MBA Research ProjectBUSI 5908Research Project Title:How Technology Road-mapping facilitate organizational Large-ScaleChange as a corporate strategic planning tool?(A case study of Tehran-Mashed new electrical railway project)A thesis submitted to:Prof, Ian LeebyMajid Babaie EbrahimabadiDate Submitted:April 9, 2008
2ABSTRACTThe objective of this project is to evaluate Technology Roadmapping for providingappropriate electrical trains technology for Tehran-Mashed railway. TechnologyRoadmapping is a comprehensive approach to strategic management for the integration ofmarket, R&D and technology development into product/service and business aspects.In this project, special consideration has been given to sustainable development aseconomic, social and environmental parameters.The point of departure was a TESP analysis of Irans macro environment with its structuraland economic data (in Chapter 2). Taking all the given parameters into consideration, andon the basis of the economic analysis, it shows that Irans macro economy is growingrapidly and is producing increased demand for transportation that itself has considerableeffect on the economy.The next step in the project was a comprehensive performance analysis of a wide spectrumof transportation modes. In this step, the industry and competitors analysis was completedto analyze rail industry in comparison to other modes. Although rail industry hasexperienced increased support from government in recent years and it has manyadvantages over other modes and is known as environmentally friendly, more efficient tonational economy and more accepted by social groups, the analysis shows that rail industryhas an insufficient share of the transportation sector. There are many reasons for that butlack of adequate infrastructures and appropriate technologies could be the most importantreason.The technology selection process (in Chapter 5 and 6) shows that customers want servicesand technologies that reduce travel time and increase travel quality and safety. On theother hand the government as a specific customer is looking for those technologies thatoffer a more direct and indirect contribution to national economy. By using rail customers’
3and rail experts opinions, the High Speed Train (HST) was determined to be the servicethat satisfied the identified goals. On the basis of the data, appropriate rail technologiesbased on existing and further technologies were analyzed. As a result, three availabletechnologies; Tilting trains, Conventional HST and Maglev trains were evaluatedconcerning technical and economic parameters.The analysis found that according to Irans railway situation a combination of the first twoalternatives could be adopted in a 20 year plan while Maglev train (technical, economicaland technological adaptation) cannot achieve the government’s objectives in the Tehran-Mashed railway.Finally, the research in this project suggests a significant new process, which resulted innew tools for acquisition of disruptive technologies in rail industry.
4ACKNOWLEDGEMENTI would like to express my gratitude to all those who gave me the possibility to completethis project. I want to thank the Irans Railway for giving me opportunity to commence thisproject in the first instance, to do the necessary research work and to use departmentaldata. I have furthermore to thank the Mr.Ghorbanalibeyk chief executive of Irans railnetwork electrification project. I am deeply indebted to my supervisor Prof. Dr. Ian Leefrom the Sprott School of Business of Carleton University whose help, stimulatingsuggestions, valuable hints and encouragement helped me in all the time of research forand writing of this project. Also I would like to thank Prof. Dr. Uma Kumar from the SprottSchool of Business of Carleton University whose read my project and gave me manyworthwhile comments.Especially, I would like to give my special thanks to my wife whose patient support enabledme to complete this work.
5"Table of Contents P#ABSTRACT 2ACKNOWLEDGEMENT 4EXECUTIVE SUMMARY 17CHAPTER ONE( INTRODUCTION)1) Background of business 252) My case study 333) "TRM" leads to optimize providing new technology 354) Managerial Questions 375) Research Objectives 37CHAPTER TWO(EXTERNAL ENVIRONMENT ANALYSIS)Part A) Macro-Environment Analysis (TESP) 42A-1) Global economy environment 42A-2) Middle East, a strategic region 49A-3) Irans Outlook Document 52A-4) TESP Analysis 53A-4-1) Technological Trends 59A-4-2) Economic Trend 61A-4-3) Socio-Cultural Trends 86A-4-4) Political/ Legal Trends 106Conclusion on Irans Macro environment 108PART B) Industry Analysis 109B-1) Overall Review of Irans Transport Sector 109
6B-1-1) Organisation of Transport Sector 109B-1-2) Irans Key Transportation Policies 110B-1-3) Sustainable Development 111B-1-4) Key Modes of Transport 123B-1-5) Investments in Transportation Infrastructure 140B-1-6) Key Issues Identified in the Transportation 142B-1-7) The Way Forward 147B-2) Market demand for railway as a target industry 148B-3) Strategic Map 149B-4) Industry Analyses by porters five forces 152B-4-1) Rivalry among competitors 152B-4-2) Barriers to Entry 153B-4-3) Substitute Services 154B-4-4) Power of Suppliers 155B-4-5) Power of Buyers 155B-5) Driving Forces 157B-6) Overall Industry Attractiveness 160PART C) Competitor Analyses 161CHAPTER THREE(PROJECT DESCRIPTION)) A) Introduction 170A-1) 21stcentury challenges 170A-2) Irans Rail Transport Background 172
7A-3) Irans Railway Internal Corridors 173A-4) Irans Rail Network 174A-5) Summary of RAI’s Current Situation 177A-6) Future Vision 177B) Project Description 178B-1) Tehran-Mashed, A potential route for high speed rail 178B-2) A Price-Time model 182B-3) Why High Speed Trains (HST) 184C) The problem and Methodology 196CHAPTER FOURTECHNOLOGY ROADMAPPING(A STRATEGIC WAY FOR CHANGE)Introduction 199A) Anticipating and Managing Change 200A-1) what’s the force behind change? 200A-2) Literature Review 201A-3) Different Perspectives to Change 203A-4) Managing change, A step-by-step approach 204A-5) Key Relative Areas 206A-6) Boosting Technological Change 207A-7) Do employees must be change? 213A-8) Look at the Past, Present and Future 214B) Distinction of Planning Paradigms 215
8B-1) what is the conventional paradigm? 215B-2) Why new paradigm? 216C) An Overview to the Technology Roadmapping (TRM) 217C-1) Definition and literatures 219C-2) Differentiations of TRM & technology planning 225C-3) Evolution of technology roadmapping 226C-4) Why Technology Roadmapping 227C-5) what are the main benefits of TRM? 229C-6) Why R&D involvement? 230C-7) Why should be avoid from exist solutions? 231C-8) Different Modes & Approaches of TRM 231C-9) Technology Roadmapping Process 233C-10) which Challenges are in face of TRMs? 239CHAPTER FIVE(TECHNOLOGY SELECTION)Introduction 242Preliminary Analysis to Roadmap Creation 244Phase 1) Market Requirements, Visions and Objectives 246Phase 2) Service-Market Analysis 253Phase 2-1) Matching Visions with Costumer and Technical Requirements 2532-1-1) Using QFD for service development 253Phase 2-2) Project’s House of Quality 263Phase 2-3) Identification of Related Services 271
9Phase 3) Identification of Technology Alternatives 276Phase 4) Technology Gap Analysis 293Phase 5) Service-Technology Analysis 304CHAPTER SIX(ROADMAP CREATION)A) Introduction 309B) Influence Matrix 310C) Roadmap Creation 314C1) Auxiliary Tasks 314C2) Main Tasks 318C3) Auxiliary Tasks Roadmap 319C4) Main Tasks Roadmap 321C5) Next Steps and Recommendations 326CONCLUSION 327APPENDIX 1: QUESTIONNAIRES 330REFERENCES 344
10TablesChapter Two• Household-based technologies at Iran 58• Comparison of Irans 3rdplan targets and performance 62• Economic Indicators during the 4th FYDP 63• Irans Macroeconomic Components 73• Irans budget deficit 80• Irans Annual Population Growth 90• Irans labor force indices and indicators 96• List of selected countries by life expectancy 98• Irans Income distribution inequality indexes in urban areas 100• Share of Iranians states in GDP, Population and Consumption 102• Level of Education 103• Market share by modes of transport 115• Irans Road network development plan 125• Irans Rail development plan, quantitative targets 130• Irans railway performance 131• Irans fourth development plan (Railway Sector) 132• Irans Sea Transport Performance 134• Iranian Railway companies, Annual freight performance 163• Iranian Railway companies, Annual passenger performance 166Chapter Three• General Status of the Irans Rail Transport Sector 173• The Routes Current Traffic 181• The European Union Plans to improve Road and HST 188• Speed Records of High Speed Trains in different Modes 193• World Fastest Scheduled Train Services 195Chapter Five• Irans Railway SWOT Analysis 249• Tehran-Mashed new Electrical Railway, (Visions & Objectives) 252
11• Refining Customer Requirements 256• Technical Requirements to Satisfy Customer Needs 257• Strong Negative Interactions among the Technical Requirements 258• Follow-up Actions 259• Iranian Railway companies, annual passenger performance 261• Competitor’s Market Share and Growth rate 261• BCG Matrix 262• Conclusion of Competitors Evaluation for Costumer Requirements 265• Conclusion of Competitors Evaluation for technical requirements 265• Effects of technical requirements on costumer requirements 266• Comparison of the relative importance 267• Final priority of Costumer Requirements 269• House of Quality 270• Rail Transport Market-Service Linkage 271• Tehran-Mashed new line, Choosing the Strategic Services 273• Comparison of different rail alternatives 273• Features Comparison Chart 284• AHP Results for Technology Selection 286• Tehran-Mashed new HST, Final priority of HST Alternatives 290• Current Technological Capabilities for high speed railway 297• Tracks Desired Capabilities 298• Equipments Desired Capabilities 298• Identification of the gap on the exist line 300• Follow-up Actions 301• Tehran-Mashed projects implementation alternatives 306Chapter Six• Influence Matrix 311• Identification of Auxiliary-Tasks 315• Categorization of Auxiliary-Tasks by Term 316• Auxiliary Tasks Roadmap 319
12• Main Tasks Roadmap, Modification of current line 321• Main Tasks Roadmap, Execution of Dedicated HST Line (350 Km/h) 324• Projects Fast Facts 329
13FiguresChapter Two• External Environment Components 40• Effective & non-effective factors 41• Selected countries comparative GDP 45• G7 Groups GDP 46• G7 economic indicators 46• Global indicators 47• Global productivity performance 47• Risks to the global outlooks 48• GDP at Middle East 49• Middle East economic indicators 50• Export and government revenue of OPEC 50• Middle East in compare to G7 51• Science and Engineering students 57• Distribution of economic freedom 66• Economic freedom, world average vs. regions 67• Economic freedom VS per capita GDP 67• Global distribution of economic freedom, results 68• Irans Economy Freedom 69• Irans ten economic freedom indicators 70• Irans GDP & GDP per capita 71• Irans GDP growth rate 71• Contribution to GDP growth, Iran 72• Irans GDP (constant & current price) 72• Irans GDP (share of world total) 73• Irans GDP by sectors 73• OPEC basket prices 75• Worlds oil demand & supply 76
14• OPEC total crude oil production 76• Irans liquid production and consumption 77• Irans interest and inflation rate 79• Irans inflation rate in 26 years 80• Iranian Rial in compare to other currencies 83• Irans HDI scores 87• Irans HDI trends 88• Irans population for 20 years 90• Population and HDI trends in compare together 91• Irans Age distribution 93• Irans Gini Index 101• Irans Misery Index 104• Irans misery Index in compare to G7 Group 105• Iran’s GDP by economic sector 111• Iran’s GNP by economic sectors 112• Value Added by Transportation sectors 113• Share of railway in transportation value-added 114• Iran’s value-added growth rate by sectors 114• Governmental assets by transportation sectors 115• Contribution of different fuel on total consumption in transport 120• Gasoline consumption growth trends in different region of the world 121• Energy intensity of GDP in different mode of transport 122• Iran’s registered vehicles 124• Vehicles to main roads 125• Iran’s road network 125• Public investment in road network 127• Freight and Passenger by road 128• Railway Transportation 132• Share of freight and passenger in railway 132• Iran’s Aviation Performance 136
15• Road and Railway comparison chart 139• Transportation Investments as % of GDP 140• Transportation investment by sectors 141• Strategic Map at railway industry 150• Iran’s railway industry attractiveness 156Chapter Three• Irans Railway Internal Corridors 174• Irans railway critical routes 176• Map of Rails Passenger volume 180• Price–Time Model 183• Effect of Train Journey Time on Air and Rail Travelers 183Chapter Four• Lewins Force Field Analysis Model 202• Key Areas of Change Management 207• Technological Change Life Cycle 209• Looking at the Past, Present and Future 214• Linking between TRM and Business Strategies 218• Technology Life Cycle 220• Evolution of technology roadmapping 227• Public & Private sectors in R&D investment 230• TRM in different modes 232• TRM Process 234• Dynamic effect of different dimension 236• The Projects Process Algorithm 238• Roadmapping Challenges 239Chapter Five• The projects Roadmap Phases 244• Roadmap Hierarchy 245
16• Conceptual Framework of Technological Renovation 247• Trip time by Technology 280• Technology Selection Diagram 291• Technological Gap Process 296Chapter Six• Influence Map 313• Integrated Relationships in both of internal and external 325
17Executive Summary IntroductionThis business case represents the significant effects of different modes of High Speed Train(HST) technology in Iranian railway system. The project aims to assess how to structure theongoing collaborative technological advancement, the exploration of the opportunities andthe threats over the next twenty years. In addition it analyses how to manage the transitiontowards knowledge based technology and a more sustainable rail industry. This vision isbeing translated into a set of technology development destinations and a total of distinctinitiatives for targeted project.Railway transportation has direct and indirect cost to society and may reduce competition.By use of HST in Iranian Railway system, there are many advantages to society, economyand environment. Also, we are going to find out how the implementation of HSTtechnology can improve the competitive advantageous of the railway industry comparing toother alternative transportation networks such as Road ways and airways in order to providea better and more efficient services to the customers. Meeting tomorrows challengesNowadays new generation of science and technologies help companies to facilitate servingnew product and services to satisfy customer expectations. Despite of all opportunities, thenew global market has several threats for the firms. In addition to the new markets, newcompetitors are emerging. The global competition is becoming more intense and firms faceserious challenges in order to survive. Customers in the new global market do not acceptthe standardized products and they prefer goods or services that satisfy their individualrequirements.In addition businesses are under tremendous pressure to make tangible productivity gainsand to hold costs in check, just to stay even with their competition. Modern companies are
18in a state of technological and cultural change. Furthermore, in the next decades,technology will hold the key to improving the quality of our lives and resolvinglongstanding conflicts between economic goals and resource constraints. In response,costumer expectations for technology have increased dramatically, placing greater demandson the application and performance of services. Also sustainable development is vital toprovide new technologies and the triangle of society, economy and environment are neededto evaluate simultaneously.On the other hand the Iranian economy is entering a transitional phase. The economyenjoyed a sustained growth, partly due to policy decisions and extensive deregulations toenhance private sector contribution to economic activities and partly to positive movementsof crude oil prices in international markets. Foreign trade system moved toward furtherliberalization through revision in trade tariffs and granting more flexibility to exporters inmanaging their exports proceeds. Also like to the global market that the most part ofworlds trade has more focused on services than products, 48.2% of Irans Gross DomesticProduct (GDP) is come from service sector. In recent years Iran has changed sometraditional approaches to make country more attractive for global economy and particularlyto increase foreign investments.Due to implementation of structural reforms in the 3rd plan, most of economic indicatorsshow a better performance as compared to the previous periods. According to positivetrends of Irans macroeconomic criteria such as GDP and GDP/per capita the country willbe faced with a huge demand for transportation services in both of freight and passenger. Background of BusinessTo response desired demand the railway network currently operated by the IranianRailways Co. (RAI) that is 8565km of main track. All tracks are standard gauge. Tehran isthe hub of the railway network, which consists of four main corridors. Although in compare
19to road section, rail transport volumes are low, they are growing. In addition because of thegeographic position of the country and the long distances involved, rail transport hasconsiderable potential for development, and a favorable comparative advantage (such asenvironmentally friendliness, lower fuel consumption, lower fatalities, lower price,…) overroad and air transport.Although investment in the rail transport has experienced special growth in recent years butshare of rail transport from GDP is decreased. It means governmental investment in the railtransport hasnt been effective to improve its market share or other modes of transportgrowing faster. Statistics shows that in recent years Iran has experienced around 5% byaverage in its GDP and also government has spent considerable investment ontransportation sector. Moreover share of transportation sector from countrys value-addedhas been increased during two decades ago. So it can be estimated that transportation sectorwill be facing with a huge demand in the next years. On the other hand railway with a widerange of advantages that mentioned before can play a strategic role in transportation sectionin both of passenger and freight modes.City of Mashed is an important religious city in the country and the second Islamicreligious city in the world. Millions of pilgrims plan to travel there every year. Around 50%of total rails passengers travel there. The route is 926Km and is known as long distanceroute. Although there are operated many semi high speed trains with maximum 160 Km/h,but average trip time for the whole of route is around 12 hours. In recent years the route hasno experienced any passenger train accident and fatalities. As a technical point of view theroute is doubled track and in recent years many substantial projects such as signaling andtracks long welding are done. Also the existence route is ready to operate trains with speedof 200Km/h.
