of infrastructure sectors have recently raised doubts regarding the capacity of the public sector to adequately address this future uncertainty and secure the delivery of infrastructure services. Prominently, private sector participation has been proposed as an option to address this capability gap. This thesis argues that public utility organizations can identify suitable alternatives to close this capability gap and thus improve their handling of future uncertainty by applying adequate management principles, such as formal strategic planning. Privatization is therefore not a necessary precondition for ensuring the long term delivery of utility services. This however requires an adaptation of existing strategic planning approaches to the particularities of the infrastructure sector, primarily 1) the high degree of path dependencies constraining the set of viable alternatives 2) the long planning horizons (and the related future uncertainty) and 3) the variety of environmental, social, economic and governance objectives imposed on the sector. To test this hypothesis, existing strategic planning approaches in the infrastructure sector were analyzed and a series of requirements for a strategic planning, suitable for the infrastructure sector, were developed. Based on this analysis, a strategic planning approach which complements the existing methodologies was developed and applied in three representative case studies in the Swiss wastewater sector. This approach builds on methods such as scenario planning and focuses on a structured debate, where possible future developments, available alternatives, and pursued objectives are explicitly addressed and evaluated from different perspectives. The application of the strategic planning approach shows that, given adequate tools, public utility organizations can overcome their limitations in identifying capability deficits regarding future challenges and assess adequate strategies to address these deficits. In addition, the strategic planning process stimulates a learning process within the organization. However, the selected strategies depend on value judgments and the existing organizational forms prevalent in the respective regions. This result suggests that an increasing diversity of organizational forms, i.e. ones which integrate various elements of private or public organizations, is likely to develop over the coming years.