iBuild Web Application Proof of Concept

Introduction

Local infrastructure facilitates everyday living. It includes private sector utilities (water, electricity, gas, and telecommunications) and public sector infrastructure of all types. It also includes local infrastructure provided by community groups and social enterprises. Reductions in local government expenditure are transforming the ways in which local infrastructure is financed and funded. New innovative business models are being developed to provide infrastructure services that are unavailable in a locality or to provide additional services. This tool provides a resource to explore the diversity of local infrastructure business models that have been developed. It will assist policy-makers and community groups to develop alternative infrastructure business models that will support the delivery of local services.

The tool provides access to a databank of 116 short case studies of current, historic and planned local infrastructure business models within the UK and internationally. Each case outlines the vision, delivery, outcomes and integration of infrastructure business models. The purpose of the tool is to demonstrate the diversity of infrastructure business models and allow users to identify business models by infrastructure class and key component parts that shape a viable business model. All information has been obtained from publically available secondary data sources, which are referenced in the documents, between September 2014 to April 2015. The cases were identified by three methods: a bottom-up approach using development plans and local authority bids, as well as researcher networks; a top-down approach to scan at a national level for core examples of infrastructure; and a targeted search by infrastructure class. The databank represents a compendium of examples of infrastructure business models and is not representative of a particular region or infrastructure segment.

What is local infrastructure?

The iBuild definition of infrastructure is "... the artefacts and processes of the inter-related systems that enable the movement of resources in order to provide the services that mediate (and ideally enhance) security, health, economic growth and quality of life at a range of scales."1. The iBuild team are working on understanding infrastructure provision through a 'whole system' approach that includes major systems and assets. However, the focus of this web application is to identify examples of local infrastructure business models. Infrastructure at the local scale is defined as sub-national and that provides direct benefits or value to the local community or region(s).

What is an infrastructure business model?

A business model describes the way inputs and processes come together to develop a revenue stream and create value over time. Infrastructure business models (IBM) are defined by iBuild as “the system of physical artefacts, agents, inputs, activities and outcomes that aim to create, deliver and capture economic, social and environmental values over the whole infrastructure life cycle.”2

How this tool works

The tool allows users to filter the databank by infrastructure segment, region of operation and by three characteristics of the business model: finance methods; funding methods and project leadership.

1. Dawson, R. (2013) Bridges n'that: An Infrastructure definition for iBuild, iBuild Briefing Note No.1.
2. Bryson, J., Pike, A., Walsh, C., Foxon, T., Bouch, C. & Dawson, R. (2014) Infrastructure Business Models (IBM) Working Paper, iBuild Briefing Note No.2.

Finance Methods

Finance is the mechanism for manipulating the main revenue streams to access funds when needed or to reduce the cost of borrowing. Finance is a key decision, which enables the delivery of the business model because particular types of investment favour certain projects and business models. Infrastructure can be financed by the public, private or community sectors, or a blend of these. Debt packages, either public or private, can be constructed based on significant added value, in the case of the public sector, and/or appropriate revenue streams to support the long term funding of the project. These are the finance methods identified in the case studies:

Finance Method Definition
National taxation (capital) Capital from central government
National debt financing Funds raised by borrowing at the national level
Debt financing: Municipal bonds Funds raised by borrowing at the local government level
Debt financing: Collective municipal bonds Funds raised by borrowing collectively by several local government bodies
Debt financing: Tax Increment Financing (TIF) Anticipated economic gains from infrastructure development are used to borrow more money from central government
Borrowing through a special purpose vehicle Borrowing via a subsidiary company to lower financial costs and risks
Public investment bodies Public investors that invest to stimulate further investment in a project or market
Private Finance Initiative (PFI) Form of public-private partnerships where private capital is the principal form of finance
Private investment Use of private capital
Community share scheme Raise capital through the sale of shares in a community enterprise, where the shareholders are the primary users
Planning obligation Direct contribution by private developers to development in return for planning rights
Crowdfunding Donations by a large number of individuals or organisations, who may or may not benefit from the infrastructure
Lottery Funds raised by tickets sales to enter a prize draw
Grants Capital given for a specific project with no expectation of it being repaid

Funding Methods

Funding is defined as the primary stream of revenue required to offset costs or to support leveraging options. Costs include the repayment of borrowed capital, management, maintenance and in some cases deconstruction. There are multiple forms of funding methods identified but ultimately the infrastructure service is either paid for directly by users or indirectly through taxation. The funding stream is critical to the viability and sustainability of an IBM. It is required to support the financing of the infrastructure and difficulties in establishing sustainable funding streams have reduced investment in infrastructure. Funding methods identified in the case studies:

Funding Method Definition
User charges Payment by service user at point of use (either one-off or rental charge)
Subsidised user charges Reduced direct user charge from an indirect national taxation subsidy
Pay-as-you-save Cost is recovered from performance efficiency savings over time
Performance-based partnership Payment based on performance guarantees
Debentures Form of debt security, not based on a physical asset, that has a fixed term
Onsite additional user revenue Revenue from associated services.
Land value capture Increased land values and business opportunities generated from infrastructure development
Sponsorship Payment from an individual or corporate body in return for commercial association with the development
Philanthropic donations Charitable giving and endowment
Local levy/rates Local tax for a specific project/activity
National taxation (revenue) Revenue from central government

Project Leadership

The value network is the group of agents that come together to develop the value proposition. The role of the agents varies and includes members who coordinate the group, provide products and services or otherwise contribute to the delivery of the infrastructure project that together enable value creation. The value network ultimately defines the structure of the organisation and how the delivery of infrastructure services can generate value. The project lead is the individual, group or organisation which takes the initiative in developing a solution to a need for infrastructure and coordinates the value network. Project leads identified in the case studies:

Project Leader Definition
National government Governance at the national level
Special district Governance entity formed to deliver a project
State Sub-national government organisation at various scales, operating in different national-local governance structures
Municipality
Combined authority
County council
District/borough/city council
Parish/town council
Public organisation Organisation owned by the state but operated at arm's length
Public-private organisation Formal arrangement between a public and private organisation to deliver a project
Private enterprise Formal private organisation
Non-profit organisation Formal organisation that does not generate profits for owners
Charitable organisation A specific type of non-profit organisation that has philanthropic goals
Community organisation Formal or informal group of individuals acting on behalf of the wider community
Individuals Individual members of the public

Infrastructure Information

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You can upload data by completing the popup webform. We only require a small amount of information – but crucial is that you provide evidence of the existence of an infrastructure. A link to a webpage and a contact email address is enough and we will get in touch validate the information.

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