20The route (Tehran-Mashed) has a good passenger potential with around 12 millionpassengers at 2006 and will be expected to increase in future. In addition rail transport has51% of the route market share, road and air transport with 36% and 13% are the next modesof transport respectively. It means rail transport is the main mode of transport in the route.As a result, it can be predicted that any rails network development and in particularproviding high speed trains technology will be effect on the rail transport market share. Providing High Speed Train technologyElectrification of Irans rail network is an essential solution for productivity improvementand sustainable development. On the other hand high speed railway is vital to productivitygrowth in transportation sector. As such, it lies at the heart of the sustainable developmentand technological transformation projected through 2025 and beyond.Development of High Speed Trains (HST) in last decades makes it more attractive incompare to car. Many direct and indirect advantages such as low travel time, loweremissions and safer trip are discussed by governments to implement new HSTinfrastructure around the world. Generally, High speed rail is defined as where trains run ata maximum speed of at least 250km/h. Capable of traveling at speeds of 250 to 350 km/h orhigher, HST would offer an efficient, attractive and convenient alternative for passengersbetween large urban areas for trips of up to 1000 kilometers. HST is economically efficientand respectful of the environment; its a major asset in efforts to ensure sustainabledevelopment in transport.According to the high passenger traffic in the Tehran-Mashed route that still is going uprapidly and also the critical capacity of the route, the RAI is going to provide an electrifiedhigh speed railway there. Previous feasibility study shows that the route has the mostpriority to implement an electrified high speed railway. The project is mostly technology-based and estimating around $15 billion and will be implemented in 15 years.
21On the other hand, to implement of this project RAI needs to make government moreconfident about the situation that will be emerged in projects life cycle. As a result thecrucial questions are:1. Which kind of high speed railway is more efficient to implement in the route2. How related technologies should be chosen3. How related departments should be involved in an integrate decision processIn conclusion, it’s very important for RAI to know what the best plan to implement projectis. Previous experiences for the same projects show that usually there has been a lack ofintegrated strategic planning to use all of the potentials that each part of project has aloneand usually there is no synergy between departments. Furthermore in most of previousprojects providing technologies were being insufficient or over design. It means afterimplementing of those projects the results will not be completely adapted to the targetstrategies. Technology Roadmapping(TRM), Thinking StrategicallyOver the last 20 years, Technology Roadmapping (TRM) has become a popular method forstrategic planning in science and technology. Generally, a roadmap provides a consensusview or vision of the future landscape available to decision makers. When conductedproperly, a roadmapping effort provides a way to involve critical stakeholders as well as toidentify, evaluate and select alternatives that can be used to achieve a desired objective. Ituses to integrate between firms business strategies and market requirements. Also by usingroadmapping the R&D tasks will be canalized to the desired visions and objectives. On theother hand the Irans rail industry has undertaken a bold technology planning initiative toposition itself to compete effectively in Irans transportation market. This business caserepresents technology roadmapping as a strategic tool to respond to new marketopportunities and challenges in Irans rail industry. The roadmap will help align the
22technological resources of industry and government to meet the future demands ofestablished and emerging customers.This roadmap is an initial effort to provide the critical link between the broadly definedstrategic goals and the detailed research portfolio that will be pursued through cooperativeR&D partnerships. It is meant to be a dynamic document that is reevaluated at regularintervals to incorporate new market and technical information and to ensure that theresearch priorities remain relevant to customer needs. Conclusion & FindingsFinally, the conclusions and findings of this business case for implementation of TRM toprovide new rail technology for Tehran-Mashed route are as follows: Although there are many negative economical and political points, but Iranseconomy indicators shows that the country will be faced with the better situation inthe next decades that helps it to provide pioneer technologies for rail transport. In recent years the government has spent considerable investments on rail projectsthat show the importance of railway transportation for decision-makers. To keep pace with the countrys rapidly growing population, rail transport mustreach the equivalent capacity for around 100 million people per year by 2025. Costumers are looking for services to make their travel safer, shorter and moreconvenience. Macro economic goals of, technological advancement, internationalcompetitiveness, and oil conservation would be supported by the development andbuilding of HST systems. A critical priority for Tehran-Mashed railway is the development and deployment ofan advanced portfolio of related technology options; Tilting and Conventional HST.
23 Providing very high tech alternatives such as Maglev trains will not be feasible forthe route as different points of view; technology adoption, high cost, Safety, nointernational acceptation and so forth. Integrated partnership of different stakeholders in the government, industry and firmis needed to ensure that the projects roadmap will provide the best technology forthe route. There is no necessary experience to integrate R&D tasks with the main projectsactivities. Related R&D tasks should be identified as secondary roadmap. Although privatization in rail transport has started for many years, but there is nosufficient effort by government to facilitate the process of private sectionsreplacement. High-speed trains and high-speed trains network are beneficial from a socio-economic point of view and that they probably alleviate the major environmentaldisadvantages of cars and airplanes. By using HST, technology innovation will be emerged as the primary driver foreconomic growth. The project results shows that creating a sustainable future will requireimprovements in a number of areas, including economic productivity, energyefficiency, and emissions reduction over at least the next 20 years. As key to energy efficiency, high speed railway will increasingly shoulder societysburden for energy-related environmental control.
25Introduction:1) Background of business1-1) Rail transport historyThe role of railway transportation has grown steadily in both scope and importance over thepast century. Developments in key technologies such as high speed locomotive andvehicles, tilting bogies, mechanized maintenance equipments and telecommunications,continuously reshaped our life as well as the productivity of its commercial and industrialfoundation. These technology advances have steadily extended the precision and efficiencyattributes of railway. As a result, railway has gained a progressively larger share of the totaltransportation use.In the coming decades, railways share to the total transportation is expected to continue togrow, as more efficient and intelligent processes are introduced into industry, transportationand business.Although sometimes identified as a mode that enjoyed its heyday during the 19thcentury,rail transport is enjoying resurgence because of technological advances in the latter part ofthe 20th century. In passenger transport this has come about through significantbreakthroughs in speed. For instance, in Europe and Japan high speed rail systems reachspeeds up to 515 km/hr. This gives rail in a competitive advantage over road transport andeven with air transport over short and medium distances. Unit trains, where trains are madeup of wagons carrying one commodity-type only, allow economy of scale and efficienciesin bulk shipments, and double stacking has greatly promoted the advantages of rail forcontainer shipments. Rail transport is also enjoying resurgence as a mode for commuters inmany large cities.
261-2) Iran’s railway networkThe railway system in Iran has been started almost 75 years ago. Passenger and Freighttransportation is the main target of Iran railway system.The air and maritime transportation system within the country have small ratio of the wholetransportation network in the country. The air transportation system is mainly focused onpassenger transportation and high prices of jet fuel are not cost benefited for consumers tosend their merchandize with air transportation unless there is urgency. On the other hand,Iran is only connected from south to open waters for transportation out of country. There isno sea inside the country to make the transportation available between cities. As a resultthese two other transportation systems are not considered as a competitors for railwaytransportation system. The only remaining competitor in the field is the road way systems.Because of the geographic position of the country and the long distances involved, railtransport has considerable potential for development and a favourable comparativeadvantage over road transport. The competitive advantageous of the railway industry overthe road ways are: Cheaper price. Capability of transporting bulk raw materials Lower external cost for the government (Environment, fuel consumption &Accidents) More safety for the carried goods & passengersGovernmental support of expansion of the railway network is planned for the next 20 yearsin order to maximize the portion of railway transportation to 50%, compared to the wholetransportation net work of the country (at present the portion is about 15%). The nationalrail network in Iran is growing rapidly. An additional 3300 km of routes are currently under
27construction, which will increase the total length of the system by almost half, and there aremany more proposed extensions under study.For freight traffic, the differences between road and rail are even more pronounced. Railremains nearly constant over the period at an average of 14 billion ton kilometers, whileroad transport increases three times over the same period.Iranian Railway requires tracks along which the locomotives and rail cars move. The initialcapital costs are high because the construction of rail tracks and the provision of rollingstock are expensive. Historically, the investments have been made by the same source(either governments or the private sector). These expenditures have to be made before anyrevenues are realized and thus represent important entry barriers that tend to limit thenumber of operators. It also serves to delay innovation, compared with road transport, sincerolling stock has a service life of at least twenty five years.1-3) Key Issues Identified at Iran railway sectorLack of Price IncentivesThis issue may be characterized as a threat. Transport users are not aware of the true costsof transport. All transport modes are heavily subsidized.Lack of Efficiency in Investment SpendingThree issues are of concern under this heading: Project justification Successful project completion Successful achievement of the desired benefits from the projectSafetyAlthough rail safety in Iran is matter of concern but as a comparative point of view,railway is many times safer than road transport
28On the other hand, because of current situation there is no proper safety atmosphere forproviding high-tech technologies. (Standards, trained human, work culture, disciplines …)Poor Quality ServicesQuality problems affect every transport user in Iran. Some examples of poor quality of railtransport services include: Slow services Infrequent services Lack of information Overcrowding Uncomfortable vehicles Low standards of safety and security Unreliability and delays Inattentive staff Untrained staff;1-4) Technology managementFirst of all I chose a definition for technology management that creates by the EuropeanInstitute of Technology Management (EITM):"Technology management addresses the effective identification, selection, acquisition,development, exploitation and protection of technologies (product, process andinfrastructural) needed to maintain [and grow] a market position and businessperformance in accordance with the company’s objectives".Managing any technology for business benefit requires effective and systematic processesand systems to be put in place to ensure that investment in new facilities, knowledge andskills is aligned with market and industry needs, now and in the future. In other wordstechnology management deals with all sides of integrating technological issues intobusiness decision making.
29Development of railway transportation requires vast technological infrastructure andequipments in which all of them should be match with internal factors such as;organizational culture, technology adoption, skills and proficiency, capital investment andalso external factors such as business aspects ( market needs and trends, market share,profitability, competition,…) , environmental impacts (air and noise pollution, land use,utilization of natural resources), and social aspects(safety and accessibility). It means if thefirm needs to make appropriate decisions for providing new technology in the project; theyshould manage the whole of factors that I mentioned above.1-5) Sustainable transportation (provide a win-win strategy):Sustainable development is one of the greatest long-term challenges facing the entire planetand transportation represents an important part of the challenge everywhere.Sustainable Transportation is talking about finding and maintaining a dynamic equilibriumbetween three forces that are seldom synchronized and often opposing each other. They are:• Economic needs of a safe and efficient transportation system,• Environmental impacts on the quality of our air, water and land,• Social priorities of the people (access and choice)In this matter the question that should be answered every time is: What the appropriatetransportation technology is? A major constraint on future sustainable transport systemswill be how various environmental, social and economical challenges are met. Majorrestructuring of social, economic and environmental values is urgently needed, and thescope of changes must transcend performance of transportation providers by alsoinfluencing the factors that motivate decisions and preferences of carriers and travelers. Inother word providing new technology must be done by analyze three different mentionedaspects.
30On the other hand, modern life styles are based on using the available technology. What isused may not be ideal for many reasons. Progress tends to eliminate inappropriatetechnology. For instance, over the last several decades environmental sustainability playeda small role in transportation planning and operations but at present this situation haschanged. The future of the transport industry is likely to be compromised without anunderstanding of environmental sustainability.Moreover, Win-Win transportation solutions are cost-effective and technically feasible thathelps solve transportation problems by increasing consumer options and removing marketdistortions that encourage inefficient travel behavior.Win-Win solutions consist of strategies that have only positive or neutral impacts oneconomic, social and environmental objectives. Win-Win strategies also provide multiplebenefits; they offer opportunities for cooperation and coordination between interest groups.1-6) Creation of a new visionThe challenge in transportation to guarantee the growth that the global economy requires totransport more goods and passengers, faster and reliably.In addition investments in the transportation sector are long-term and capital-intensive.Vision, good planning and good policy are therefore required if optimal vehicles,infrastructure, corridors, organization and information management systems are to bedeveloped.Back-casting from the year 2007 to 1970, it is apparent that there have been enormoustechnological changes in railway and it is rather clear that the growth and changes in thecoming decades will be even faster.As a result there is an urgent need for a vision of the future. New concepts for anytransportation systems require 4 to 6 years from design to realization and 5 to 10 years is
31needed for construction. Also the payback period for transportations mega projects is oftenmore than 15 years. As a result the vision should be shaped for the several coming decades.In this condition, as a win-win strategy point of view, the most appropriate vision for Iranrailway in the new project (my case study) is sustainable high speed electrical railway thatmeets the needs of society, industry and the environment for the coming decades.1-7) "Technology" work as organizational change factorThe acquisition of new technologies continues to be important to both public and privatesector organizations, especially larger organizations.According to the above mentioned the most important question is: "why technology isimportant for Railway Transportation as a special change factor"?A) General view:Technological change is important because it mostly leads to organizational changefor the following reasons: Technology and markets are changing more and more rapidly Often it has seen as a most competitive advantage Technology is usually seen as a specialized field of development policy The evolution of technology is a complex process Technology bring Modernity and Values that both of them can changeorganizationB) Business view:Providing a proper range of technology for railway industry is important because: Railway is a technical based business New expectations by customers can be done by providing related technology As a strategic planning point of view, "Technology" is the most importantelement that influence on the whole of internal and external expectations
32On the other hand making any change in an organization needs to manage change processesaccurately. As we know managing change is a very important factor in the success of everybusiness. To achieve success in today’s global economy, companies must be able toproduce the right product/service at an appropriate time and with necessary specifications.So it leads companies to have more competition together for providing sustainableresources.Moreover there are many drivers for change in organization such as Customer expectations,Technology, Competition, Legislation, and Economy. Depends on organizational situationsuch as Urgency/Pressure, Organisational climate, Culture, and Management style,companies needs to recognize Critical Success Factors (CSF) for prioritizing all of driversto managing change properly. As we know in most of technical-base companies such asrailway, technology issues mostly are part of the main problems that organizations arefacing to solve them. Therefore, the process of technological change (market needs,competitors situation, organizational culture, and other internal and external factors)influence on technological planning that should be consider by any company.Also there are many obstacles to implement any change in an organization such as: Lack of related knowledge Power of existence systems Lack of integration between departments Lack of transparency in objectives from managers Cost of installing new systemFurthermore every organization depends on its different situations needs to make differentlevel of change those are named as tree key concepts: Change, Transition, Transformational
33This range recognizes any change in an organization from newness of some elements(change) to make a new vision for firm (transformation).2) My case study"Development of exist Tehran-Mashed route to new Electrical high speed railway"Mobility and transportation infrastructure are essential pre-condition for the industry andthe national economy. They are providing the basis for trade, goods and passenger trafficand consumption. Moreover mobility and transportation infrastructure are a primary needfor the population. They guarantee a high grade of quality for the citizens, for their workand leisure time.In spite of these facts, infrastructure is hold responsible for many negative impacts;especially environmental pollution, disturbing noise and land use are complained.On the other hand in todays business there are two important factors for evaluating oftransportation efficiency, they are: speed and reliability.In Iran railways network, the Tehran-Mashed route constitutes one of the main routesbetween other corridors in terms of traffic demand which have two unique aspects:1) The route has a special role for connecting Central Asian Countries to EuropeanCountries2) More than 50% of whole of passenger traffic around the country are carried inthis routeFurthermore there are many problems to operate the exist line, they are: the operation system is based on non-electrical infrastructures (track & vehicles) Although fuel consumption in compare to road way is around 20%, but usingfossil fuel that is more expensive than other alternate energies can be a threat infuture.
