:00:00. > :00:09.and manned and also land reform. `` domestic demand. Now it is time
:00:10. > :00:14.for The Bottom Line. Most of us plan our lives a few days
:00:15. > :00:17.ahead, Pabst at work we think a few months in advance, most of us
:00:18. > :00:22.negotiate with a few people from time to time, an employer or a
:00:23. > :00:25.customer, but today we will be talking about business life for
:00:26. > :00:30.those who have to think decades ahead, and have masses of different
:00:31. > :00:33.interest to handle. My guests or work in transport and infrastructure
:00:34. > :00:42.and they will tell us how they get things done. Each week, influential
:00:43. > :00:45.business leaders gather in London for the BBC Radio 4 programme, The
:00:46. > :00:48.Bottom Line. You can see it as well as he read. `` as well as here at
:00:49. > :01:00.it. I enjoyed around the table by three
:01:01. > :01:05.guests or run organisations involved in planning the unpredictable. Let's
:01:06. > :01:14.spend a few minutes meeting each of them. We will start with Tushar
:01:15. > :01:20.Prabhu. URA boardmember at an engineering company. Tel is a bit
:01:21. > :01:24.about Pell Frischmann. It is a consulting engineering firm. We get
:01:25. > :01:27.involved in the design of large`scale projects. These are in
:01:28. > :01:33.the infrastructure space, so we are talking about roads, some property
:01:34. > :01:37.projects, buildings, highways, water supply. Anything that is in the
:01:38. > :01:44.built environment. You are based in the UK. I am. But your company works
:01:45. > :01:50.in India and all over. We worked out a three hubs. We have the UK where
:01:51. > :02:01.the headquarters is located. Then we have a middle eastern group. And we
:02:02. > :02:06.have an Indian hub. Also with us is Richard Deakin, who is the chief
:02:07. > :02:09.executive of NATS. It used to be National Air Traffic Services, that
:02:10. > :02:15.has long since dispensed with that name. Feel everybody in on the
:02:16. > :02:22.structure of this company. It was partially privatised a decade ago.
:02:23. > :02:26.It is a fully privatised company. The government owns 49% but we do
:02:27. > :02:31.operate as fully privatised. We provide all the en route to air
:02:32. > :02:36.traffic control sensors for UK airspace and the north Atlantic. We
:02:37. > :02:41.also control air traffic services to 15 of the largest airports in the
:02:42. > :02:46.UK, and contracts in over 30 countries outside of the UK. You are
:02:47. > :02:49.a commercial enterprise. You sell your expertise to other nations. Are
:02:50. > :02:59.there any rivals in a similar position? The Canadians have got a
:03:00. > :03:04.similar model. But other than that, it is done by government owned
:03:05. > :03:09.players. My third guest is Alison Munro, Chief Executive of High Speed
:03:10. > :03:14.two. Did you know it was going to be such a controversial job when you
:03:15. > :03:18.took it on? I have been doing it for nearly five years. I knew it was
:03:19. > :03:23.going to be controversial but it has turned out to be really quite
:03:24. > :03:27.controversial. You came from the Department for Transport. It is
:03:28. > :03:36.owned by the UK government. It is a government entity. We are a
:03:37. > :03:41.government owned company. The case has been refined and replaced, a new
:03:42. > :03:46.version, and now we have a relatively new case that is being
:03:47. > :03:50.made. Does that worry you that the case has not somehow grabbed the
:03:51. > :03:54.ball yet? It should be the easiest thing on the planet to sell, fast
:03:55. > :04:00.trains, connecting big cities, improved journey times, all of those
:04:01. > :04:06.things, and yet somehow it is not captured the imagination. We have
:04:07. > :04:09.recognised that we have to make the case more strongly. We have been
:04:10. > :04:14.gathering more evidence to show what will happen in the future if we do
:04:15. > :04:18.not make a good investment. Some of the parallels are similar to the
:04:19. > :04:22.debate around airport capacity. Investing for the long`term growth
:04:23. > :04:26.and capacity for the UK essential. You will never end up in a situation
:04:27. > :04:32.where everyone is happy with the solution. I guess the debate to have
:04:33. > :04:36.is whether one has to plan for the UK or plan for specialist
:04:37. > :04:40.communities. You raise an interesting point, Richard, is the
:04:41. > :04:46.balance between perfectly legitimate, sensible people
:04:47. > :04:51.supporting their local community, saying they do not want it in their
:04:52. > :04:59.community, whether it is Richmond, or people living in the Chilterns,
:05:00. > :05:10.we disparagingly call them NIMBYs. It is a term of abuse, really, but
:05:11. > :05:14.what is the balance? The communities which are going to be badly affected
:05:15. > :05:19.and the national infrastructure. You have to strike a balance. Even on
:05:20. > :05:22.the national economy you cannot decide on something that is
:05:23. > :05:27.devastating to too many people. The Duke and do things about environment
:05:28. > :05:33.improvement. There is a lot that you can do. There is compensation also.
