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Case Summary:
One of the biggest and richest cities of the world, London is facing encountersto serve
its people due to the lack of proper investment in its infrastructural area.The orbital
motorways, rail services and the underground lines fail to serve properly due to the
infrastructural limitations, such as- lack of rejuvenation, lack of space and resource to
keep pace with the increasing crowd of travelers, lengthy timespan of track
replacements, technical mishaps. The overpopulation, climate change, heavy snow
also results in poor transport system in British railways and other underground lines.But
compared to other such big cities, London lags behind in modernizing the system rather
than altering it to “lean systems”. The steps commenced to overcome the situation
should be designed in a way that it can keep pace with both the intensifying
population and the renovating technicalities of the up-to-date era.
Question/Answers:
Question no 01: What are the features of a ‘Lean System’?
Answer to the Question no 01:
Common Features of a Lean System:
The aim of a lean system is to reduce the quantity of resources used.

Main Focus: Less use of labor, materials, space and time.
It is a practice that considers the expenditure of resources for any goal other than
the creation of value for the end customer to be wasteful, and thus a target for
elimination.
According to the Case Study:
The Lean System Applied to the British Railways Refers to Hold the Following Features:
o The total system’s resources have been reduced to such a level minimum to
operate adequately.
o Efficient to serve the common purposes of the railway in normal situations.
o Designed to take the load up to its full capacity.
o Any small disruption may pull down or cause the whole system to collapse.
Question no 02: In terms of the steps described in this chapter, how did the under-
investment in transportation infrastructure come about?
Under-investment in Transportation Infrastructure of London:
London’s transportation system has been facing potentialchallenges to serve the city’s
people properly due to the lack of proper investment in the infrastructural area.
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• The orbital motorways, rail services and the underground lines get affected easily
now even by simply a bad night’s weather.
• Though there are sometimes track replacements and other technical issues, a
question has been emerging already regarding the old and paced out system of
the British transport system.
• Population pressure can be stated as a reason behind this problem in London, but
again, in other developed cities like New York, Paris and so on have the similar or
even larger amount of people travelling through the railways and they have
managed it better than the British Transport System.
• The number of passengers has been increased keeping pace with the economic
explosion, but the events of modernizations remained in under-invested zone.
• London’s infrastructure is already under pressure, and London’s population
continues to grow. Current projections suggest London’s population will hit 10 million
by the early 2030s. Climate change presents further long term challenges. It includes
the effect of snowing too.
The Plan to Overcome the Situation:
The aim in developing a long term infrastructure investment plan is to help the city
prepare better for this growth over the very long term, while working out how we can
overcome current problems and bring fresh thinking into delivering the infrastructure the
city needs.
Question no 03: In what ways is a transportation infrastructure different from other types
of investment? How might such differences affect the investment decision?
Defining Infrastructure:
o Infrastructure include assets that are typically physical investments like toll roads,
railways, seaports, airports, power stations, electricity transmission lines and gas
pipelines.
o Infrastructures provide essential services and often involve governments as
regulatory or funding counter-parties.
o Revenues from infrastructure assets may be regulated or based on demand or
availability. What they all have in common are long economic lives, high capital
costs and high barriers to entry.
Defining an Investment:
A monetary asset purchased with the idea that the asset will provide income in the
future or appreciate and be sold at a higher price.
Investment in Infrastructures versus Typical Investments:
• Stimulating effects of any infrastructure investments on economic growth becomes

even more important for speeding up the recovery compared to private or any
such investment.
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• Infrastructure investment’s contribution to economic growth comes from two
aspects:
1. Improvement of productivity and
2. Relatively larger multiplier effects
• Firstly, both fundamental theories and statistical evidences tell us that investments in
public infrastructure such as transportation improve private-sector productivity too.
• Secondly, due to its relatively larger multiplier effects than that of other types of
spending or investment, infrastructure investment still has a strong stimulus on
economic growth even without consideration of its productivity improving effects,
which serves as the more ultimate reason.
• A distinctive set ofinvestment risksare present in any infrastructural investment.
Examples of risks associated with such investment include- delays, cost overruns,
governmentapprovals commissioning risk and risk with improper demandforecasts.
Factors Effecting the Decision of Investment in Infrastructures:
A typical investment decision varies from the decision of investing in any infrastructure
(i.e. transportation, because, the latter one will have to deal with some massive issues
compared to the first one.
Governments also generally retain principal planning responsibility for public

infrastructure, even though private owners may have responsibility for making decisions
about particular investments.
o Significant upfront capital expenditure

o Long-term revenue and/or benefit streams linked to the services provided by the
infrastructure asset;
o Costs and revenues subject to a range of uncertainties and project-specific risks;
o Irreversible and illiquid investments that can lock in technology and future upgrade
options; and
o Assets and services that exhibit public good and/or monopoly characteristics
o Regulating and to provide public (taxpayer) funding
Thank You!
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Case Summary:

Question no 01: What are the features of a ‘Lean System’?

Answer to the Question no 01:

Common Features of a Lean System:

The aim of a lean system is to reduce the quantity of resources used.

According to the Case Study:

Answer to the Question no 02:

Under-investment in Transportation Infrastructure of London:

The Plan to Overcome the Situation:

Answer to the Question no 03:

Investment in Infrastructures versus Typical Investments:

• Stimulating effects of any infrastructure investments on economic growth becomes

Factors Effecting the Decision of Investment in Infrastructures:

Governments also generally retain principal planning responsibility for public

o Significant upfront capital expenditure

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