34 Environmental impacts (emissions of CO2) the route average speed for passenger trains is around 100 km/h and for freighttrains is 70 km/h Although the route is double track but depends on trains speed, lines capacitycant cover whole of market demands Big part of the exist technologies are obsolesced Safety is a big managerial concernAs a result make a strong change in the infrastructure as I mentioned above can affectextremely on the whole of Iran railway.By this condition, Iran railway has a new plan for development of exist line from non-electrical system to a high speed electrical system. This project is one of the most importantprojects for Iran railway, because: Its the first high speed railway More than 2 billion dollars investment for the whole phases is estimated It makes a new set of technologies and knowledge Create a set of organizational behaviors (cultures, structures, standards…)The main goals for implementation of this project by Iran railway are as follows: Increasing freight and passenger capacity Decreasing travel time for both of freight and passenger trains Decreasing environmental impacts Decreasing project life cycle costThe whole of project is expected to come into new service by 2015 as a phased process inwhich cover the whole of 900 km between Tehran and Mashed.This thesis tries to analyze the impact that preparing a Technology Roadmap (TRM) haveon technology providing for the project. I also try to explore how integration between
35market, services and R&D activities can improve our technology planning in the project lifecycle. This is a flexible plan that can be modified in accordance with the needs of any givenmoment. It works also as a window to the future in which the firm manages its capitalinvestment with appropriate risk and challenges.3) "TRM" leads to optimize providing new technology:As I understand there is a strong correlation between using new technology and making aset of changes in an industry such as railway. For example in this case, providing highspeed railway technology extremely affects on whole of railway industry stakeholdersbehavior (government, customers, employees, experts, managers...).By using of this newtechnology in Iran Railway system, it can reduce the cost of transportation and travel timeby increasing network capacity. Both of above factors affects on industry, market &customers needs. Perhaps the most important obstacle in this way is lack of long termmaster plan for providing new technology as a phased process.Also at the moment there is no any proper integration between market, services andrequired technology in Iran railway. So any part of decision-makers work as an island. Inthis situation, choosing any technology often start by present solutions instead of analyzingthe stakeholders needs.Moreover, good design, management, and planning for providing new technology requirean understanding of: Where we are? Why we are here? Where we may be going? What is the gap?It is very important to anticipate what probably will, and reject what probably will nothappen.
36In this way, Im going to find out how the implementation of a technology roadmap canimprove the competitive advantageous of the railway industry and how it makes a longterm plan for providing required technologies in order to provide a better and more efficientservices to the customers. Also recognizing the main obstacles in the implementation phasesuch as resources, training and communicating is needed.Technology Road-mapping (TRM) has known as an analytical tool with the capacity tochart future market directions, forecast technological change and help to determine thestrategic choices that companies need to make. Through this process, TRM provide impetusfor research and development, technological innovation and technology transfer. It helpscompanies to identify, select and develop technology alternatives to satisfy future service,product or operational needs and also helps companies to think strategically, decideintelligently and collaborates strongly to deliver the critical solutions they need to succeedin tomorrow’s markets. Technology road-mapping works as a master plan that can bridgesgaps. In this situation no departments in organization is an island, selecting and integratingrailway technology must be a collaborative process.In addition a Technology Roadmap can effect on organizational change behavior because: It helps an industry to predict the market’s future technology andproduct/service needs Defines the "road" that industry must take to compete successfully intomorrow’s markets Guides R&D decisions Increase collaboration, shared knowledge and new partnerships Reduces the risk of costly investment in technologyFurthermore, before considering the use of TRM, there are a number of challenges thathave to be considered: Starting up the TRM process
37 There has tended to be too great a concentration on the integratedcooperation and cross-functional teams. (none of us is as smart as all of us) Keeping the TRM process alive Developing a robust TRM processAfter the roadmap is produced, the participants works together to launch developmentprojects with the aim of providing technologies that will help them capture future markets.Also the risks and benefits are shared, and the whole industry grows stronger.4) Managerial Questions1) How to improve technology providing process for the project as a maincompetitive privilege?2) How Iran railway can chart future market directions, forecast technologicalchange and determine the strategic choices that need to make in the project?3) Is there any capacity (know-how, skills, processes & systems…) in theorganization to adopt new technology (maybe as a disruptive technology)?4) How prevent investment on the inappropriate technologies5) Research ObjectivesIn summary, in this business case Im looking forward to doing following: First of all, the main objective of this research is to identify requiredtechnologies as a systematic way for future.( using TRM) Secondly, explore how preparing a Roadmap can influence the improvement ofproviding proper technologies for Iran new electrical railway. Thirdly, the research focused on the evaluating of technology road-mapping as astrategic planning tool by making a strategic plan through analyzing firm andindustry factors.
38 Fourthly, the research examines QFD to make integration between market needsand technology providing. Finally, the research explains how technology roadmap uses as stimulate fororganizational change.
40External Environment Analysis (EEA):In this chapter, the external environment is defined as everything outside an organizationthat is capable of affecting the survival or success of the business. Everything from macro-environment trends, related industry and competitors are included in the externalenvironment. Competitors are also a part of an industry which itself is part of the externalenvironment. In addition there is a common area between three sections that is allocated tothose of factors with greater influence on the business.MacroEnvironmentAnalysisIndustryAnalysisCommon areaIn the modern era, the rapid of change in the global economy is expected to continue. Itmeans businesses that facing the future need to be more strategic. They must become muchmore responsive. So firms need to use up to date information concerning the externalenvironment of the business.Mostly wecan findmoreeffectivefactorsthatinfluenceonbusiness
41I have organized the chapter in three main categories; Macro-environment, industry andcompetitive analysis. We can recognize those kinds of factors which have the mostpositive or negative effect on the business with high probability (most effective factors).Moreover, we will understand non-effective factors that do not any considerable effect onthe business.Dont spendmoney andtimeMostly islocated inthe commonarea,SpendMoney andTimeWe arentsufficientlysure to spentMoney andTime
42Part A) Macro-Environment Analysis (TESP Analysis):A-1) Global economy environment:I introduce this chapter with "the millennium development goals" 0F1that are emphasized byWorld Bank as follows:a) eradicating poverty and hungerb) Achieving universal primary educationc) Promoting gender equalityd) Reducing child mortalitye) Improving maternal healthf) Combating diseasesg) Ensuring environmental sustainabilityh) Developing a global partnershipIn the latter decades of the 20th century, the general business environment has experiencedmajor changes. Physical boundaries have declined in importance and an enormous globalmarket is emerging. Emerging markets and developing countries are expected to continueto grow strongly. There have also been significant improvements in global technology andother broad measures of well-being, including life expectancy and education. Traditionalsmall stores have changed to huge chain retailers (one stop shopping). Informationtechnology is serving the globalization process as a powerful tool. Information technologyand globalization are changing the history of the world. An increasing number of firmsinvest a significant part of its income on R&D activities.1World Bank at http://devdata.worldbank.org/atlas-mdg/
43New generation of science and technologies help companies to facilitate serving newproduct and services to satisfy customer expectations. Presently, in the global economy, asteadily increasing percentage of worlds trade is in services rather than products. Forinstance 48.2% of Irans Gross National Product (GNP) is from service sector.1F2Despite these opportunities, the new global economy poses several threats for firms. Inaddition to new opportunities, new competitors are emerging. Global competition isbecoming more intense and firms face serious challenges in order to survive. Customers inthe new global market do not accept standardized products and they prefer goods orservices that satisfy their individual requirements. Companies must cope with productdiversification while offering the best goods and services taking into account the differentneeds of diversified customers (mass customization). On the other hand, there are differentthreats from governments from new regulations, monetary policies, environmentallimitations and international organizations such as WTO.Moreover, there are many disparities closely linked to the human impact on theenvironment. This game has two sides, one of them are people in the developing & non-developing countries that produce raw materials for global economy. They use theenvironment in an inefficient manner e.g. land use, water and natural resources. On theother side, developed countries are the greatest consumers of natural resources, and alsohave much greater power to shelter themselves from environmental impacts such aspollution, scarcity and climate change. So the immediate challenge for policymakers is tocontinue to steer the global economy on a sustainable path that is consistent with lowinflation and global expansion.2Central Bank of Iran, Annually Report, Statistical appendix 2004
44Furthermore, the global economy has changed as free markets have spread to more parts ofthe world than ever before. During the past two decades international trade and investmenthave sharply increased and global economy has grown steadily. Nowadays, countries aretrying to increase their share of produced goods and services. On the other hand there aremillions of Chinese and Indians that can make the same goods and services at much lowerprices. Although some developing countries such as China, India and even Iran haveexperienced high growth rate in a recent years, the economic growth has slowed inadvanced countries.According to the World Economic Outlook report annually prepared by IMF, the globaleconomy volume steadily increased during the most recent decade. World real GDP growthincreased significantly for three decades. Although most developing countries experiencedgrowth rates higher than advanced countries, some of them e.g. China, achieved more than10% annual growth. In this way they have learned to produce goods and services in a moreproductive manner. Global productivity performance in recent years in China & developingcountries has surpassed advanced countries in terms of growth rate.So far, advanced countries (mostly the members of G7 group) are the most importantplayers in the global economy and represent a large share of global GDP.As demonstrated in the next figures, 25 years ago global trade was experienced differently.At the beginning of the 1980s most of global economy was produced by western countries(North America and Western Europe) but starting in the 1990s there was a revolution inglobal partnership and due to an increase in communications technologies the worldeconomy became more globalize. During this period, firms looked for goods and servicesthat were more reliable, and cheaper than others. In this situation, emerging and developingcountries such as China, India and southeast countries entered the global market with adifferent set of competitive advantages. As a result, in recent years the emerging countries
45have become much more involved in international trade. For instance at 2005, Chinaexperienced B$ 8000 in terms of GDP that is rather equal with four advanced country totalGDP (UK, Germany, France and Italy).Countries Comparative GDP(by PPP)0.005,000.0010,000.0015,000.0020,000.0025,000.0030,000.0035,000.0040,000.0045,000.001980 1985 1990 1995 2000 2005Billion$Total United States China Japan GermanyFrance India United Kingdom Italy CanadaAustralia Iran Linear (Total)Data Source: IMF, World Economic Outlook, April 2007
46G7 Group at 200602,0004,0006,0008,00010,00012,00014,000CanadaFranceGermanyItalyJapanUnitedKingdomUnitedStatesBillion$GDP, current priceGDP, by PPPData Source: IMF, World Economic Outlook, April 2007G7 economic indicators at 2006051015202530Canada France Germany Italy Japan UnitedKingdomUnitedStatesPercentageInvestment, % of GDPInflation, Annual percent changeUnemployment rateData Source: IMF, World Economic Outlook, April 2007
47Source: IMF, World Economic Outlook, April 2007Source: IMF, World Economic Outlook, April 2007
48Although there are many socio-economic and political threats and barriers such asinternational and regional challenges, unemployment, wars and resource limitation, thereare also many positive signals, potentials and opportunities that contribute to the globaleconomy to ensure increased performance in a persistent growth rate. As demonstrated inthe next figure, global economy growth decreased drastically between 2004 and 2005 withIraq and Afghanistan wars and the drastic increase in oil prices the main reasons forflattening the world GDP growth rate curve.Source: IMF, World Economic Outlook, April 2007Considerablefail as a resultof Iraq war
49A-2) Middle East, a strategic region:Although the region has experienced intensive regional challenges and wars in recentyears, most countries in this region experienced high economic growth strongly influencedby oil price.Gross domestic product, current prices, 2005188.479309.945130.25680.7842.46313.37830.83512.71221.428050100150200250300350Iran,IslamicRepublicofSaudiArabiaUnitedArabEmiratesKuwaitQatarBahrainOmanJordanLebanonMiddle east countriesBillion$Data Source: IMF, World Economic Outlook, April 2007Iran isranked asa secondeconomyin theregion
50Middle East Economic Indicators02004006008001000120014001600180020002000 2001 2002 2003 2004 2005 2006YearBillion$GDP- current priceGDP- PPPData Source: IMF, World Economic Outlook, April 2007Source: IMF, World Economic Outlook, April 20071-OPECmemberseconomycompletelydepends ontheir oilexports2-theeconomies aremostly public
51Middle East in compare to G70.005,000.0010,000.0015,000.0020,000.0025,000.0030,000.002000200120022003200420052006GDP (byPPP)middle EastG7 GroupData Source: IMF, World Economic Outlook, April 2007In summary, the global economy is facing gaps between different countries. Some of themare too rich and have larger shares in global economy. The rest includes developing andnon developing countries that are preparing themselves to achieve better situation in thefuture. But there is no single recipe for success; each country needs to identify prioritiesand appropriate solutions to the national context.The gap is tooconsiderable
52A-3) Irans Outlook DocumentIn order to draw a clear picture of Iran during the next fifth of century (up until 2025) as thecountry emerges following structural reform initiatives. Iran prepares itself to become thefirst power in the fields of economy, science and technology in the region at 2025.2F3Theoutlook document was prepared by government in different fields of economy, social andpolitical. It shows a long term vision for the country. The other midterm and annual planssuch as the five years plans must be prepared based on forecast indicators.3The Expediency Council at: http://www.irec.ir
53A-4) TESP Analysis:A-4-1) Technological TrendsRapid advances in technology, especially information and communication technology(ICT) are accelerating the pace of change in production and service activities. ICT, and theInternet in particular, is today a key business enabler, and has contributed significantlytowards a borderless global economy by removing physical distance as an obstacle to trade.Moreover access to information and the mobility of capital and talent have also beensignificantly enhanced by technological progress.In recent decades our socio-economic activities have been influenced by science andtechnology. We live in an era of increasing use of diverse technologies in all aspects of ourlife; as a result life style is extremely changed as a technological replacement and most ofsocio-economic indicators such as life expectancy and communication are improved. Theworld is undergoing a global technology revolution that is integrating developments inbiotechnology, materials technology, and also information technology at an acceleratingpace.Today, technology not only plays a role stimulating invention and innovation, but workssimultaneously as a product. On the other hand there are many problems to implement anykind of technologies. For instance, capacity to acquire a new technology (particularly adisruptive technology) does not necessarily equal capacity to implement, because the latterrequires a threshold level of physical, human, and institutional capacity; financial resources;and the social, political, and sometimes even cultural environment necessary to maintainand sustain widespread use of the technology.On the other hand, there are usually limitations for using current technologies that haveenvironmental and economical impacts such as air pollution, land use and energyconsumption. A term used in recent decades is alternative technology that refers to
54technologies which are more environmentally friendly than the functionally equivalenttechnologies dominant in current situation.This kind of technology has more focus on resources and wasteful industry, aims to utilizeresources sparingly, with minimum damage to the environment, at manageable cost andwith a possible degree of control over the processes. According to this new concept,industries should move toward development of an appropriate range of technology thatcreates a difference in our lives and work. An appropriate technology, in this sense,typically requires fewer resources, as well as lower cost and less impact on theenvironment. Some famous examples in transportation are hybrid fuel vehicles andelectrical trains as both are cost-effective and environmentally friendly.The railway technology which is only 100 years old is developing very quickly. Trains arebeing equipped with new tracking technologies as GPS & RFID. Many safety tools arebecoming common in every train. Electrical trains have made travel more secure, faster,reliable and economical for both of freight and passenger end-users.Besides these improvements, revolutionary technologies have been commercialized. Highspeed trains with around 400 km/h operational speed (e.g. France TGV, JapaneseShinkansen and German ICE) are the innovative response of wagon and locomotivemanufacturing technologists to increasing customer expectations. As any other industry, therailway will face major changes in the new future and there is a threat that the existingtechnologies will become obsolete in the next decade. Also there is a big challenge thatprivate sector has no effective role as a competitor for public sector.As a result Science and Technology development play the most important role for thesignificant growth in railway because: It facilitates cost reduction It increases productivity It creates more quality
55 Facilitate to produce a wide range of products, and It also increases competition
56Iranian current technological potential: Human Capital (as a technological aspect)Iran has the second largest population, after Egypt, in the Middle East and North Africa region. Most ofits 65.5 million people (70 million in 2007) are young, with increasing hopes and expectations of a betterfuture. Larger numbers of increasingly well-educated women seek opportunities to participate at alllevels of Iran’s labor market and civil society. The country’s health and education indicators are amongthe best in the region. 3F4The most common source of technology development in countries is educated people. As aresult it has an important role for providing new technology and sciences to enhanceeconomic growth. In other words the skill and training level in each country createscompetitive advantages for their economic. The above statement by World Bankemphasizes Iranian human capital potentials that can play a considerable role ontechnological development.For instance by 2004, for each 1000000 Iranian there were 560 researchers in which theindex for some other countries are as follows4F5: Japan- 4909 researchers United States - 3776 researchers Germany- 2831 researchers England- 2448 researchers South Korea- 2193 researchers Egypt- 459 researchers Indonesia- 182 researchers Malaysia- 117 researchers4World Bank at http://web.worldbank.org5Central Bank of Iran, annually report 2004
57Source: Economist.com, "More pain than gain", Sep 14th 2006More attentionto Science andEngineering indevelopingcountries is aresult of hugegrowth intechnologytransfer fromindustrialized todevelopingcountries inrecent years
58 Household-based technology:Percentage of Iranian Distribution of Households by Using Equipments andAppliances-2004Equipments and Appliances PercentPersonal Car 25.1Motorcycle 18.9Bicycle 22.4Sewing Machine 72.2Radio Cassette Recorder 73.8Television 98.4Video and CD Player 52.3Personal Computer 20.6Refrigerator 79.9Freezer and Fridge – freezer 51.1Gas Cooker 98.4Vacuum Cleaner 78.2Washing Machine 66.1Mobile Phone 15.8Data source: Irans Central Bank, Household Budget Survey 2004-05
59 High-tech exports:High tech products export by each country is an important indicator to measure level oftechnological potential of country. In 2004, only 2% of Irans total exports came from high-tech products. But at the same time the index is 80.8% for Japan, 74.9% for Singapore,67.4% for Malaysia, 66.7% for South Korea and 16.9% for Australia. In each country,there is a strong correlation between the level of technological potentials and the amount ofhigh-tech exports in percentage of GNP. According to the cited statistics, those countriesthat have greater ability to produce new technologies have greater ability to export them toothers. As a result it means that Irans technological potential is very low compared to someselected developed country. Transportation TechnologyTo satisfy the increase of market demand for transportation during the next decade, thewhole Iranian transportation network has to be radically improved. In this waytechnological process should suggest solutions and methodologies that could improve thequality handling of the transportation systems. In recent years, Irans transportation systemhas experienced a set of new technologies in a wide range of services. For instance usingRFID to trace wagons and trucks, implementation of Intelligence transportation systems(ITS) such as streets monitoring, contact less toll pay system and streets green wavesystem.