:05:34. > :05:38.The people who are affected, how they are compensated. We are quite
:05:39. > :05:44.mean in this country overcompensation, head to some of
:05:45. > :05:54.those? The French give a bonus. You get 10% bonus. On top of the kind of
:05:55. > :06:00.market value. It is not that mean. The French may pay more. But at the
:06:01. > :06:04.same time, the British system allows a lot of time and opportunity to
:06:05. > :06:09.have your say. So there is an argument to say that more voices can
:06:10. > :06:16.get hurt. It has been incessantly debated. We are talking about a
:06:17. > :06:19.railway in 2032. How many miles of high`speed line will be Chinese
:06:20. > :06:27.built in that time? We have been consulting non`stop. It is a very
:06:28. > :06:31.intensive process. But that is the way that our democracy is founded.
:06:32. > :06:40.One hopes that at the end of it you get more consensus. You have a very
:06:41. > :06:43.long argument and then tread on the interest of half of the country that
:06:44. > :06:47.did not want it. That is High Speed two. Our theme is complexity, the
:06:48. > :06:52.complexity of the sorts of businesses that you are in. In
:06:53. > :06:55.particular, trying to plan the unpredictable. There is a movie
:06:56. > :07:02.called the fog of war, Robert McNamara described the complete
:07:03. > :07:05.absence of information in which decisions were made. You could call
:07:06. > :07:14.it the fog of business. You are involved in predicting a long way
:07:15. > :07:21.ahead. Making full cars which can be so, so wrong. Nevertheless you have
:07:22. > :07:26.to make them. There's talk about all the stuff that goes wrong and causes
:07:27. > :07:30.you to lose sleep. It is an interesting business. Tell us about
:07:31. > :07:35.the models that you use and the way that you go about. A lot of what we
:07:36. > :07:39.do is driven by forecasts around a man to a mantle passenger travel,
:07:40. > :07:47.which gives help is very much linked to the economy. `` around demand
:07:48. > :07:53.for. A lot of the demand that we see in the UK is a reflection of global
:07:54. > :07:57.demand. The key thing for us to try and get the long`term trends.
:07:58. > :08:03.Whether you are one or two years out on your actual numbers is rather
:08:04. > :08:08.immaterial. But the trick becomes, how do you take it out of the life
:08:09. > :08:13.of the infrastructure. Say it is a hideaway you are widening, that will
:08:14. > :08:17.itself has a life of 50 years. So you can only with confidence look at
:08:18. > :08:23.the beginning of the infrastructure, and hope that that peace will be fit
:08:24. > :08:27.for the purpose, the infrastructure also attracts traffic. Users like
:08:28. > :08:31.it. So the thing that you are doing changes the environment in which you
:08:32. > :08:36.are full casting. You have to take your best guess. We are at the other
:08:37. > :08:44.end of the spectrum. We are looking a very long way ahead. The normal
:08:45. > :08:52.period is 60 years. The second phase is 2033. We are looking at 2093. Do
:08:53. > :08:56.you have a forecast for rail traffic in 2093? We try to do the cost and
:08:57. > :09:04.benefits after 60 years after opening. It is so uncertain. We are
:09:05. > :09:08.quite conservative. We think that once you get past a certain point in
:09:09. > :09:13.time, it is so uncertain and that we cut off to mount at a certain point.
