Category Archives: Lytton Advisory

Capital Flexibility in Municipal Waste to Energy Projects

waste-to-energy
Source: arena.gov.au

Municipal waste-to-energy (WTE) systems incorporate significant uncertainty and risk. However, they provide ways to achieve significant environmental and economic sustainability for communities. With growing uncertainty, there are significant challenges around when and how to exercise flexibility.

Flexibility is important because as a mechanism it helps ensure better sustainability for WTE systems with long-term lifecycles. Flexibility of capacity expansion, in particular, is an important consideration given the expenditures that are typically required. Multi-stage stochastic modelling can help develop an optimal decision rule to guide decision making on capacity expansion using a real options approach.

Research on the expected net present value (ENPV) arising from flexible design suggests significant improvements are possible over the fixed rigid design in terms of economic lifecycle performance. The ability to make multi-stage decisions in any time period based on available information as uncertainties are resolved is an advantage over lifetime capital investment decisions that are typically set in the first year of WTE projects.

Through work with UTL Utilities, we bring strong cost benefit analysis and real asset option approaches to this kind of infrastructure investment.

Seasons Greetings

For it is in giving that we receive. (St Francis of Assisi)

A big thank you to our clients for the opportunity to work on very interesting projects during 2019. In a sentence, it has been a year of electrification, explosives, timber, leases, water, telecommunications, free zones, customs and trade across Papua New Guinea, Saudi Arabia and Australia.

Personally, I have been blessed to work some very smart people who have generously shared their experience, skills, talents and good humour in these projects.

Wishing everyone all the very best over the holiday season.

Lytton Advisory in Saudi Arabia

Kingdom Centre, KSA

Work with Maxwell Stamp colleagues continues in Saudi Arabia. Gene Tunny and I got a great view of the significant changes occurring right now in downtown Riyadh, including the construction of the city’s USD22.5 billion metro (176km of track and 85 stations). We are on the Sky Bridge at the Kingdom Center, one hundred floors above the city.

L-R: Gene Tunny, Craig Lawrence

Mission to the Kingdom

L-R: Nick Behrens, Craig Lawrence, Gene Tunny, Hamish Bain.

Intra regional trade and the effectiveness of 147 active zones (economic, industrial and free) in the Middle East will be under consideration by Lytton Advisory. The firm has been given a mandate to develop advice for the Gulf Cooperative Council Secretariat on the next phase of closer economic cooperation between member states. This will involve a baseline review of existing economic zones, careful analysis of customs arrangements between Gulf states, an examination of World Trade Organisation implications and economic modelling of preferred solutions. Lytton Advisory is looking forward to working with colleagues from Maxwell Stamp in the Middle East, building on engagements in the region over the past three years.

Economics of Infrastructure with Craig Lawrence podcast discussion – Part 2

Thanks again to Gene Tunny for inviting me onto his podcast ‘Economics Explained’.

Queensland Economy Watch

I’ve just published part 2 of my Economics Explained podcast discussion on the economics of infrastructure with Craig Lawrence, Managing Director of Brisbane-based Lytton Advisory:

Economics of Infrastructure – Part 2

Craig Lawrence has three decades of experience as a professional economist and has advised on a wide range of infrastructure projects in Australia, the Pacific, and the Middle East. Part 2 of our conversation covers, among other things:

  • public private partnerships or PPPs, their pros and their cons;
  • challenges in infrastructure provision in emerging economies;
  • the merits of quasi-independent infrastructure advisory bodies such as Infrastructure Australia and Building Queensland; and
  • the geopolitics of infrastructure (e.g. Chinese takeover of a Sri Lankan port, Australia blocking Huawei’s involvement in 5G infrastructure, and the 99-year leasing out of Darwin port to a Chinese company).

My new Economics Explained podcast is also available via iTunes/Apple Podcasts and Spotify.

On PPPs, you might…

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Economics of Infrastructure Podcast

Image result for podcast

Thanks to Gene Tunny, Principal at Adept Economics, for inviting me onto his new podcast series – Economics Explained. We discussed the nature of infrastructure, the services these assets supply and how good economic analysis helps select better infrastructure projects. Gene and I have collaborated on a number of projects over the last two years. He is a leading independent economist who blogs regularly at queenslandeconomywatch.com.

You can listen to the podcast here: https://queenslandeconomywatch.com/2019/09/16/economics-of-infrastructure-interview-with-craig-lawrence-of-lytton-advisory/

6th Anniversary

Economic Effects of Infrastructure Investment and its Financing

Today marks the sixth anniversary of Lytton Advisory as an independent economic consulting practice. Over that time, we have worked on a wide range of economic issues. This has taken us to places as diverse as the Solomon Islands, Papua New Guinea, Kuwait and Saudi Arabia.

We have never lost our enthusiasm for helping clients make smarter capital investment decisions. Neither have we wavered in our passion for proper planning, prioritisation and funding of infrastructure. In more recent years, our work has been around leading project teams of committed, experienced economists and professionals to bring high conviction analyses to our clients. Good cost benefit analysis is at the heart of what we do.

In the first half 2019 founder, Craig Lawrence took, in effect, a sabbatical from the practice to lead the establishment of the Economic and Social Infrastructure Program in PNG. This $130 million 4+4 year Cardno-delivered, Australian Government funded program seeks to improve the quality of planning, prioritisation and funding of infrastructure to achieve economic outcomes and social development goals for Papua New Guineans.

Whether it is: developing an investment manual to incorporate climate change adaptation in infrastructure development decisions in the Solomons; a full cost pricing algorithm for food and drug regulatory services in Saudi Arabia; or generating savings from waste transfer station closures that fund a ten-year capital works program – Lytton Advisory is up for the challenge. At every stage, it is about driving value for the clients and communities affected by infrastructure.

We are excited about the future for infrastructure, its contribution to sustainable economic and social development, and how emerging economic incentives, new social paradigms and innovative technologies are shaking up these services.