60 Scientific growth:Based on Irans 2007 annual budget report, 1.2% of GDP should be spent for R&Dactivities.5F6Iran is a good example of a country that has made considerable advances byfocusing on education and training. Despite sanctions in almost all aspects of researchduring the past few decades, Persian scientists have been producing cutting-edge science.Their publication rate in international journals has quadrupled during the past decade.Although it is still low compared with the developed countries, this puts Iran as one of themost important Islamic countries. Considering the countrys brain drain and its poorpolitical relationship with the USA and some Western countries, Irans scientificcommunity remains productive, even while economic sanctions make it difficult foruniversities to purchase equipment or send people to developed countries to attendscientific activities.Irans university population has swelled from 100,000 in 1979 to 2 million in 2006.6F7Theoretical and computational sciences are quite developed in Iran. Despite the limitationsin funds, facilities, and international collaborations, Iranian scientists have been veryproductive in several experimental fields as pharmacology, pharmaceutical chemistry, andorganic and polymer chemistry. Recently in last months of 2006, Iranian biotechnologistsannounced that they, as a third manufacture in the world, have sent CinneVex (recombinanttype of Interferon b1a) to the market. Also, Royana, which is the first live cloned sheep inIran, has passed the critical months of his life.6Central Bank of Iran, Annual report 20067Ministry of science, research and technology
61A-4-2) Economic TrendIran has experienced two important events since 1970s that caused the country to becomeless competitive in the world.The first one occurred after a shock in the oil prices in 1975. As a result Irans revenueincreased considerably. It led the country to emphasis an open door approach for imports.In addition, this change made the country more dependent on the oil economy anddecreased the importance of other sectors.The second one was Irans revolution in 1979. After the revolution, Irans economy wasaffected by the new political, social and economic policies. These policies caused somemajor problems in the countrys economy such as: Decreasing the role of supply and demand in the market Decreasing competitiveness between economy players most of the economy regulated by government Prices completely controlled by government Productivity (in both of efficiency & effectiveness) has decreased in all of factorsOn the other hand, in recent years Iran has changed some previous approaches to makecountry more attractive for global economy and particularly to increase foreigninvestments. As a result the economy started to grow during the past 5 years. We willdemonstrate these changes from different aspects as follows:
62A-4-2-1) Development plansLike most developing countries, Iran places great emphasis on long-term developmentplans. Despite regional tensions, the Iranian economy performed relatively well during the3rd FYDP (Third Five-Year Development Plan- 2000/01-2004/05) ending 1383(2005).During the 3rd Plan, the economy enjoyed sustained growth, partly due to policy decisionsand extensive deregulations to enhance private sector contribution to economic activities.Foreign trade system moved toward further liberalization through revision in trade tariffsand granting more flexibility to exporters in managing their exports proceeds.Due to implementation of structural reforms in the 3rd plan, most economic indicatorsshowed improved performance compared to the previous periods.COMPARISON OF TARGETS AND PERFORMANCE OFTHE IRANIAN ECONOMY DURING THE 3rd FYDPIndicators Averageperformance ofthe 2nd Plan(%)Annual growthtargetof the 3rd Plan(%)Averageperformance ofthe 3rd Plan (%)Annual GDP growth(at basic price)3.2 6 5.5Investment growth 8 7.1 5.5Inflation rate 25.6 15.9 14.1Unemployment rate 12 10.7-12.6 12.5Data Source: Central Bank of Iran, Economic Research & Policy Department, July 21, 2005,"ECONOMIC REPORT AND BALANCE SHEET 1383 (2004/05)"In addition, despite intensive regional tensions, the 4th FYDP (Fourth Five-YearDevelopment Plan- 2005/06-2009/10) was formulated, with a view to realities of the
63international and Iranian economy and with regard to the experiences gained from theimplementation of the previous five-year development plans. Creating an appropriateframework for rapid economic growth, establishing proactive interaction with the globaleconomy, enhancing economic competitiveness, restructuring the government, improvingstandards of living, maintaining social justice, and providing national security are amongthe main objectives of the 4th Plan.Some of the most important indicators during the Iran 4thFYDP ¹are as follow:Economic Indicators During the 4th FYDP (percentage change)2005 2006 2007 2008 2009 Period averageGDP (at constant 1381 prices) 7.1 7.4 7.8 8.4 9.3 8.0Gross fixed capital formation 11.3 11.0 11.7 12.9 14.1 12.2Aggregate consumption expenditure 4.8 5.5 5.9 6.4 7.4 6.0GDP (per head) 6.6Inflation 14.6 11.5 9.1 7.9 6.8 9.9Non-oil exports 10.7 10.7 10.7 10.7 10.7 10.7Imports 5.0 6.5 6.2 8.9 6.6 6.6Unemployment rate (percent) 8.4Productivity of labor 3.5TFP 2.5Iranian economy performed relatively well in the first year of the 4thDevelopment Plan,1384 (2005/06). In line with the economic policies drawn up in the Fourth Plan on the basisof constructive interaction with the global economy as well as the expansion ofcompetitiveness, the government attempted to prepare the ground for economic growth anddevelopment through further participation of the non-public sector, enhancement ofproductivity, facilitation of trade regulations, establishment of fiscal discipline,implementation of decentralization policies, and reduction of disparities among variousregions of the country. The continued price rise of oil in international market also played apivotal role in creating growth environment in this year. Achieving a sustainable long-term
64economic growth, in particular provision of economic justice, as the main priority of thegovernment, requires price stability and curbing inflation.Irans five-year economic plans emphasized a gradual move towards a market-orientedeconomy, but political and social concerns, and external debt problems, have hamperedprogress. Faster movement, however, occurred under the third five-year plan (2000-04),which advocated a more ambitious program of liberalization, and privatization.
65A-4-2-2) Major Macroeconomic Indicators:The Iranian economy is entering a transitional phase. The economy enjoyed sustainedgrowth, partly due to policy decisions and extensive deregulations to enhance private sectorcontribution to economic activities and partly to positive movements of crude oil prices ininternational markets. Foreign trade system moved toward further liberalization throughrevision in trade tariffs and granting more flexibility to exporters in managing their exportsproceeds. The successful implementation of exchange rate unification and deregulatingforeign trade procedure were among the salient achievements of the Iranian economyduring the 3rd Plan period. Also, investors were further encouraged to invest in Iranianfirms via the stock exchange. Due to implementation of structural reforms in the 3rd plan,most economic indicators showed a better performance as compared to the previousperiods. Here I try to explain some important indicators in the Iranian macroeconomic field.
66a) Economic Freedom"Economic freedom is that part of freedom that is concerned with the materialautonomy of the individual in relation to the state and other organized groups. Anindividual is economically free who can fully control his or her labor and property".Definition by: Economist, the index of economy freedomIran hasunfreeeconomy(Repressed),It isimprovingslowly
67Source: Economist, Index of economic freedomEconomic freedom VS per capita GDPSource: Economist, Index of economic freedomCountrieswithhigherGDP havemostlyhighEconomicFreedomScore
68Source: Economist, Index of economic freedomAccording to Economist 2007 assessment on "Economic Freedom", Irans economy is 43.1percent free which makes it the worlds 150th freest economy. Iran is ranked 16th out of 17countries in the region of Middle East/North Africa, and the whole score is considerablylow—almost one-third below the regional average.The government acts as an intermediary. As a result, businesses need to get permission forall of internal and foreign trades processes. Business licensing and closing are regulatedheavily by an intrusive and highly inefficient bureaucracy. High tariff rates and non-tariffbarriers impede trade and foreign investment alike. Also property rights in a court of lawcannot be guaranteed.
69In the same report, it is revealed that Irans economy is not free in different ways. Theeconomy is rather free in the "Fiscal freedom" that Iran has a high income tax rate (35percent) and a moderate corporate tax rate (25 percent) and "Labor freedom". Irans score inthis factor is above the world average.On the other hand, there are other factors in which Irans economic freedom not onlymeasured as an un-free but also there are many factors that reveal a large gap between Iranand world average score such as Investment Freedom, Financial Freedom and PropertyRights.Source: Economist.com, Index of economic freedomIran haschanged someof rules andregulationstowards moreeconomicfreedom duringthird five yearsplan (2000-05)
70Source: Economist.com, Index of economic freedomVery badcondition inthese factorsdirectly affecton sustainableeconomicgrowthLack ofPRdestroyCreativity&Innovativeprogress
71b) GDPIrans economy relies heavily on oil export revenues. As you see in the next tables Iransreal GDP increased for 2004, 2005 and 2006 by around 5.1, 4.4 and 4.3 percent,respectively.Irans Macroeconomic Indicators010020030040050060070019801982198419861988199019921994199619982000200220042006Billion$GDP, Current pricesGDP (by PPP)GDP, per capita02,0004,0006,0008,00010,0001980198419881992199620002004$GDP Per capita,Current PricesGDP, per capita (byPPP)Data Source: (IMF), world economic outlook, April 2007Source: Central Bank of Iran, Annually report of 2005-2006The gap betweenresults of GDPcalculationmethods(Nominal and PPP)in developingcountries is higherthan developedcountries. Itsmostly accrue as aresult of lowerprices, wages andraw materials
72Source: Central Bank of Iran, Annually report of 2005-2006Irans GDP (constant & current price)0200,000400,000600,000800,0001,000,0001,200,0001,400,0001,600,0001,800,0002000 2001 2002 2003 2004 2005YearsBillionRialGross domestic product, constant pricesGross domestic product, current pricesData Source: International Monetary Fund, world economic outlook, April 2007The gapscreates as aresult ofinflation
73Gross domestic product based on purchasing-power-parity (PPP)share of world total0.780.80.820.840.860.880.90.920.942000 2001 2002 2003 2004 2005YearspercentageGross domestic product based onpurchasing-power-parity (PPP) share ofworld totalLinear (Gross domestic product based onpurchasing-power-parity (PPP) share ofworld total)Data Source: International Monetary Fund (IMF), world economic outlook, April 2007share of important sections in GDP0.00%5.00%10.00%15.00%20.00%25.00%2000 2001 2002 2003 2004PercentageAgricultureTransportation,communicationIndustryEducationMiningData Source: Iran Statistical Center
74Irans Macroeconomic ComponentsOrigins ofgrossdomesticproduct 2004% oftotalComponents of gross domesticproduct 2004%oftotalServices 51.8 Private consumption 54.2Agriculture 13.7 Public consumption 10.9Industry 34.5 Gross fixed investment 35.2Maindestination ofexports 2005% oftotalMain origins of imports 2005 %oftotalJapan 17.3 Germany 14.2China 11.4 France 6.2Italy 6.2 Italy 7.5South Africa 5.5 China 8.3South Korea 5.2 UAE 6.7Major exports2004% of total Imports 2004 % oftotalOil & gas 82.8 Raw materials & intermediate goods 47.7Chemicals &petrochemicals4.1 Capital goods 34.2Dried fruit &nuts1.8 Consumer goods 18.0Leadingmarkets 2005% of total Leading suppliers 2005 % oftotalJapan 17.0 Germany 14.0China 8.3 France 7.1Italy 8.4 China 8.3Source: Economist.com, economic structure, May 30th2007Indicators 2002 2003 2004 2005 2006GDP (US$ bn) 116.4 134.0 161.3 188.5 202.6Real GDP growth (%) 7.5 7.1 5.1 4.4 4.3Consumer price inflation (av;%)14.3 16.5 14.8 13.4 12.0Total external debt (US$ bn) 9.2 12.3 13.6 12.5 12.3Exchange rate (av) IR:US$ 7,958.1 8,281.5 8,719.0 9,026.0 9,227.1FDI inflows (% of GDP) 2002-2006 (av. 0.2)
75c) Oil priceIran is ranked in second place for oil production as a member of OPEC. Oil is the mostimportant part of the countrys export. At 2004, the major Iran export is oil & gasaccounting for 82.8% and 4.1% by chemicals & petrochemicals products. To implementinfrastructure plans, Iran completely relies on oil revenue but recent growing of oil priceincrease the countrys potentials for investment in other parts of economic sectors such asintermediate industry (specially in oil industry) and related services.When the second Iraq war started in 2003, economists predicted oil prices would increase.Indeed, now the market has achieved a new record of $78 per barrel. In 2003, the OPECbasket was around $27 per barrel but during the past 4 years the price has reached around 3times the 2003 price. On the other hand there is another shock to oil market as a result ofsupply shortage at 2007.Source: Energy Information Administration (EIA)
76worlds oil demand & supply8383.58484.58585.58686.58787.5882006 2007(s) 2008(s)Millionbarrel/dayTotal World DemandTotal World SupplyData Source: EIA / Short-Term Energy Outlook – July 2007Source: Energy Information Administration (EIA)Continuesincrease inthe oil pricecan be resultof surplusdemand andalsoregionaltensions
77Source: Energy Information Administration (EIA)Iran hasexperiencedfuelconsumptionmore thanworldsaverage as aresult ofsubsidizepolicy
78d) Interest RateIran has experienced high interest rates during last decade. There is an inverse correlationbetween inflation and interest rate. High inflation rate requires high interest rates to reduceinflation. Low interest rates make it less attractive to deposit funds with banks forinvestment. But on the other hand it makes financial cost lower for manufacturers. As aresult Irans government has a policy of low interest rates as a monetary policy.Interest Rate Inflation Rate Economy RecessionInterest Rate Inflation Rate Economy RecessionThe above diagram reveals different outcomes for each policy. The point is that countriesshould make policies to optimize economys growth. Each policy has negative and positiveresults simultaneously. For instance, although expansion policies accelerate economygrowth and reduce recession but it fosters inflation growth. On the other hand, if aneconomy is constricted by government it means they are willing to reduce inflation rate butit causes a reduction in economic growth.ExpansionMonetaryPolicyConstrictionMonetaryPolicy
79Interest* & Inflation rate05101520252002 2003 2004 2005 2006 2007PercentInflation RateAvg. Interest RateData Source (inflation): IMF, world economic outlook, April 2007Data Source (interest): Central Bank of Iran
80e) Inflation rateIrans Inflation Rate010203040506019801982198419861988199019921994199619982000200220042006PercentageInflation rateLinear (Inflation rate)Data Source: IMF, world economic outlook, April 2007Irans budget deficit(Billion Rial)Year Volume of money Budget Deficit1963 56.11973 296.3 -57.11979 2097 -365.51979 2578.9 -508.51989 18753.3 -1135.32001 526596.4 -81241.5Data Source: Central Bank of IranIranexperiencedhigh inflationrate as a resultof expansionmonetarypolicy afterwarEnd ofIran-Iraqwar
81Irans budget deficit-200000-10000001000002000003000004000005000006000001963 1973 1979 1989 2001BillionrialsVolume of moneyBudget DeficitData Source: Central Bank of IranIranstarted itsexpandingmonetarypolicyafter war
82f) Value of RialIn recent years, the interaction of the Iranian economy with the world economy posted asurplus in major accounts of the balance of payments. The noticeable growth in oil price isthe main driving force behind the surplus in trade balance and remarkable rise in the foreignreserves, albeit a surge in imports.Relaxation of foreign trade, along with the stability of exchange rate, resulted in thecontinued upward trend of imports in the review year. The value of Iranian Rial hasdecreased continually in the latter period in compare to some other important foreigncurrencies. It means there is a powerful potential to continue this trend but result ofgovernment policy to implement unique currency rate is keeping the pace of change.Iranian Rial (IRR) in compare to other currencyForeignexchange2004 2005 2006 20071 USD ($) 8729 8991 9095 92701 EUR (€) 10715 11082 11715 128071 GBP (£) 16115 15990 17350 189401 CAD ($) 6665 7394 8070 8794Data source: XE.COM, all of rates at 06thof august
83Iranian Rial in compare to othercurrency050001000015000200002004 2005 2006 2007Rial1 USD ($)1 EUR (€)1 GBP (£)1CAD ($)Data source: XE.COM
84A-4-2-3) Future Outlooks for Irans EconomyIranian Economy Aims for Long-term Growth. In this way associating with WTO is animportant strategy for the country. At the moment Iran is an observer member of WTO.This suggests Iran is going to become formal member of WTO in the next decade. Thereare different opinions by economists. Some believe that admission to WTO will force Iranto open its market to other stronger countries and brands and this will destroy internalindustry and make economical, political and social problems. On the other hand, somebelieve the most important problem in Iran trade is competitiveness. Low quality, lowerproductivity and higher price are the results of a closed economy and they are the mainIranian product and services obstacles in competition with others. As a result, if Iranbecomes a member of WTO it can help to increase competition and then Iranian firms try toimprove their abilities at the global economy. But there are many problems in the Iranstrade framework that create delays in that goal. Some of the most important obstacles inthis way are as follow:o Countrys trade completely is dependent to oil marketo Countrys trade strategies are unknowno share of non-oil exports are low in comparison to total exportso There are very limited target markets for exportso Iran has a low share of global marketso trade is affected by considerable weaknesses in banking systemIn summing up there are many forces driving and also pressures on the Irans economicdevelopment. Forces driving the Iranian economyThe forces that are assumed to drive the Iranian economy forward include the following: Stable growth of the world economy leads to make more consumption fornatural resources
85 The moderate recuperation in industrial (in particular petrochemical),agricultural productions and service section The sharp rise in crude oil prices The accelerating of the pace of involving private sector in economy The accelerating pace of ICT leads whole of sectors to become more productive.b) A downward pressure on the economic development: Large governments could have a negative impact on economic activities throughpublic sector inefficiency Decline in corporate profits because of difficulties in implementing price-shifting(tariff limitation by government) Two digit unemployment rate International political pressures Iran located in a risky region that limits foreign direct investment Tariff policy is considerably towards to limit competition between Iranian andforeign corporations
86A-4-3) Socio-Cultural TrendsIn the two past decades, Iran has experienced sustained effort involving cultural, social,political and economic transformation that has wrought considerable achievements inhuman development. Also execution of three development plan represented the pursuit andexpansion of those reforms."In our view, desirable development is comprehensive, balanced and sustainabledevelopment, guaranteeing the participation of all individuals, social groups andsectors, including women and youth, in the process of growth and progress. Thisdevelopment is centered on human beings and is directed towards the enhancement oftheir ability to enjoy the material and spiritual benefits life has to offer."President Seyed Mohammad Khatami, 1996Since 20 years ago, the social environment has changed such that Iranians choices haveexpanded considerably, but even more progress could be made. Here I will emphasizesocial indicators that are more influenced by Iranian social, economical and politicalsituation in recent years.