:09:14. > :09:19.And just issued that it flatlines. That is because we do not know. What
:09:20. > :09:22.we do not know, particularly for Railways, in terms of the total
:09:23. > :09:28.traffic it is a share, a small share, when will the increase that
:09:29. > :09:35.we have been seeking in rail traffic, when will it level off?
:09:36. > :09:41.People already drive a lot. We anticipate road travel. That rail
:09:42. > :09:47.travel, there is tremendous scope for people to increase their rail
:09:48. > :09:50.journeys. I heard a report saying that we have reached peak car, we
:09:51. > :09:57.are at the point where the amount of time we are spending in a car is as
:09:58. > :10:01.long... Now forecast, in the year will be cut off to Mand, we issued
:10:02. > :10:11.that every household makes 3.5 trips per year. That is long distance
:10:12. > :10:15.trips. I'm sure there are plenty of people who already do more than
:10:16. > :10:18.that. So that is the real difficulty, predicting how that will
:10:19. > :10:24.happen over such a long period of time. Things like new technology
:10:25. > :10:29.will come along. Technology will reduce the need to travel. But the
:10:30. > :10:33.evidence does not support that at all. So a lot of unknown is when you
:10:34. > :10:38.look into the future. You have to make the best judgement. It is the
:10:39. > :10:44.issue, when will the jet pack come? That has been promised for so long.
:10:45. > :10:57.One day we will be there and a lot of this will be obsolete. What is
:10:58. > :11:00.the jet pack? Even the highways agencies wrote an article say we
:11:01. > :11:02.will be able to have roads and highways which will be a bit like
:11:03. > :11:05.railways, where cars will be right next to each other in a wagon. So
:11:06. > :11:09.the capacity of the system will certainly increase. We will have a
:11:10. > :11:13.different type of travel. You have an oil price shock which means
:11:14. > :11:20.people will behave very differently. You will have a new
:11:21. > :11:26.technology. Over a significant horizon, you cannot put it in. You
:11:27. > :11:31.know that something will happen. Let's go on the cost side.
:11:32. > :11:37.Predicting the cost of building a railway. A bridge or a road. How
:11:38. > :11:40.easy is that? One of the lessons that we have learnt is that we have
:11:41. > :11:46.been much too definite at an early stage. Projects up the
:11:47. > :11:53.underdeveloped. We have said it will cost so much. There is a lot of
:11:54. > :11:59.uncertainty. In the cost `` the case of High Speed two, the charge is
:12:00. > :12:04.that the cost has risen and risen. It has not actually risen that much.
:12:05. > :12:09.What we have done recently is provide more of a buffer. A
:12:10. > :12:12.contingency. We will not face that problem because we have the allowed
:12:13. > :12:19.for the risk of the cost going up in the future. I suspect that in
:12:20. > :12:24.Britain, we think of ourselves as being particularly bad at that it
:12:25. > :12:28.can cost, but whenever I look at what every other country does, it
:12:29. > :12:32.seems the same everywhere. The burly and airport is the latest example of
:12:33. > :12:38.an infrastructure project that has run over budget. It is true that
:12:39. > :12:44.there is a general worldwide tendency for cost to creep up. It
:12:45. > :12:49.does not have anything to do particularly with Britain. I think
:12:50. > :12:53.British exports of these kind of services that we provide are quite
:12:54. > :12:57.well`known around the world. So we must be doing something right, if
:12:58. > :13:02.British technical services are being seen as more useful. But it is in
:13:03. > :13:07.the nature of the beast. One of the reasons that it can do that, it can
:13:08. > :13:10.become bigger than you thought, is that when you high your construction
:13:11. > :13:18.companies, or whichever entity you get to build your piece of
:13:19. > :13:25.infrastructure, the one that you will pick is the one who has the
:13:26. > :13:29.most optimistic view about the piece of infrastructure that you wish to
:13:30. > :13:34.deliver. Typically, varies very strong pressure to go with the
:13:35. > :13:37.dollars cost, the lowest entity. That tends to push projects a bit
:13:38. > :13:42.further than they would have otherwise gone.
