Sometimes business innovation means taking something old and making it new again. Take the idea of restorative development—projects that revitalize the existing environment encompass a trillion dollars worldwide. From renovating urban areas to healing native resources, there's money to be made, and project-focused companies—from construction to finance—are taking the lead.
Storm Cunningham, a leading expert in the restoration economy, details how this trend will impact project management, your company and your world.
PM Network: Why should company executives and project managers take note of the restorative development mega-trend?
Storm Cunningham: Project managers have been in the thick of this activity individually, but the profession as a whole has yet to recognize the shift away from new development, nor has it addressed the unique needs of restorative projects. This presents a singular opportunity: If project management provides these solutions quickly, restorative development has the potential to thrust project managers into far more influential, higher profile and better paying positions than they currently enjoy.
PM Network: Why is restoration growing so quickly?
→ Cunningham: Because restorative development is every bit as profitable as new development, but the subsidies and incentives for new development are shrinking, and anti-sprawl measures are growing. Meanwhile, cities worldwide are embracing and encouraging restorative development. Although restoration is good for the world, it's seldom done out of altruism. Restoring damaged properties is often the ultimate in “buy low, sell high,” and the redeveloper gets to be the hero—rather than the villain—in the process.
PM Network: So restoration projects are making a difference environmentally?
Cunningham: We've all heard that the wars of the 21st century will primarily be fought over water, rather than oil. What most of us haven't heard about are the hundreds of watershed restoration projects worldwide. China is spending billions to restore a single watershed that was destroyed by clear-cutting, resulting in more than $30 billion dollars of damage (not to mention the loss of thousands of lives) in a 1998 flooding. An estimated $1 billion Catskill watershed restoration saved New York City from having to build a water filtration plant that would have cost half a billion dollars annually to run. We've all heard that deserts are expanding around the world, but the Sahara has been shrinking for the past 15 years, largely thanks to restorative agriculture.
Similarly, we've all heard that the federal “no net loss of wetlands” program has been a failure. What most of us haven't heard is that, in 2002—for the first time in history—a U.S. state (North Carolina) actually had a net gain of wetlands. Granted, it was only a net gain of half an acre, but it was yet another landmark moment in the shift from a new development-based economy to a restorative development-based economy.
PM Network: Given the trend, how can companies take advantage of burgeoning restoration projects?
→ Cunningham: The most successful redevelopers and investors of the 21st century will be those that practice integrated restoration, in which three or more of the eight sectors of restorative development [See sidebar, Natural and Built] are master-planned together. Done right, they can then harness the phenomenon of “restoration contagion.” Restorative activities are tremendously contagious, as anyone who has lived in a newly gentrified old neighborhood can tell you. Sometimes the epidemic of revitalization is planned, such as with the hundreds of metropolitan waterfront redevelopments going on around the world.
Other times, economic rebirths are “organic,” unplanned and not assisted in any way by government. Take the case of the Georgetown neighborhood in Washington, D.C., USA, where a few people started buying run-down old brownstones and restoring them. This added to the desirability of nearby properties, which were bought and renovated in turn. Pretty soon, outsiders—investors and developers—started to perceive the area as being on the upswing. A feedback loop was formed that encouraged restoration and financed more restoration, and a tipping point was passed. Money, businesses and residents poured in. This is a typical “restoration contagion” scenario.
PM Network: Aside from the successful delivery of the projects themselves, where does project management come in?
WHAT CAN YOU DO?
To address this largest and fastest-growing of all “new” markets, Cunningham recommends that project managers:
- Formally recognize restorative development as a distinct economic sector—separate from new development, and from maintenance/conservation—with its own unique dynamics and needs. “At the very least, PMI members should form a specific interest group on restorative development, as well as design an educational program to quickly bring members and chapters worldwide up to speed on the opportunities, players and trends,” he says.
- Launch research initiatives to aggregate and analyze existing knowledge related to project management vis-à-vis restoration and accumulate new data and insights for future analysis. For example, Clemson University and RestorAbility Inc. are organizing a restorative development research partnership, coordinated by Clemson's Graduate School of Historic Preservation in Charleston, S.C., USA.