87A-4-3-1) Human Development Index (HDI)According to UNDP program at human development (annually report), perhaps one of themost important elements that has influenced on socio-cultural development in each countryis economic growth. For instance, countries with high GDP per capita usually experiencedhigh HDI rate (Human development Index, The HDI measures the average progress of acountry in human development). On the other hand, there is a remarkable correlationbetween economic indicators and human development. It shows that some countries dobetter than others in converting income into education and health opportunities. Forexample Luxembourg not only has experienced $69961 GDP per capita at 2004, but alsosimultaneously obtained 12thplace in HDI (HDI=0.945) at the same time. In comparison toLuxembourg, Iran at the same time experienced $7500 GDP per capita while the HDI forIran is 0.746, which gives Iran a rank of 96th out of 177 countries. It means the country hasnot been completely successful in using its income to improve human development. As aresult, this ratio shows that 95 countries have a better situation (better human development)than Iran.Source: UNDP, Human Development Report 2004
88Moreover, there are other indicators for evaluation of HDI that Calculated each year such aslife expectancy at birth, adult literacy rate and human poverty index. Although the indexshows considerable growth for Iranians human development in which Iran has improved itsindex from 57% at 1975 to 74% at 2004 (28% growth for 30 years), Iran has been ranked asan median country with a place of 96 at 2004.Irans HDI Trend00.10.20.30.188.8.131.52.81975 1980 1985 1990 1995 2000 2004TotalScoreHDI TrendData Source: UNDP, Human development Report 2004Irans human development index 2004HDI valueLifeexpectancy atbirth(years)Adult literacyrate(% ages 15 andolder)GDP per capita(PPP US$)Human PovertyIndex*2004In worlds placeof 96th, (0.746)In worldsplace of 85th,(70.7)In worlds placeof 85th, (77.0)In worlds placeof 72nd, (7,525)In worldsplace of 35th,(16.4)Data Source: UNDP, Human Development Report 2004* The Human Poverty Index for developing countries (HPI-1) focuses on theproportion of people below a threshold level in the same dimensions of human development as thehuman development index - living a long and healthy life, having access to education, and a decentstandard of living.
89Source: UNDP, Human Development Report 2004Another measurement is "Gender Empowerment Measure" (GEM) that reveals whetherwomen take an active part in economic and political life. It tracks the share of seats inparliament held by women; of female legislators, senior officials and managers; and offemale professional and technical workers- and the gender disparity in earned income,reflecting economic independence. Iran, Islamic Rep. of ranks 71st out of 75 countries inthe GEM, with a value of 0.326. It means Iran has low level of gender empowerment andwomen have no participation in economy as well as men and most of important seats in thepublic and private sectors are occupied by men.
90A-4-3-2) Populations:Periods Irans Annual Population Growth1946-1956 3.131956-1966 2.921966-1976 2.711976-1986 3.911986-1996 1.961996-2006 1.45Reduction in the population growth rate has been among the main achievements during therecent years, which is mostly due to the economy, life style, culture of households anddownward trend of female fertility rate. The high growth of population during 1977-1987evolved the population age-structure and brought about additional demand for education,health and employment. Improvement in the social indicators such as education, health andincome distribution reflects special attention paid to the social affairs during the recentyears. However, to meet accelerated pace of labor force supply, certain measures weretaken in the area of mobilization of potential resources to raise the demand for labor forceand to reduce unemployment rate.Irans Population4045505560657075801995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006MillionIrans PopulationData Source: Iran Statistical CenterPopulationwas affectedby firstdecadesbelieves ofIransrevolution
91Irans Annully Population and HDIgrowth rate0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%197819811984198719901993199619992002%Population Growth rate HDI Growth rateLessening of Iranspopulation growthrate has affecteddirectly by highgrowth in its HDIindex. During threedecades ago HDIindex always hasbeen bigger thanpopulation growthrate.
92A-4-3-3) Age distribution:Percentage Distribution of Households’ MembersBy Age Groups, 2004-05Age Groups Percent0-5 years 7.56-10 years 7.811-15 years 11.116-20 years 13.921-30 years 20.031-50 years 26.151 years and over 13.6Total 100Data source: Irans Central Bank, Household Budget Survey 2004-05Iran is known as a young country in the world because more than 45% of population isunder 30 years old. Due to this demographic distribution, there are many opportunities andthreats facing Iran:Opportunity: Good potentials for labor market Good potentials for buying goods and services (does consumption stylechange as a result of age distribution?) Good potentials for scientific activitiesAround 70%of Iranspopulationinvolves injob marketAround 45%of Iranspopulationis young(Goodpotentialfor marketdemand)
93Threats: Need to spend huge investment on training and education Unemployment emerge as an social crisis for government Aging and Challenges for Medical Care and Long-term CareMost of Iranspopulation isyoung and areknown asmarketdemandpotential
94A-4-3-4) Unemployment, An emerging social crisisYear Population(Million)Unemployment Rate(%)1956 18.9 31966 25.7 91976 33.7 101986 49.4 141991 55.8 111996 60 92001 64.5 14.22006 70 10.2Data Source: Irans statistic centerEmployment and unemployment are among major economic issues of every country so thatany changes in unemployment are treated as development indicators in societies.Meanwhile, unemployment rate is one of the indicators used to evaluate the economicconditions of the country.Unemployment is currently the Islamic Republic’s most acute single economic concern.Demography, rapid urbanization and a shift in the countrys economic structures are themain causes of growing unemployment in Iran. As an increasing number of youth, bornduring the 1980s baby boom, is reaching adulthood and want jobs, the unemploymentconcern is quickly developing into an acute crisis. In recent years Iran has experienceddouble-digit unemployment rate. The challenge is formidable not only because ofunemployment’s debilitating impact on the economy, but also due to its dire political,social, and even cultural consequences for the countrys stability and staying power.
95Unemployment in Iran is around 11 percent, but is significantly higher among youngpeople. Iran is attempting to diversify its economy by investing some of its oil revenues inother areas, including petrochemicals production. Perhaps the main factor for the double-digit unemployment has to do with the inadequate pace of economic growth. By aconsensus of Iranian and foreign economists, Iran’s gross domestic product must grow at arate of at least 8% a year in real terms in order to absorb all the new job seekers, and bymore than 9% to reduce unemployment below 10% in compare to Iranian economy’s 5.6%average yearly growth during 2002-2006. Another important reason for the mushroomingof young job applicants has been the mismatching of Iran’s education system with thecountry’s occupational needs. The large number of unemployed college graduates classifiedas “unskilled” suggests that their formal training is not suitable for the market place’srequirements.There is a fundamental solution to decrease unemployment rate which is Foreign DirectInvestment (FDI). Iran needs to concentrate more on the potential of foreign investment fortwo reasons: on the one side, productive foreign investment will create additional jobs andon the other, increasing levels of FDI will encourage the countrys vast private sectorengage more actively in investment activity. Clearly, without remarkable amounts offoreign investment, it will be impossible for Iran to close the gap between the current andthe required level of unemployment rate.
96Irans labor force indices and indicators (10 + year old population), 2006Title of index / indicatorunitAmount / numberEconomic contribution rate (rate of activity)(%42Men economic contribution rate%65.7Women economic contribution rate%17.7Employment share in agriculture%26.5Employment share in manufacturing%30.7Employment share in Services%42.8Employment share in private sector%82.1Employment share in public sector%17.3Non-regular employment share%5.6Employment ratio for 10+ years old population%37.7Employment ratio for 15+ years old population%42.1Unemployment rate%10.2Men unemployment rate%8.8Women unemployment rate%15.4Unemployment rate in Urban areas%12.9Unemployment rate in rural areas%5.3Youth unemployment rate (15-24 years old(%20.9Youth unemployment rate )15-29 years old(%18.7Data Source: Iran Statistical CenterIrans Labor force Indicators, 20060510152025UnemploymentrateMenunemploymentrateWomenunemploymentrateUnemploymentrate in UrbanareasUnemploymentrate in ruralareasYouthunemploymentrate (15-24years old)Youthunemploymentrate (15-29years old)PercentUnemployment rateData Source: Iran Statistical CenterCan be athreat forIraneconomy
97Irans Labor force indicators0510152025303540452001 2002 2003 2004 2005 2006percentEconomic contributionrate (rate of activity)Unemployment rateYouth unemploymentrate (15-29 years old)GDP growtsData Source: Iran Statistical CenterThere isconsiderablecorrelationbetween youthunemploymentrate and GDPgrowth
98A-4-3-5) Life expectancyIran is ranked 109thcountry in the world as a point of "life expectancy at birth" at 2006.7F8Inthe same time total average of LE for Iran was 71 years (69.4 for men and 72.6 for women).Although Iran was ranked in middle of countries list but it also shows Irans life expectancyis more than world average. Moreover as I mentioned in previous economic and socialindicators (HDI, GDP growth …) there is a considerable correlation between the indicatorsthat I mentioned and Life Expectancy.List of selected countries by life expectancy (2006)Rank Country Overall Male FemaleWorld Average67.2 65 69.51 Japan 82.6 79 86.14 Switzerland 81.7 79 84.25 Australia 81.2 78.9 83.611 Canada 80.7 78.3 82.912 Italy 80.5 77.5 83.515 Singapore 80 78 81.922UnitedKingdom79.4 77.2 81.623 Germany 79.4 76.5 82.134 South Korea 78.6 75 82.28http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancyBest
9938 United States 78.2 75.6 80.859 Argentina 75.3 71.6 79.166 Malaysia 74.2 72 76.782 China 73 71.3 74.886 Saudi Arabia 72.8 70.9 75.398 Turkey 71.8 69.4 74.3106 Egypt 71.3 69.1 73.6109 Iran 71 69.4 72.6123 Ukraine 67.9 62.1 73.8160 Niger 56.9 57.8 56167 Kenya 54.1 55.2176 Cameroon 50.4188 Afghanistan 43.8195 Swaziland 39.6Data Source: WikipediaWorst
100A-4-3-6) Income distributionIncome distribution has always been a central concern of economic policy. It is alsorecognized as a socio-economic indicator that defines the level of inequality. Countriesusually try to balance income distribution and its an important criterion to measuredevelopment.The "Gini coefficient" can be used to indicate how the distribution of income has changedwithin a country over a period of time. Thus it is possible to determine if inequality isincreasing or decreasing. The Gini coefficient indicates between 0 and 1. More coefficientmeans more unequal income distribution and lesser coefficient means better equalityincome distribution. Iran has experienced intermediate Gini index (around 40) in recentyears. It shows that income distribution is rather normally balanced. In addition, mostdeveloped countries such as US and Canada also capture the Gini Index around lowerintermediate and thus are accepted as an advanced indicator.INCOME DISTRIBUTION INEQUALITY INDEXES IN URBAN AREAS (percent)Share ofincomedeciles1999 2000 2001 2002 2003 20041st decile 2 2.1 2.1 1.9 2 2.12nd decile 3.5 3.5 3.6 3.3 3.3 3.53rd decile 4.6 4.6 4.6 4.4 4.4 4.64th decile 5.7 5.7 5.7 5.4 5.4 5.65th decile 6.8 6.9 6.8 6.6 6.6 6.86th decile 8.2 8.2 8.1 7.9 7.9 8.1
1017th decile 9.9 9.9 9.9 9.6 9.8 9.88th decile 12.2 12.1 12.3 12 12.2 12.49th decile 16.2 16.1 16.1 16.5 16.4 16.810th decile 30.9 30.8 30.8 32.4 32 30.3Ratio ofrichest 10%ofhouseholdsto poorest10%15.5 14.7 14.7 17.1 16 14.4Data Source: Central Bank of the Islamic Republic of IranIrans Gini Index38.53939.54040.54141.54242.51999 2000 2001 2002 2003 2004GiniIndexData Source: Central Bank of the Islamic Republic of Iran, Statistical Research and StudyDepartmentIncomedistributionleads tobecome moreunequalBetterequality forincomedistribution
102Ratio of richest 10% of households to poorest 10%1313.51414.51515.51616.51717.51999 2000 2001 2002 2003 2004percentData Source: Central Bank of the Islamic Republic of IranIn addition, income distribution is also affected by geographical distribution. For instance,the next table shows that there is no balance in equality between each region. As anexample, although Khuzestan (an Iranian state) has second place in state GDP, it does nothave the same share in total consumption.Data Source: Iran Statistical CenterChosen state Share in GDP Share inpopulationShare inconsumptionTehran 24.6 17.6 28.5Khuzestan 13.7 6.6 5.3Isfahan 6.5 6.5 6.7Khorasan 6.3 9.5 7.9Kohkilooye 5 .9 .6Kerman 3.2 3.3 3.1Charmahal .62 1.23 .8Ilam .6 .83 .8
103A-4-3-7) Literacy rate, Education levelWe are living in an era in which everybody goes to college. According to Irans agedistribution, the country is facing with a vast demand for education in different levels. Morethan 50% of Irans population is under 30 years old. Although Irans literacy rate is around77.2% but the demand for higher education increases continuously. Change in literacy rateusually is affected by other social and economical indicators such as GDP per capita, HDIand also Gini index. During the last 2 decades, Iran experienced remarkable growth in all ofthe mentioned indicators. As a result it leads country to capture more social and economicalinfrastructures to increase literacy rate.Distribution of Six Years Old and over Members ofHouseholds by Education, 2004-05Level of Education PercentIlliterate 12.8Capable to Read and Write 1.6Elementary Education 23.5Secondary Education 49.4University Education 12.7Total 100Data source: Irans Central Bank, Household Budget Survey 2004-05Literacyrate isaround77.2%
104A-4-3-8) Misery Index"The Misery Index is an economic indicator, created by economist UArthur OkunU, andfound by adding the Uunemployment rateU to the Uinflation rateU. It is assumed that both ahigher rate of unemployment and a worsening of UinflationU both create economic and socialcosts for a country".Source: (Uhttp://en.wikipedia.org/wiki/Misery_indexU)As we see in the next diagram, although Iran has experienced decreasing trend for itsMisery index in recent years but the index is high in comparison to developed countries.For instance the United States has experienced the index for 7.98 at the same period that isabout 32% of Irans index. There is also a strong negative correlation between GDP percapita and Misery index. Countries with high GDP per capita usually have less Miseryindex because there is more job opportunity and also low inflation.Irans Misery Index051015202530352000 2001 2002 2003 2004 2005 2006%(Unemployment+Inflation)Unemployment rateInflation RateMisery IndexData source: Irans statistical centerCan be athreat forIraneconomy
105Avg. of Misery Index during 2000-20060.005.0010.0015.0020.0025.0030.00Canada France Germany Italy Japan UnitedKingdomUnitedStatesIranMisery IndexData source: IMF, world economic outlook, April 2007
106A-4-4) Political/ Legal TrendsIran, (Persian: ﺍﻳﺮﺍﻥ), officially the Islamic Republic of Iran (Persian: ﺍﺳﻼﻣﯽ ﺟﻤﻬﻮﺭیﺍﻳﺮﺍﻥ), formerly known internationally as Persia, is a Southwest Asian country located inthe geographical territories of the Middle East and Southern Asia. The 18th largestcountry in the world in terms of area, Iran is slightly smaller than the United Kingdom,France, Spain and Germany combined. It has a population of over seventy million people.The political system of Iran comprises several intricately connected governing bodies. Itis based on the 1979 Constitution. The highest state authority is the Supreme Leader,currently Ayatollah Ali Khamenei.Iran as a land and a nation has one of the oldest histories in the world, extending nearly6,000 years, and throughout history, Iran has been of geostrategic importance because ofits central location in Eurasia. Iran is a founding member of the UN, NAM, OIC, OPEC,and ECO. Iran is a regional power in Southwest Asia and occupies an important positionin the world economy due to its large reserves of petroleum and natural gas. The nameIran is a cognate of Aryan and literally means "Land of the Aryans".8F9Iran became an Islamic Republic after a popular uprising overthrew the regime of the Shahin 1979. The country established a new ideology with different approaches to economy.Moreover, the new policies completely changed the countrys economy circulation.Furthermore, Iran became involved in an undesirable war from 1980 to 1988. It diverted thecountrys potential toward non-economic activities for near one decade. After the war, Iranstarted its 5 years development plans for two main goals; rehabilitation of destroyedinfrastructures and implementation of new constructions in different sections such as dams,transportation, power plants …Although during the decade after the war, Iran implemented many construction planssuccessfully, there were still many fundamental problems in different shapes. I meanintangible barriers in which huge construction plans couldnt still improve countryseconomy in comparison with the global economy. For two decades, those obstacles havebeen a threat for Irans economy. Here I try to explain some important Irans political / legalsituation in the past and new generation of Irans economy.The political and legal environment has some major changes that can be considered aspotential threats for each industry. The problems in the countries with substantial state9http://en.wikipedia.org/wiki/Iran
107interventions in the business are no coincidence. Despite numerous differences between allcountries, there are many common features. For instance Irans government proposeslimited deregulations, so there are massive protests. In addition we can see different threatsfrom governments in the field of new regulations (e.g. firms income tax, controlled tariff,import tariffs), monetary policies (e.g. decreasing interest rate), environmental limitationsand even joining international organizations such as WTO.On the other hand, government interventions in the business produce serious negativeeffects in terms of low investment, unemployment, uncertainty and increasing share ofpublic expenditure vs. private expenditure.In summing up, Irans social and economic situation has been affected by political/legalinterventions for a few decades, globalization as an external variable effect will decreasethe role of political/legal trends on economy.