:13:43. > :13:49.I have the winners curse in front of me. Ten people bidding for the
:13:50. > :13:54.contract, the one who wins is the one who didn't understand how much
:13:55. > :13:58.work was involved and it too low. That is the winners curse because
:13:59. > :14:04.you lose money on the things you win and you do not make money begins it
:14:05. > :14:07.will actually make money on. Tushar Prabhu, you probably have the most
:14:08. > :14:12.experience in this. How much more competent at does that make your
:14:13. > :14:16.life? You are doing a lot of business in Iraq, for example. That
:14:17. > :14:23.must be obligated in many different ways. It is. We have been building a
:14:24. > :14:28.huge water supply system, which will serve about 5 million people. A very
:14:29. > :14:33.substantial project. But what we are doing there and the areas where we
:14:34. > :14:37.find ourselves having the issues is many close conflict countries are
:14:38. > :14:43.coming out off centrist kind of political situations. Strong
:14:44. > :14:46.dictators. Yes. The systems have been working under 40 years of
:14:47. > :14:52.chaotic decision`making. What do they do? A narrow down in what they
:14:53. > :14:56.do, people don't take risks, things have to be done by the book and a
:14:57. > :15:01.lot of blame afterwards. Maybe even complete an interest, lack of
:15:02. > :15:06.interest, in innovation. We want to try to plug of that stuff in. That's
:15:07. > :15:13.the extra dimension. When you are doing that, I do demanding forecasts
:15:14. > :15:20.from Iraq? Absolutely, because the populations grow. We did a large
:15:21. > :15:27.project as an interesting crossroads between the Iraqis and the Kurds.
:15:28. > :15:30.That was exactly what we were doing. We tried to work out for 20 years
:15:31. > :15:35.what would happen. How will the city naturally grow, what will be the
:15:36. > :15:40.blockers and how do we unblock them. Is that easy to do, in a country
:15:41. > :15:46.might Iraq? Or is it harder to do than in a developed economy like the
:15:47. > :15:51.US? One of the issues relating to maturity is the issue of keeping
:15:52. > :15:57.data. In a country like Iraq, it's difficult to find back. There are
:15:58. > :15:59.many oil traditions and things are written down but they aren't kept
:16:00. > :16:04.properly or they are in files decaying. In this situation, you
:16:05. > :16:07.tend to have to do things more from first principles, using judgement
:16:08. > :16:15.and knowledge and interviewing people. The basic principles are
:16:16. > :16:18.still the same. We have been talking about some of
:16:19. > :16:23.the complexities of your business, in terms of predicting demand,
:16:24. > :16:28.handling costs. The other area is very complex relationships. The
:16:29. > :16:32.multiple stakeholders. Not a word I like. With whom you have to deal.
:16:33. > :16:38.All infrastructure projects, government in particular, deal with
:16:39. > :16:42.this. What are some of the difficulties you face? It's a
:16:43. > :16:51.massive exercise and you have to try to take everyone along with you. At
:16:52. > :16:55.the moment we have 26 forums along groups, where we meet local people.