- Establish strategic relationships with the nonprofit organizations that are deeply involved in restorative development. These include the Society for Ecological Restoration International (www.ser.org), the National Trust for Historic Preservation (www.nationaltrust.org) and the Urban Land Institute (www.uli.org).
THE DEFINITIVE STORM
Storm Cunningham is chief executive officer of RestorAbility Inc., a public speaker and author of The Restoration Economy (Berrett-Koehler Publishers, 2002). RestorAbility Inc. provides strategic planning workshops for businesses and communities, as well as project review services for real estate development and engineering/architectural firms. The firm also publishes the quarterly Restoration Economy Leader.
THREE Cs
Cunningham attributes restorative development's explosive growth to three global crises:
CONSTRAINT CRISIS. We are fast running out of land for new development. Virtually all remaining developable land already is serving some valuable purpose that someone will fight to protect. Developers instead must improve and reuse already developed properties.
CONTAMINATION CRISIS. Every square mile of the Earth is now polluted—some horribly, some mildly. Economic growth increasingly involves toxicity assessments and decontamination as first steps.
CORROSION CRISIS. Sheer age, often combined with deferred maintenance has created huge restoration backlogs. Even the United States has a $1.3 trillion backlog of infrastructure renewal, according to the American Society of Civil Engineers.
NATURAL AND BUILT
Restorative development encompasses eight sectors, or macro-industries, according to Cunningham.
FOUR RESTORE THE NATURAL ENVIRONMENT:
- Ecosystem
- Watershed
- Fishery
- Agricultural/Rural redevelopment.
FOUR RESTORE THE BUILT ENVIRONMENT:
- Brownfield remediation/Redevelopment
- Infrastructure renovation/Replacement
- Heritage restoration
- Disaster and post-war reconstruction
Cunningham: Whether planned or emergent, integrated restoration is hugely complex: It often involves dozens—even hundreds—of properties in the private and public realm. Any attempt to manage the process, predict the synergies, or identify the best investment opportunities well ahead of time will require project management of the first order.
PM Network: Is the growth of restorative development affected by worldwide economic conditions?
Cunningham: While restorative development can be found almost everywhere, it's only natural that some cities, states and nations are ahead of others in making the transition from new development to restorative development.
New Jersey is probably the leading U.S. state at the moment. Democratic Governor James McGreevey recently announced a package of “superincentives” to stimulate restorative development and a series of regulations that severely curtail new development. These included “smart codes” and tax incentives that make it more profitable to restore and adaptively reuse old buildings, as well as incentives related to brownfields redevelopment, or hazardous waste removal.
For instance, New Jersey was already a leader with its policy of reimbursing redevelopers for 75 percent of the cost of remediating contamination, once a project was completed. Legislation is in the works to increase that to 100 percent of remediation costs.
PM Network: What about at the national level?
Cunningham: Almost all areas of policy continuity from the Clinton to the Bush administrations have been restoration-related. The only two bills that have passed both houses of Congress unanimously during the Bush administration were for brownfields restoration and estuary restoration. The 2002 Farm Bill allocated millions to restoration related to the Chesapeake Bay.
PM Network: And around the world?
→ Cunningham: Project managers worldwide will find a treasure house of restorative development going on in their backyards, when they take the time to look for it. Even PMI chapters in small economies, such as Bermuda, will likely find far more activity than they might expect.
While some lesser-developed economies still have a substantial and growing new-development sector, many are refusing to repeat the mistakes made by the more-developed countries during the 20th century. They are abandoning new development before it depletes their natural resources, contaminates what's left of their natural areas and destroys their built heritage.
PM Network: In which areas has restoration not caught on?
Cunningham: One might expect struggling, somewhat isolated economies—such as Cuba—to have no money for restoration, yet it's everywhere one looks in Havana, from the restoration of hundreds of gorgeous buildings in the historic old sector on the west side to the restoration of the Almendares River on the city's east side. Due to the collapse of the U.S.S.R., Cuba was forced to abandon unsustainable agricultural methods and has become a leader in techniques that restore topsoil. Even Antarctica has a number of brownfields and heritage restoration projects, and many African countries that have long been wracked by tragedy and poverty usually have some disaster and/or war restoration projects.
PM Network: How will this shift in development activities affect those who provide project tools, services and products?