108Conclusion on Irans Macro environment:a) Opportunities Growth rate and other economic trends are growing steadily There is a considerable market labor potential Global economy is facing with natural resources limitation Crude oil price is growing steadily A few infrastructural projects are executed Improving of political and social trends Educated people are increasing rapidly Information technology is growing rapidlyb) Threats Misery index (Unemployment rate + Inflation rate) is going up International relationship is affected by political policies Government interested to increase its interventions Iran is located in a dangerous region (Iraq and Afghanistan wars) Joining to WTO leads country to become a market for others
109PART B) Industry AnalysisB-1) Overall Review of Irans Transport SectorB-1-1) Organisation of Transport SectorIrans transportation sector is mostly planned and implement by public sector and privatesector has no any managerial roles on process of planning, programming and prioritising ofinfrastructural & operational plans. The government body responsible for managing thetransport sector is the Ministry of Road and Transportation (MRT). The role of the MRT isto study, provide and set Long-Term and Five years plans in order to appoint executiveguidelines in the field of the country’s transportation system and to implement theseguidelines. Its responsibilities include: Providing for the construction and maintenance of the country’s transportationinfrastructures Handling the country’s transportation affairs, initiating a comprehensive policy fortransportation, creating, equipping, developing and maintaining the establishedinfrastructure with regard to social, economical and environmental developmentrequirements.
110B-1-2) Irans Key Transportation PoliciesTo define transportation policies, the National Criteria for Spatial Development Planning(NCSDP), proposed by the Management and Planning Org (MPO), were approved by theCouncil of Ministers on 27thOctober, 2004. The NCSDP defines the overall policy andobjectives for national development within the broader strategic goals of the IR Iran 20-year vision.The NSCDP define the necessary guidelines for development and budget orientationswithin MPO, in particular for the definition of the 5-year development plan, and for theoperational programs of implementing authorities, such as MRT.In the field of transportation and the CTSI, the main policies are as follows:i. Reducing accumulation of population in concentrated regions (esp. Tehran, Isfahan)by development of infrastructures and associated investment in less developedregions, and by generating industrial activity and services in smaller urban centersii. Modification of Tehran as an internationally performing centre and of urban centers,such as Isfahan, Mashed, Tabriz, Shiraz, Ahvaz and Kermanshah, as centers actingnationwideiii. Promotion of modern technology (information and communications, biotechnology,nanotechnology etc) by training, research and technology developmentiv. Development and equipping of main routes within international transportationcorridorsv. Development of transportation supporting industries for road, rail, sea and airtransportvi. Development of tourism and mining activities and export-related industries
111B-1-3) Sustainable Development Transportation EconomyAs I mentioned before Irans economy divided by three main category, Agriculture,Industry and services. According to official statistics, although near to 50% of totalcountrys GNP is produced by service section but in recent years share of services hasdecreased. On the other hand transportation is categorized in the service section. Nextfigures show that in recent year share of transportation from total GNP has been ratherfixed at 7.5%. At the same period oil section has dramatically increased but manufacturing,service and agriculture became thinner in the economy respectively.GDP by Economic Sectors0%10%20%30%40%50%60%70%80%90%100%1985 1995 2004 2005%ofShareAgriculture Industry ServicesData Source: World Bank Group, Iran, Islamic Rep. at a glance
112Irans GNP byEconomic Sectors at 20050.0%10.0%20.0%30.0%40.0%50.0%60.0%2002 2003 2004 2005%ofShareAgricultureOilManufacturing &MiningServices(includetransportation)TransportationData Source: Central Bank of Iran, annual report 2005Historically, roadway has been the biggest mode of transportation in Iran by around 85% oftotal goods and passenger movements. As a result it has made much more contribution tothe economy. As you see in the next table around 87% of transportation value-added during10 years ago is created by road sector.On the other hand railway has been faced with a considerable descend at the same period. Itcould be better because of recent investments in the section but there are many reasons forthat as following:1) Government still is interested to make more public investment in the other sections2) Railway has no more attractiveness than road way for private capital3) Some investment in the railway haven’t been efficient to make value
114Share of Railway in transportations V-Added0.0%1.0%2.0%3.0%4.0%5.0%6.0%1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Total%Data Source: Irans statistic centreIrans value-added growth rate by sectors-10-505101520251961-1971 1972-1978 1979-1988 1989-2002percentageGDPAgricultureIndustryBuildingOilTransportationData Source: Central Bank of Iran
115On the other hand, as a governmental assets point of view, rail transport has around 27% oftotal governmental assets and the rest is 64%, 5% and 4% for road, air and sea transportrespectively.Governmental Assets byTransportation Sectors at 20050%10%20%30%40%50%60%70%80%90%100%%ofShareRoad Railw ay Air SeaData Source: Central Bank of Iran, annual report 2005A considerable point is why rail transport has lower market share than its assets. Next tableshows comparative analysis in two criteria:Modes ofTransportMarket Share(%)GovernmentalAssets (%)differenceRoad 87% 64% -23%Rail 5% 27% 22%Air 5% 5% 0Sea 3% 4% -1%
116Yes, its obvious that in recent years there is charged more assets by the government in therail transport, but it hasnt changed its market share. The main reasons are as follows:1) Road sector is more dependent to private sector2) Implementation of rail transport projects is more expensive and needs more capital3) Execution of rail projects need more time to become operational
117 Transportation & EnvironmentEnvironmental and natural resources in Iran have been substantially degraded over the pastdecades, mainly due to unsustainable development and consumption patterns,overpopulation, institutional fragmentation, inadequate enforcement of environmentallegislation and lack of capacity in controlling environmental impacts. At present, Iran isfacing serious environmental challenges, especially with regards to air pollution in mega-cities such as Tehran amongst others.One of the major constraints for environmental protection in Iran is the lack of effectiveenforcement of the existing environmental legislation. This is demonstrated by thepersisting air pollution in Iranian cities and the continuous threats for protected areas,forests, wetlands and other sensitive ecosystems by development.The transport sector has not yet comprehensively addressed environmental impacts in itsdevelopment programs. On possible reason is the lack of institutional capacity within theMinistry of Roads and Transportation (MRT). Up to now, MRT lacks an effective andcomprehensive environmental management system, including an environmental unit toimplement such a system.On a positive side, a growing commitment to protect the environment and reverse the trendof environmental degradation is evidenced by the incorporation of environmental concernsinto the national planning frameworks. The present five-year development plan (4thFYDP)continues to incorporate some environmental strategies and policies (e.g. for air pollution),at times with designated budget lines. However, the enforcement of these strategies remainsa weak point.
118Railways and EnvironmentAs their spatial extension is similar to roads, railway construction impacts can be comparedto those for roads. Operational impacts are generally less significant than those of roads,with air pollution and noise emissions probably being most important. Due to the transportcapacity per train unit, accidents could cause major spillages and damages to theenvironment.Roads and EnvironmentAs extensive linear corridors across landscapes, roads can affect a wide range ofenvironmental parameters and ecosystems. New constructions or extensions of roads mayinfringe into natural ecosystems such as forests, wetlands, but also aquatic and marineenvironments, often under a protection status, if carried out within or adjacent to theseareas.Seaway and EnvironmentPorts are situated within coastal ecosystem, containing marine, aquatic and terrestrialhabitats with many coastal species.Environmental impacts may be caused by direct destruction of ecosystems for theconstruction of the quay area and buildings for the port. This encroachment on ecologicallysensitive areas may impact the coastal marine ecology, including, fish reproduction andcapture zones.Airports and EnvironmentAirports may be located within or in proximity of environmentally sensitive sites.Construction activities may lead to physical destruction of significant ecosystems. AlsoIncreased air traffic may affect air quality and increase noise levels in the airportsurrounding. Noise impacts may occur after runway upgrading with larger aircrafts landingand starting more frequently. Studies have shown that the impact of aircraft operations on
119air pollution, even at very large airports, is minimal. More pollution is generated at airportsby automobile traffic to and from the airport. Transportation & Energy9F10According to results of "comprehensive transportation studies of Iran" there is differentsituation for fuel consumption in different modes of transport. Also in recent years Iran hasexperienced using high rate of fuel consumption growth. In addition using new fuels suchas LPG (Liquefied petroleum gas) has increased dramatically. Evaluation shows that LPGwith 33% annual growth is highest and rate of annual growth for gasoline, diesel oil, jetfuel and heavy oil are 6.2%, 3.6%, 2.9% and 1.5% respectively. The high growth rate ofLPG consumption in transport is as a result of applying LPG vehicle in 1994 and today thisgrowth rate decreased to 4% in 2003.The evaluation of the contribution of different fuel in transport fuel mix shows that in 1994,gasoline is responsible for 48% of total fuel consumption and the share of diesel oil, jetfuel, heavy oil and LPG is 47%, 3%, 2% and 0.01%, respectively, whereas, in 2002 theshare of gasoline and LPG increased to 51% and 2% and share of diesel oil decreased to42%. The share of jet fuel and heavy oil is constant; therefore more than 93% of consumedfuel in transport sector is gasoline and diesel oil (Next Figure). Because the road transportis responsible for 93% of total fuel consumption in transport sector, gasoline and diesel oilare used widely in road transport.10Ministry of road and transportation, comprehensive transportation studies of Iran
120Contribution of different fuel on total consumption in transport (Million liters)040008000120001600020000240002800032000360001373 1374 1375 1376 1377 1378 1379 1380 1381LPG Gasoline Diesel oil Heavy oil Jet fuelSource: Irans Statistic center
121Gasoline consumption growth trends in different region of the world (1990=100)951051151251351451551651751851952052152252351990 1992 1994 1996 1998 2000 2002North America South & Central AmericaEroupe Middle EastAfrica Pacific AsiaChina OECDIran World w ithout USSRSource: BP Amoco Statistical Review of World Energy, Edition 2003Of course, energy intensities of GDP capture all the factors, which contribute to changes inthe amount of energy required to produce one unit of GDP by transport, includingtechnical, managerial and economic factors. In this sense, changes in the economicstructure contribute to variations in energy intensities, although this phenomenon is not ingeneral the result of energy efficiency policies.For purpose of the comparison of Iran’s transport sector’s energy efficiency with othercountries, the energy intensity of GDP in different mode of transport sector was developedat constant price of 1997. The result shows that for 1Bn. Rial added value in GDP bytransport sector, 31.2TJ energy is consumed. The intensity for whole of transport sector isinfluenced strongly by intensity of road transport. Next figure shows the energy intensity ofGDP in different transport modes. As was shown in figure, the road transport with average
122of 31.2 TJ/Bn. Rial added values is very intensive, whereas the average intensity of air,marine and rail are 31, 25.6 and 8.8 TJ/Bn. Rial, respectively. This means that for one Bn.Rial added value in GDP by road and air, the energy consumption is 3.5 times more thanrail and 1.2 times more than marine.Energy intensity of GDP in different mode of transport(TJ/Bn. Rials at constant price of 1376)0510152025303540451372 1373 1374 1375 1376 1377 1378 1379 1380 1381Road Rail Marine Air TotalSource: comprehensive transportation studies of IranIn conclusion, the results of previous studies reveal that the rail transport is the highestefficient mode for cargo and passenger displacement with lower fuel consumption andhigher degree of safety, so that the future transport development plan focused on railtransport. On the other hand, the air transport consumed fuel 11 times more than rail and 4times more than marine, and the air transport development plans only focused on passengertransportation in the cases of needfulness or the rail development is physical impossible oreconomical infeasible. Furthermore according to many governmental reports the road
123transport in Iran consumed fuel 6 times more than rail and this is one of the most importantadvantages of rail transport.B-1-4) Key Modes of TransportIran has an extensive transportation system, including roads and highways, railways, portsand airway. In this section, each of these sectors and their characteristics will be explainedbriefly. The main reference for this analysis is Iran’s five years development plans. One ofthose is the 4thFive-Years Development Plan that is planned for the period 1384-1388(2005-2009 inclusive). This plan provides the overall considerations for institutions,investments and policies for development of road, rail, air and sea sectors and upgrading ofthe existing facilities.Road transport:As we know while the transportation supply has increased, the demand for infrastructurehas increased at a faster pace. For instance the increase of registered vehicles is shown inthe following figure. Over the 25 years between 1980 and 2005 the vehicle fleet grew by365 %. The majority of these were automobiles and motorbikes manufactured in Iran. Thistrend has created many problems, particularly congestion and pollution in urban areas. Nextfigures show that the registered vehicles and road congestion has increased more than 7 and2 times since 25 years ago respectively. As a result in recent years the road transport hasexperienced a remarkable growth in the number of fatalities (around 27000 people peryear). It means there was no good balance between road capacity and passenger or freightmovements. So in recent years the country has spent much money in the road section todevelop new lines and rehabilitate existing lines.As I mentioned above, one of the most important factors in road transportation is the trafficvolume and roads capacity. In another word comparing growth in number of vehicles, andthe expansion of the roads lengths in recent year, could leads us a useful conclusion. At the
124same period the number of vehicles growth rate is faster than the rate road’s length growth,particularly from 2000 to 2005. Therefore, making serious decision about promoting theroad’s safety has been necessary.By this situation, the country has focused on the road development particularly in a decadeago and now there is rather a well-developed transport network, consisting of almost 81360km of roads (excluding local roads). In addition about 95% of roads are paved. Consideringthe high volume of traffic on many roads and lack of maintenance, the network is rather ingood condition. Many of the worst sections are being replaced with new constructioninstead of being reconstructed or rehabilitated.Irans Registered Vehichles02,000,0004,000,0006,000,0008,000,00010,000,00012,000,00014,000,00016,000,0001980 1985 1990 1995 2000 2005NumberofVehichlesNumber of Vehichles Number of Motorcycles TotalData Source: Irans Management and Planning Organization
125Vehichles / main roads(KM)020406080100120140198019851990199520002005VehichlesperKilometerVehichles / main roads(KM)Date Source: Irans Management and Planning OrganizationIrans Road Network050,000100,000150,000200,0001980 1985 1990 1995 2000 2005KMLengths of Main Roads(KM) Lengths of Local Roads(KM) Total(KM)Date Source: Irans Management and Planning Organization
126Irans Road network development plan(3rdIrans development plan, 2000-2004)Plans 2000 2001 2002 2003 2004Invest fulfill Invest fulfill Invest fulfill Invest fulfill Invest fulfillHighways 425 135 388 162.5 1307 170 1490 290 1670 354Main roads 282 428 445 314 1394 340 1307 365 1741 324Maintenance 238 19 285 141 428 186 412 133 491 204Total 945 652 1091 617 3138 696 3234 788 3926 882Data Source: Deputy of Construction & Development of Highways NetworkInvest (in Billion Rial)Fulfill (in Kilometer)Irans Road network development plan(Fourth Irans development plan, 2005-2009)Plans 2005 2006 2007Invest(credit)Fulfill(Km)Invest(credit)Fulfill(Km)Invest(credit)Fulfill(Km)Highways 1915 532 2415 634 3084Main roads 1879 362 2243 354 3275Maintenance 587 236 1108 264 1192Total 4381 1130 5766 1252 7551Data Source: Deputy of Construction & Development of Highways NetworkInvest in billion Rials
127Public Investment to enhanceRoadway capacity020004000600080002000 2001 2002 2003 2004 2005 2006 2007BillionRialsHighways Main roads highway & main RoadsData Source: Deputy of Construction & Development of Highways NetworkRoadway performance to enhancenetwork capacity0200400600800100012002000 2001 2002 2003 2004 2005 2006KilometerHighways Main roads highway & main RoadsData Source: Deputy of Construction & Development of Highways NetworkAlthough road transport has around 87% of the transportation market (Rail, Air and Seahave 5%, 5% and 3% of the market share respectively) but the freight and passengertransportation by road has increased in recent years. In the next figure it is shown.