:16:56. > :17:04.We have numerous local authorities, whom we have to talk to. `` a great
:17:05. > :17:08.three. We have the Mayor in London, transport operators and the city
:17:09. > :17:17.councils, we have the National Trust, for example. The Woodland
:17:18. > :17:28.trust, the wildlife trust, the Bucks back group. `` Buckinghamshire Bat
:17:29. > :17:32.Group. We have been criticised for community relations but it's a big
:17:33. > :17:36.part of the job. You won't get it through unless you talk to all of
:17:37. > :17:42.these people and try to address their concerns as you go forward. If
:17:43. > :17:46.you think of the consultation we do around London airspace, redesigning
:17:47. > :17:49.that, several hundred consultation events going on to talk to local
:17:50. > :17:53.communities, for each of those communities, the challenge really is
:17:54. > :17:56.to share with them what we are trying to deliver to get them to
:17:57. > :18:00.understand the challenges we have as well. Equally, you try to understand
:18:01. > :18:06.what life looks like from their point of view. I agree, sharing
:18:07. > :18:10.information is important. But because we are at an early stage,
:18:11. > :18:15.people's expectations of the information we should have doesn't
:18:16. > :18:18.match where we are. They want a lot of information that you would have
:18:19. > :18:22.if you were about to build the project that's not where we are. It
:18:23. > :18:27.can quite frustrating for our stakeholders when they feel that we
:18:28. > :18:30.are holding back or we should have information. Ideally, you want to be
:18:31. > :18:35.able to share all the information. If they don't like it, at least they
:18:36. > :18:38.understand why do I doing what you are doing and what the impact will
:18:39. > :18:44.be. Sometimes you can't. For example, when we were developing at
:18:45. > :18:48.an early stage, if we brought all of the information out into the public
:18:49. > :18:52.domain, we would have blighted half of the country. It would not be
:18:53. > :18:57.responsible. Sometimes you have to wait until the information is
:18:58. > :19:00.sufficiently certain that you can make it available and you aren't
:19:01. > :19:05.causing unnecessary concern, where actually they shouldn't be any. ``
:19:06. > :19:11.there shouldn't. We steered away from governments. Let's talk about
:19:12. > :19:15.them and how you deal with them. They are your shareholder,
:19:16. > :19:23.basically, you're only shareholder, Alison. 49% of your company. They
:19:24. > :19:26.are not indifferent to what you are doing what you are designing. Tell
:19:27. > :19:33.me about governments and how easy they are to deal with, in the UK and
:19:34. > :19:36.abroad. I think government is fundamental to infrastructure. It's
:19:37. > :19:43.the only entity that can really underwrite it. If we get it wrong,
:19:44. > :19:47.we can't go bust. There is no we `` way we can recall infrastructure.
:19:48. > :19:50.Government is the only one that can take that view. Unfortunately, what
:19:51. > :19:56.we have in government is also attended the two want to keep
:19:57. > :19:59.flexibility. Sometimes that fertility hurts us because it then
:20:00. > :20:11.means that suddenly project has stopped. Other European countries
:20:12. > :20:14.have much `` of a different view. We will positively view our
:20:15. > :20:17.infrastructure as an enabler, a growth driver, and we build the rest
:20:18. > :20:21.around it. In this country we have chosen to keep infrastructure or
:20:22. > :20:25.flexible and we have kept other things more ring`fenced. What's the
:20:26. > :20:28.difference between consulting government and consulting say,
:20:29. > :20:38.another private business, for example? What's it like in Spain? We
:20:39. > :20:41.have a contract for traffic control tower is out there and it's a
:20:42. > :20:44.different environment to the UK, certainly from an industrial
:20:45. > :20:49.relations point of view. We have had challenges. Ben hasn't been used to
:20:50. > :20:53.the privatisation model we had in the UK. `` Spain. But with the
:20:54. > :20:58.powers to have taken onboard, we deliver them for half the price and
:20:59. > :21:03.at that equality. The customer is very happy. Who is the customer
:21:04. > :21:07.their? The Spanish government. They have privatised some of the towers
:21:08. > :21:14.but we hope they will do more. It's been interesting to see how it
:21:15. > :21:18.evolves. Often the public sector still delivers a lot. One of the
:21:19. > :21:26.tensions we find is that, when we are there, we sometimes have a less
:21:27. > :21:35.productive competitor in the sector, who is also in addition with us. ``
:21:36. > :21:37.in competition. We have looked at different characteristics of the
:21:38. > :21:42.business you are in. When you look at your companies, maybe this is
:21:43. > :21:46.unfair on new Alison, your company has not built anything yet, what are
:21:47. > :21:52.you most proud of that you have achieved? What makes you stand up
:21:53. > :21:57.and think, that's amazing and I'm glad I work for this organisation?