→ Cunningham: Product and service providers alike have a plethora of opportunities awaiting them as we make the transition to an economy based predominantly on restorative development. Despite the trillion-dollar-per-year size of current restorative activities, companies and government agencies are largely making do with tools, chemicals, software and disciplines created for new development.
The need for restoration-specific products and services is driving billions of dollars of business annually. For instance, I recently received a demo for RIVERMorph®, the first commercial river restoration software. The new software titles required to address all eight sectors of restorative development likely numbers in the thousands.
PM Network: How will this trend continue to play out for project managers, consultants and related software firms?
Cunningham: The sheer size of the existing economic sector [more than $1 trillion globally] should be enough to catch the attention of PMI members, but there's an even more exciting story here: integrated restoration, the next big thing for the restoration economy.
Project management for restorative development applies all of the same skill sets used by new development projects, but poses a very different application environment. For instance, new development projects usually start with a relatively blank slate, whereas restoration starts with an existing asset that must be thoroughly assessed, mapped and stabilized.
Another difference, especially when dealing with natural systems, is that new development projects usually have a clear end-point, whereas restorative projects often require years—even decades—of follow-up activity. This is a good thing, because it provides much longer cash flows, thus smoothing the financial roller coaster experienced by most firms involved in the stop-start world of new development.
PM Network: How will the idea of integrated restorative development affect the way companies approach projects?
Cunningham: To date, the eight sectors of restorative development and their hundreds of component professions largely have been operating in “silos.” All are dealing with similar dynamics and all are restorationists, but they seldom perceive those connections. A brownfield project, a historic building restoration and an urban stream restoration might all be going on within blocks of each other. Usually, there will be no coordination among the projects, little awareness of each other's projects, and no realization that all are part of the same sector. Such a lack of project integration eliminates many potential efficiencies and synergies.
PROFIT WITH A CONSCIENCE
GOAL: Create the most comprehensive sustainable redevelopment project in the United States.
SIZE: 3,000 acres in North Charleston, S.C., USA
KEY ORGANIZER: The Noisette Co.
EXPECTED DURATION: 15 years
COST: Up to $3 billion
FUNDING SOURCE: Bridge financing for public infrastructure, which will be backed ultimately by the tax increment financing district established on the former base, with urban redevelopment funded by Noisette.
CHALLENGE: Environmentally-conscious urban redevelopment including a number of nonprofit educational initiatives are planned, along with preliminary plans for two major museums. The site will feature:
• A three-quarter-mile Cooper Riverfront Park
• 200-plus acre urban park surrounding Noisette Creek
• 5,000-plus new housing units
• 6,000 rehabilitated housing units
• Up to 5 million square feet of retail, industrial and commercial space.
THE RESTORATION LIST
A short rundown of global restorative development projects:
| $42 | billion restoration of the London Underground |
| $3.1 | billion (first phase) project to restore Russian railways |
| $500 | million project to restore the Golden Horn waterfront of Istanbul |
| $100 | million project to restore ancient Angkor Wat, Cambodia |
| $3.5 | billion, first-phase multinational Danube River Basin restoration project |
Hundreds of billions of dollars to restore war and disaster damage, such as the $100 billion to recover from the 1995 Kobe, Japan earthquake.
This integration issue is just beginning to be perceived and addressed—to a small degree. Redevelopers are starting to grasp the great rewards and efficiencies inherent to working at a larger, more holistic scale. John Knott, CEO of the Noisette Co., expanded the redevelopment of nearly 300 acres of a closed naval base in North Charleston, S.C., USA, into a 3,000-acre master planned community revitalization, the largest urban redevelopment project in the United States and possibly the world.
PM Network: How can project management facilitate integrated development?
→ Cunningham: Any one of the eight sectors of restorative development can be complex, especially if done right, and/or on a large scale. “Done right” means that it's based on proper research and assessment, enjoys intimate community involvement and support (often including public-private partnerships), is executed by competent professionals, and requires long-term monitoring and follow-up research.
Now, take the innate complexities of each sector and multiply by the number of other sectors one wishes to link into the project. The resulting mega-complexity is probably impossible to accomplish without project management—or more likely, program management—of the highest order.
High-quality integrated restoration might thus be literally impossible without sophisticated project management software and professionals. As a result, our restored future is quite literally in project managers’ hands. PM
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