128Freight & Passengerby Road020040060080019971999200120032005Million-TonFreight(registered) Passenger(registered)Freight(total) Passenger(total)Source data: RMTO, annual statistic report, 2006As it shows after 2002, both of the freight and passenger traffic by road have increasedconsiderably. As I mentioned before in those years Irans economy was in boost and theGDP has experienced even 7% growth. It means there is high correlation between level ofeconomy and the volume of transportation.Rail transport (Target industry):The railway network currently operated by the Iranian Railways (RAI) is 8565km of maintrack line. All tracks are standard gauge. Tehran is the hub of the railway network, whichconsists of four corridors. These are the western corridor, with extensions to the Turkish(Razi) and Azerbaijani (Jolfa) borders; an eastern corridor to Mashed with connections tothe Caspian sea and the Turkmenistan border at Sarakhs; and a southern leg divided intotwo corridors a Quom, one to the southeast to Bandar Abbas port (with planned connectionsto the eastern corridor and Pakistan), and a south west line to the ports of Imam Khomeiniand Khorramshahr.
129In 2005, freight tonnage transported by rail was 30.3 million tons, a volume of 19.1 billionton/km with 632 km average trip length.On the other hand, the number of passengers carried is the most important index in arailways company. Statistics say that during the same period some 19.4 million passengerswith 575km average trip length have been handled across the country. That amounts to11.1billion passenger-kilometers. Compared to the year before it, the number of passengerhandling shows an 11.6 % and the number of passenger kilometers shows an 11.3% hike,and in line with the 4thdevelopment plan (20.4 million passengers) it shows a 95.1 % offulfillment.Although in compare to road section, rail transport volumes are low, they are growing. Inthe next figures we see the Iranian Railway performance in both passenger and freightduring last decade.
133Sea TransportThe Iranian ports can be divided into 2 groups; those on the Caspian Sea and those on thePersian Gulf and Gulf of Oman. The principal Caspian ports are Anzali and Noshahr, andBandar Imam Khomeini, Bandar Abbas, Bushehr and Chabahar on the southern coast. Thehighest volumes enter and leave through the southern ports. The largest volumes arehandled at Bandar Abbas and Imam Khomeini. These two ports have enjoyed the highestgrowth rates as well, especially at Bandar Abbas where a recent increase in container traffichas been instrumental in increasing total volumes.Furthermore, the Iranian ports are active in both of freight and passenger movement.Although in compare to other modes of Irans transportation, seaway has around 3% ofmarket share but it has considerable effect and play as vital role in multi-modaltransportation.On the other hand, in recent years amount of investment in the field has increased morethan 10 times. In addition most of indices such as freight and passenger movement, portsand vessels capacity, containers load and unload and personnel efficiency have improved atthe same time.
136Air TransportWith around 300 constructed airports, although Iran is relatively well placed compared withother countries in the region but most of airports are unusable. At 2005 only 60 airports hasbeen used for internal or international flights. Moreover the demand for domestic flightshas been fairly increased between 1997 and 2005. However, over the same periodinternational flights showed more growth rate, as shown in the figure below.Irans Aviation Statistics0102030405060701977 1987 1997 2005Number of AirportNumber of internalairlinesNumber of externalairlinesData Sources: Civil Aviation OrganizationPassengers by Air05,000,00010,000,00015,000,00020,000,00025,000,0001977 1987 1997 2005PersonNo. of InternalPassengersNo. of InternationalPassengersData Sources: Civil Aviation Organization
137Freights by Air020,00040,00060,00080,000100,0001977 1987 1997 2005TonVolume of Internalfreights(Ton)Volume ofInternationalfreights(Ton)Data Sources: Civil Aviation Organization
138ULand Traffic Comparative AnalysisBecause of the geographic position of the country and the long distances involved, railtransport has considerable potential for development, and a favorable comparativeadvantage (such as lower fuel consumption, lower fatalities, lower price,…) over road andair transport for a number of commodities, particularly those with high weight/value ratiocarried over long distances.To obtain an idea about the evolution and trends of land traffic, it is instructive to compareroad and rail modes for passenger and freight traffic. In the next Figure both of passengerand freight are compared for the two modes between 1996 and 2005. While railwayfreights & passengers have remained nearly steady over these years, road transport climbedcontinuously in both freight and passenger modes.Irans Railway Traffic05,000,00010,000,00015,000,00020,000,00025,000,00030,000,00035,000,0001978198119841987199019931996199920022005Ton-PassengerNet TonnagePassengerSource Data: Iran’s Railway Company (RAI)
139Road & Railway0100200300400500600700800Million-Ton(person)Freight by Road(estimated)Passenger by Road(estimated)Passenger by RailwayFreight by RailwayFreight byRoad(estimated)191.5 199.5 226.4 247 268.5 298 348 388.9 406.8Passenger byRoad(estimated)646.4 642.9 657 659.4 646.9 642.4 653 726.5 761.6Passenger by Railw ay 8.9 9.5 9.6 10.7 11.7 13.1 14.3 16.1 17.4 19.4Freight by Railw ay 22.7 24.4 21.6 23 25.2 26.4 26.5 28.8 29.5 30.31996 1997 1998 1999 2000 2001 2002 2003 2004 2005Road & Railway(Passenger-Kilometeres)0204060801001201401601801997 1998 1999 2000 2001 2002 2003 2004 2005Billion-Ton(Person)-KilometeresPassenger Kilometeres(railway) Passenger Kilometeres(Road)
140B-1-5) Investments in Transportation InfrastructureInvestment by transport sector has varied considerably over time. Over the last 20 years,although investment in the rail transport has increased as a remarkable manner but still thepriority for transportation infrastructure investment has been on road construction, asshown below. Although, growth of transportation investment in compare to total countryinvestment is sensible, but it seems most of them is still charged in the road transport.On the other hand rail transport has lost its market share in recent years. There are somereasons for that:1) Other sections growing faster2) Investment in rail has no enough effectiveness and make less value added thanothers3) Social pressure is more on the road transport because of huge annual fatalities andleads money there4) Private sector has no considerable role in the rail transport and public railway has noeffective potentials for more growthTransportation Investments as % of GDPShare of Road & Railfrom Governmental Investment01020304050607019891991199319951997199920012003%Transportation toCountryRoad toTransportationRail toTransportation
141Transportation Investment050010001500200025003000350019931995199719992001BillionRialRoadRailAirSeaSource: MRT, 4thfive-years development planAs you see, although investment in the rail transport has experienced special growth inrecent years but share of rail transport from GDP is decreased. It means governmentalinvestment in the rail transport hasnt been effective to improve its market share or othermodes of transport growing faster.
142B-1-6) Key Issues Identified in the TransportationLack of Price IncentivesTransport users are not aware of the true costs of transport. In Iran all transport modes areheavily subsidized, most of all road transport. Statistics indicates that the heavy fuelsubsidies, if sustainable, can only be sustained at huge cost. Existing plans to remove thesubsidies over five years are being overtaken by events, as the world price of oil hasresumed its upward trend.The problem is not just a budgetary or balance of payments one. When users are givenfalse price signals about the true cost of inputs such as petroleum, they consume more, andhave little interest in conservation methods. Technologies are not updated, industrial andresidential location decisions are not optimized, and less economic transport modes may bechosen. The result is a weakening of Iran’s competitive position in the world.In a country where the predominant national income is from oil, but most people areinvolved in other agricultural, industrial or service activities – or are unemployed, it isnatural that government wishes to transfer income and wealth more widely in the economy,and particularly to the poorest sections of society in the interests of fairness and nationalunity.The method chosen, however – petroleum fuel for the masses that is extraordinarily cheap –is fraught with difficulties. Whether it is sustainable or not, the overall damaging effects onthe economy and the environment cannot be ignored. There must be a better way to meetthe objectives. Many, perhaps most, of those who benefit from the present policy are notfrom the poorer sections of society. Some may argue this point. Of course, poor urbanworkers benefit from low taxi fares. But they spend long hours in these taxis every day,whereas the huge sums spent on subsidy and petroleum imports could perhaps be investedin better public transport systems. Subsidies could be targeted at the real need, which may
143for example be better and faster bus and rail services, or the provision of air services toisolated destinations whose airports now receive no flights.Lack of Efficiency in Investment SpendingThree issues are of concern under this heading:Project justificationSuccessful project completionSuccessful achievement of the desired benefits from the projectProject justification is an issue, as there are systematic weaknesses in the projectevaluation procedure, as far as can be seen from those documents that have been studied.Economic analysis is not carried out in accordance with modern international best practice.There does not seem to be a willingness to use economic costs or discounted cash flowtechniques, or the modern specialist software packages for transport project evaluation thatinclude these techniques. Traffic forecasts may be arbitrary and based on too little analysis.There does not seem to be a clear set of economic, social or environmental criteria bywhich one project – or variant of a project – can be compared with another.Successful project completion must be an issue dear to the heart of many Iranians. Thecountry is littered with projects that have taken many years to complete or which havenever been completed. Some projects are still under construction after more than 20 years.Some have been abandoned when obstacles that should have been foreseen – such asnational parks – were suddenly encountered. Some projects are completed, but toinadequate specifications, or the design standard is not met, or traffic signs have beenomitted.Some of the reasons for this serious weakness stem from the nature of the Iranian economy.In Iran, which is not a member of the Asian Development Bank and has not been a majoruser of World Bank funds in recent years, long-term loans for transport infrastructure
144projects are more difficult to obtain than in many other countries. Investment projectsdepend heavily on the annual budget. This in turn depends heavily on the world price ofoil, which is never easy to predict. Budgets have to be varied at short notice and someprojects get deferred when oil prices fall.This is only part of the explanation, however. A reading this report reveals a wider litanyof weaknesses. Contractors are paid late, environmental concerns are forgotten, design andsupervision may be faulty, priorities may be changed (perhaps because of the weakness ofthe previous evaluation) – there are a number of reasons. The ongoing work must seek toaddress the causes one by one, in the effort to overcome this problem.Successful achievement of the desired benefits from the project really follows from theabove two items. There are examples of new railways that cannot be used at the designspeeds, and/or have no signals so that not many trains can use the lines safely. There aremany new airports that have no flights. Eight years of effort to make a new motorway fromTehran to the Caspian Sea has resulted in very little, apart from environmental mayhem. Ofcourse, the latter may be put right, and the motorway completed, but at the present rate ofprogress, this will not be within our generation.This is a vital issue. There are plans to introduce a nationwide network of very high speedtrains, to link the major Iranian cities that are separated by long distances. The twenty-yearvision is clear, though the concept is recent so the details and the funding are not. But whatguarantee is there that success can be achieved, and that the final result will match thevision and reap the benefits that would justify the enormous cost? Perhaps the lines will befinished but there will not be enough trains…Without such confidence that investment will yield the desired results, programs may grindto a halt. Iran needs to take a much tighter grip on its transport infrastructure projects, in all
145sectors, and find ways in which the benefits can be achieved much earlier than is the casetoday.SafetyRoad, rail and air safety in Iran are matters of concern. Much has been written about thesesubjects, and Chapter 10 discusses road safety in particular, but also addresses air and railsafety. There is not much that can be added here, except to reiterate the horror of thepresent situation, and to draw attention to the finding that a considerable reduction in roaddeaths may be achievable quickly by a major effort to improve the emergency services.Only half of the road deaths occur at the site. The others die waiting for help, on the way tothe hospital, or in the hospital. The link between road safety and the situation of the roadtransport industry is also apparent from Chapter 3. Truck drivers are under extremepressure, with unsuitable vehicles, and their driving hours are not properly controlled.Poor Quality ServicesQuality problems affect every transport user in Iran. Inter-city bus services, where theseare provided with modern vehicles at premium fares, may be the main exception, but evenwith these there are problems with access to terminals (the terminals themselves are oftengood). Examples of poor quality of transport services include: Slow services; Infrequent services; Lack of information; Overcrowding; Uncomfortable vehicles; Low standards of safety and security; Unreliability and delays; Inattentive staff (not always – the best are good);
146 Untrained staff;Transport everywhere in the world has problems with providing services that satisfy all thepeople all the time. The problems in Iran, however, have built up over many years, andthey stemming from three main causes: The fuel subsidies already mentioned, since these are not targeted towards anyparticular desired result, other than to keep the cost of living down. Specifictransport subsidies for specific purposes – low fares, for example, or specificservice improvements – should have a much greater role to play in Iraniantransport policy; Price control, which is implemented by diktat rather than by revenue support, sothat services are chronically under-funded; The imperfect working of the market. This is because there is no clear choiceoffered to users. There are other examples of transport monopoly where a similarsituation applies. In developing transport policy, more attention needs to be paidas to how to improve the workings of the market in the transport sector.
147B-1-7) The Way ForwardOf course, there are other issues that need to be addressed in transport policy and planning– imbalances between construction and maintenance for example, and the lack of clearroles and accountability for results.What is needed is a holistic view of transport: the mobility and access needs of thepopulation, including women, children and old people on foot, or trying to reach a bus stop;the effect of transport decisions on the environment, the economy and public health.Government as whole has a leading role to play in shaping the attitudes of the transportprofessionals who are responsible for proposing the policy and investment decisions.Much can be achieved, and much has been achieved, in post-revolutionary Iran. There isnow an impressive network of rural and village roads, and the main highways are beingupgraded to a high standard. A national rail network is taking shape. The need now is forhard policy decisions and improved investment performance that can bring significantbenefits of major transport service improvements to the majority population and theeconomy at large.
148B-2) Market demand for railway as a target industryAs I mentioned before there is strong correlation between Irans economy growth rate andtransportation growth. Statistics shows that in recent years Iran has experienced around 5%by average in its GDP and also government has spent considerable investment ontransportation sector. Moreover share of transportation sector from countrys value-addedhas been increased during two decades ago.As a result it can be estimated that transportation sector will be facing with a huge demandby public and private sectors in the years forward. On the other hand railway with a widerange of advantages that I mentioned before can play a strategic role in transportationsection in both of passenger and freight modes. According to those advantages, statisticsshows that potential demand for railway is much higher than present performance.Although there are many obstacles in railway development plans but the railway can beattractive for new investment and new entrants. Implementing of those projects thatincrease railway accessibility and geographic coverage such as electrical and high speednetworks can encourage customers to use railway in compare to other modes.In following pages Ill try to analyse Irans railway industry by Porters five forces and at theend of chapter competitors environment will be discussed.