:21:58. > :22:02.It's a family firm. Continuity is very important. One of the projects
:22:03. > :22:06.that my father and his colleague worked on was centrepoint. A fairly
:22:07. > :22:10.prominent building in the middle of London. It was a tall tower and had
:22:11. > :22:19.its own share of notoriety for the reason. We were reappointed on this
:22:20. > :22:22.project and the public square will be there. It's not the biggest
:22:23. > :22:28.project we have worked on but, in a sense, it's actually, timewise, in
:22:29. > :22:31.terms of the abolition of the firm, it's been something we have been
:22:32. > :22:37.proud to work on before and we are still proud to work on the game.
:22:38. > :22:41.That's an interesting one. We haven't built anything yet but, in
:22:42. > :22:46.terms of what the have delivered, I am really proud of the fact that we
:22:47. > :22:49.have done a lot in five years. We have been through far more
:22:50. > :22:56.consultation than any other project. When we deposit the bill, it will be
:22:57. > :23:02.the quickest any project of this scale has done it. You are proud of
:23:03. > :23:10.the stuff you have done but it isn't job done yet? Of calls. What makes
:23:11. > :23:14.you proud? `` of course. The safety record that we have delivered over
:23:15. > :23:19.the past few years, in particular in an environment where we have the
:23:20. > :23:23.world's busiest airports in the UK. And at a time when traffic has
:23:24. > :23:30.picked up since privatisation quite significantly, handling 7500
:23:31. > :23:36.aircraft a day and doing so safely, without anyone noticing. How many
:23:37. > :23:41.horrific incidents have there been since NATS was formed in its current
:23:42. > :23:45.structure? Zero. That's something we are particularly proud of. And
:23:46. > :23:49.something overseas governments are attracted to. That's a good note on
:23:50. > :23:55.which to close. Let me thank my three guests. Tushar Prabhu, Richard
:23:56. > :24:05.Deacon of NATS, air traffic control services, and Alison Munro. I will
:24:06. > :24:09.be back with more guests next week. Don't forget, the downloads of the
:24:10. > :24:15.bottom`line Mac are available. The details are on our website and you
:24:16. > :24:19.can listen to it on BBC Radio 4. `` the bottom`line Mac. We also like
:24:20. > :24:26.getting your e`mails. Just drop us a line.
:24:27. > :24:33.Good morning. Typhoon Haiyan is leaving the Philippines but will be
:24:34. > :24:36.battering Vietnam on Sunday. Winds could still be gusting 150 mph. More
:24:37. > :24:41.details on the website. Here at home, the weather is quieter. It
:24:42. > :24:45.looks like Saturday will be the wetter day. Then a risk of frost on
:24:46. > :24:50.Saturday night before we enter the weekend with dry and sunny weather.
:24:51. > :25:00.Early sunshine on Saturday in east Scotland, but a touch of frost. The
:25:01. > :25:03.showers are waiting in the west. Some snow, even over modest hills. A
:25:04. > :25:05.few showers coming into the north`west of England. The chances
:25:06. > :25:07.are it will be