149B-3) Strategic MapAs I mentioned before private sector has limit cooperation in the rail transport. But itsgrowing very fast. In order to identify the real competitors of our target company which isIrans Railway Co. (RAI) I classified companies by two criteria, Market Share and Quality& Price. Different companies can be classified with different prices, qualities, quantitiesand also maybe in different places. The companies which have low market share and alsolower quality or prices are not competing with the companies with the higher range.Therefore, they should be sorted in groups that belong to. The strategic Map here is basedon price, quality and quantity. The most important dimension in the map is quantity thatalso shows each companys market share.As it is illustrated, RAI that is my project target company compete with around two or threecompanies in both of passenger and freight section. In freight competition is more difficultbecause of number of competitors and with more experience there. On the other hand inpassenger section the RAI (Raja) has major market share (around 63%). In addition privatecompanies are looking for the rest public share that is going to be private by government10F11.As a result the competition in the rail transport will be more aggressive in near future. Inthis situation it should change the whole policy of the companies and switch betweendifferent groups with different conditions.Next figures show the strategic map for both of passenger and freight sections. As you seein passenger section the RAI has major market share but in freight the RAI has secondplace and also there are more competitors. Detailed information about competitors will beshown in the section of Competitor Analyses.11According to the Irans Basic Low, No.44, government should privatize the economy
152B-4) Industry Analyses by porters five forcesBy analyzing Porter’s five forces, the attractiveness of the industry can be identified. It isimportant for a company to start its business in a niche market to protect itself from 5forces. M. Porter believes that industry is a place in which competitors, buyers, suppliersand substitutes are related to each other. Furthermore, ROI in each industry is directlydepends on the strengths of forces. If forces be high the ROI for the industry will be lowand inverse. As a result it can be very important for each company to know more aboutforces to make a better respond.In the following section these forces will be discussed and according to the intensity ofthem they will be ranked from 1 to 10. Forces within 1-5 have lower effect on the industryand within 5-10 have greater effect.B-4-1) Rivalry among competitors High demand & few railway companiesAs I mentioned before there is a big demand potential for railway transportation. Safety,reliability, price and comfort travel are the most important criterions in which exceedsrailway from other modes. This situation makes railway an attractive mode for newentrants. On the other hand there are only around 30 companies that work as a carriercompany in railway. Hence, there are few companies to compete with each others in thecurrent situation. In other hand we have high demand for railway transportation in Iranaccording to the population, economy of scale and low transportation facilities. Irans economy is going to become more privateIrans economy is facing with new situation for privatization. In recent years many ofpublic activities have been separated from government body. Railway industry is also animportant part of government in this way. In addition government for making better ROI
153for the industry makes some new regulations such as giving low interest rate loans toinvestors for buying freight and passenger vehicles. Although still most of activities in theindustry cope by government but the privatization train is going forward rapidly. It meansin near future many of new entrants will be interest to enter to the industry. As a result, therank of this force was assigned 4/10.B-4-2) Barriers to Entry High Capital RequirementsTo enter in this industry high capital is needed. For instance to have a company with 200freight vehicles, $ 20,000,000 is needed at the first stage that can be a considerable barrierfor new entrants. In addition there is needed to invest money and time for transferringrailways special knowledge to employees. High Payback PeriodAs a cultural point of view Iranian investors interested to receive its return in short term. Onthe other hand railway industry traditionally has experienced high payback period for itsprojects. Government PolicyEven though entering to this industry required high capital, but changing the restrictedrules, makes it easier to enter to the industry. As was mentioned before Irans governmenthas started new movement for privatization that has effect on the entry in the industry.There are some changes that currently occurred in the rules of the country that make theentry easier than before. Nowadays government gives the permission of establishing a newcompany in the industry or having activity in the area much easier than before. Hence,people and exist companies that had potential of entering to railway industry are enteringtoday.As a result, the rank of this force was assigned 7/10.
154B-4-3) Substitute Services Road transportation is more economical to end usersGenerally, railway can easily be substituted by road transportations, such as truck, bus andtaxi. As was mentioned before according to Irans subsidized economy (particularly for fuelprice because the fuel consumption for railway is around 15% of road section), the roadtransportation is cheaper and more accessible. It is very economical to use them for endusers but there are many problems such as much more accident and huge external cost innational scale. In addition they don’t work on a specific schedule and they dont bringsufficient comfort for the customers. Although using road transportation have its ownproblems but they cant be absolute reasons for end users to make different choice. Irans railway has very low capacityRailway capacity defines by its specific infrastructures. Railway network and vehicles arethe two most important criterions to calculate its capacity. There are some operationalregulations that make railway capacity different from road. According to the mentionedabove, there is no big gap between performance and capacity for Irans railway. It meansextra demands (very huge demand) should be response by substitutes modes. More investment in road transportationAs was mentioned before according to power of road transportation unions such as truckdrivers and also the power of lobbies between decision makers in parliament and Ministryof road and transportation, allocated budgets for road section is traditionally higher thanrailway. It means every year much rehabilitation and innovation creates in this section bydoing new standards lines and equipments that helps it to make better situation for endusers.
155 Road vehicles are being faster and more comfortableAccording to global technology and also Irans vehicles industry, there is acquired a rapidchange in the road vehicle technology that makes travel for freight and passenger faster,safer and more comfortable than before.As a result, the rank of this force was assigned 8/10.B-4-4) Power of Suppliers Narrow range of suppliersAlthough in recent years the government has made several financial supports to makeinteresting for other companies to enter in the railway supply chain but as a technical pointof view there are two reasons in which Iranian railway suppliers are very limit and also theyhave more powerful than road section that are supported by much many Iranian companies:1) Low demand for railway spare partsAccording to economy of scale theory, there is no good return for producing those ofrailways spare parts in which have no high demand for them. In this situation foreignsuppliers have more power to bargain its business.2) Lack of internal technical knowledgeRefer to previous reason internal companies havent any good experience to produce someof sensible spare parts such as brake system and traction motor. It means there are noIranian potentials to produce those kinds of spare parts.As a result there arent a few companies to support railways operation. So the rank of thisforce was assigned 8/10.B-4-5) Power of BuyersSince diversity of railway services is not very high in Iran, people do not have so manychoices to use them. On the other hand according to the railway advantages and also the
156limitation of railway capacity that was mentioned before, we are facing with a traditionalsituation unbalanced between demand and supply. Hence, buyers cannot influence therailway industry strongly and they have a medium power by selecting among the fewalternatives. Thus, power of buyers was ranked 5/10.Industry Analysis by five forcesAmong the forces that have been discussed in the previous pages, only two of them include"Power of Buyers" and "Rivalry among competitors" has medium and low influence on therailway industry. The rest of three forces have high influence on the railway industry. Theaverage of these five forces is 6.4 which are moderately high. Therefore, according to thenew approaches in the government towards privatization and also the potential growth thatestimated for the industry I believe that the industry will be more attractive in the nearfuture but in the current situation it is moderately unattractive and it means there is lowprofit potentials for railway industry and related companies at the moment.Conclusion of CurrentIran’s railway industry attractivenessRailway Industry Analysis(Porters 5 Forces)6.458874AllocatedScoreLow rivalry amongcompetitorsHigh entry barriersStrong threats fromsubstitute servicesSuppliers have strongpositionBuyers have moderatepositionAverage AttractivenessLinear (AverageAttractiveness)
157B-5) Driving ForcesAccording to the Porter’s 5 forces analysis, it is static and there are only existing problemsincluded. But the situation around the industry environment will change during the time;therefore, we should take to account them too. These changes are included in the drivingforces that will be discussed in the following pages.As was mentioned, 5 forces are static and they don’t capture industry changes. But byanalyzing driving forces, the external forces that are dynamic will be considered too. Thesedriving forces can be technological changes, product & marketing innovation, long-termindustry growth rate and so forth. Most of them are beyond the control of firm, some ofthem are opportunity for the firm and some are threats.B-5-1) Opportunity: A faster pace of technological changes- High speed & Electrical trains:In the future the number of high speed and electrical trains will be increased which clearlyis enough to satisfy the highest of demand. In addition high speed railways have by far thehighest capacity per unit land they use.The point of this is to show that external cost (fuel consumption, accidents, emissions,traffic congestion) play a key role in looking at high speed rail projects, as to whygovernment rather than private companies would be interested in setting high speed railsystems. On the other hand there are many advantages for consumers such as lower traveltime, more convenience & safer trip. It means the new trains lead more the industry towardsustainable development (economical, environmental and social benefits). As a result theindustry will be more attractive for stakeholders.
158- Information Technology & Telecommunication:As I was mentioned before, we are facing with a fast pace in electronic andtelecommunication technologies. It leads Irans railway using new tools and methods toincrease railway capabilities in compare to other transportation modes. For instance usingsome of signaling and remote control systems can help to make higher capacity or usingRFID for tracking freight and passenger vehicles that makes the operational situation moreefficient. As a result the new technologies can help railway industry to become moreproductive and more attractive in the future. Demand growthAs I was mentioned in the first part of this section, according to the Irans economy growthrate it will be expected that the country needs to develop its transportation networkssimultaneously. Furthermore we discussed about the advantages of railway at the nationaland market scale. So it means by spending more capital (both of public and private modesof investment are concerned) for developing of railway networks there will be moredemand to use railway services. Fuel is going to be unsubsidizedIrans economy is going to change its approach about giving subsidize for the some ofproducts particularly for fuel consumption. For instance since this year government createfuel intelligent card for each vehicle. So its the first stage to close internal fuel prices tointernational rates. It means in near future the cost of transportation will be clearer betweendifferent modes. On the other hand as I was mentioned, fuel consumption for railway isaround 1⁄6 of road section. It means fuel cost in road transportation is around 6 times morethan railway that after reducing subsidize or fuel it will be more sensitive and will havegrowing effect on the road transportation prices. So the new situation leads railway industryto be more attractive for both of national and consumer scales.
159B-5-2) Threats: Development of Hybrid Fuel TechnologyTo overcome the problem of high gas prices (crude oil price $92 per barrel at 26thof Oct,2007) and also the pollution that gasoline cars make, the new technology of hybrid fuel iscoming to car industry. “There are a lot of models on the market these days, and mostautomobile manufacturers have announced plans to manufacture their own versions”11F1.“Any vehicle that combines two or more sources of power that can directly or indirectlyprovide propulsion power is a hybrid”12F2. One kind of hybrid technology is fuel cell that “isan electrochemical energy conversion device. A fuel cell converts the chemicals hydrogenand oxygen into water, and in the process it produces electricity”13F2. As result fuelconsumption for road transportation vehicles will be lower than today. It means the lowerfuel consumption will not be a considerable competitive advantage for railway industry inthe future. Tariffs will be controlled by governmentAnother threat for railway industry can be government intermediate to control any changeon the railway services tariff. The main reason that this can be a threat is related to themotivation of investors to spend money on the projects that its pricing is out of control.This means no investment come to railway industry, the network will be freeze, the presentsupply of services cant cover the new demands and finally the industry remainsunattractive in compare to other modes.1How Hybrid Cars Work http://auto.howstuffworks.com/hybrid-car.htm2How Fuel Cells Work http://auto.howstuffworks.com/fuel-cell.htm
160B-6) Overall Industry AttractivenessAnalyzing the industry by only five forces showed us that the industry is moderatelyunattractive but after studying environmental changes that affect railway industry, it isobvious although the industry will have serious challenges such as hybrid fuel technologybut there are some positive changes that make new opportunities and bring the industry atthe ledge of success. Thus, according to the driving forces that the industry will face in thefuture I believe it can be an attractive industry anymore.
161PART C) Competitor AnalysisOverall, transport demand in Iran has increased significantly for a number of decades. Inparticular, passenger and freight traffic have increased for all modes of transportation.Furthermore, most demand forecasts suggest significant increases over the next decade. Forexample, long distance passenger transport (trips over 150Km) is forecast to increase.On the other hand statistics shows that rail transport has only about 5% of market share.Therefore, railway has started its reform since the 2ndfive years development plan (startedat1995). This reform was included three main targets:1) development of railway network (making more capacity)2) emerging new technologies and,3) privatizationNow Iran has completed 2ndad 3rd five years development plan and half of the 4thone.During of those plans railway industry achieved more capacity and became more up to datearound the technologies, but the last target that was privatization has no expected results.As a result competition at the Irans railway industry is emerging slowly. Whereas otherindustries such as roadway have been more competitive for many years and they have acertain experience with competition for the market. From the emerging competition someproblems may evolve which are mainly well known in theory, but still unsolved in practise.As I mentioned before, according to the railway industry 5 forces analysis there are manyproblems for investment in the industry. Overall industry attractiveness shows that theindustry is moderately unattractive. It means private sector has more business alternativesin other industries. As a result we have a short list of companies that are active in therailway industry. As I show in the next tables there are only 23 companies in the freightsection and 11 companies in the passenger section that some of them active in both section.As you see in Pareto diagram in freight section 10 of 23 companies has more than 80% of
162market share and in passenger it is covered only by 2 companies that recognize the lowlevel of competition in the industry.On the other hand, most of companies that are active in the industry owned by public or ajoint of public and private sectors. It has made the shape of industry more public. As aresult the competition situation is affected by public strategies and capitals. So in thissituation we cant see a fair market for private section. Moreover because of above reasonsthat I was mentioned, there is no clear information for all of the business aspects andcompanies have no extra published information about their strategies, objectives, threatsand strengths.In this project I’m looking to implement “Technology Roadmapping” as a strategicmanagement tool for one of the most important project in “Iran’ Railway Co (RAI) “. RAIis the company that my project implements there. RAI experienced 12.7% of market sharein freight and 62.6% in passenger section at 2006.
164Although the industry is evaluated unattractive by 5 forces analysis and it limits newentrants to the industry, but there are many driving forces such as environmental impactsfuel consumption and other external cost that will omitted some of obstacles to enter newcompanies to the industry. This situation can be a threat for exist companies. As a resultbecause of medium size of the industry (in compare to other industry such as oil, car,building…) exists companies are looking for extra market for them and it is one of the mostcommon strategies for them.Furthermore between exist companies those companies that owned by public covered bytheir financial support and it can be a good strength for them to make needed investments intheir projects.0.0%5.0%10.0%15.0%20.0%25.0%Iranian Railway Companies(Freights Market Share) Tooka RailIrans Railway(RAI)Behtash SepahanRahahan Hamlo-NaghlFoolad Rail-e-JonoubJooparHaml-o-Naghl Raili NirooRail Tarabar-e-FajrAsia Seir-e-ArasTarkib Haml-o-NaghlRail Abrisham-e-ParsBaradaran-e-MajdpoorSamand RailFoolad KhoozestanHaml-o-Naghl Raili KeshtiraniRailkaran-e-VereskKardan Rail KaraSaipa RailRahahan-e- Sharghi-e- BobyadIralcoBootanIran GasSafa RailSource Data: Irans Railway, Operational Department, 2007
168In conclusion, competition in Irans railway industry is facing with many opportunities andthreats as following:A) Opportunities:1) Most of facilitate rules and regulations are operational2) Previous experiences by private sectors are pretty positive3) Irans Parliament approved a 30% market share for railway at 20124) Huge investment is coming to the industry5) According to the rail advantages demand for it will increase dramatically6) Delete of fuel subsidy make rail transport more cheaper than other modesB) Threats:1) Other modes of transport in particular road still has more attractiveness2) The model of competition is not completely fair3) There is no special unions to protect private sector in fighting with public sector4) Some cultural obstacles limit public managers to outsource activities5) Rail transport has few chance to make itself as a member of stock market because ofalmost non-beneficial of public companies performanceAs a result each company that is interesting enters to the industry should evaluate differentaspects of business. The market will be more sophisticate and also attractive. For IransRailway Co (RAI), that has the mother role for other companies, the main responsibility isto make railway more attractive for them and bring more companies in the field.
170CHAPTER THREE, PROJECT DESCRIPTIONA) IntroductionA-1) 21stcentury challengesAs mentioned in previous chapters, rail is supposed to be an environmentally-friendly modeof transport, especially in comparison with road. But railways are finding it increasinglydifficult to get planning approval for new railways, and when they do, increasingly onerousand therefore more costly environmental protection measures are being placed on them.The rail industry needs to have a much stronger voice to promote the benefits of railtransport.On the other hand there are many challenges for the world at present but the world will beaffected by Economic Growth, Increasing Mobility Demand and Climate Changesimultaneously. So it leads decision makers to choose those modes of transport that havelower environmental impact and simultaneously help to achieve economic growth byincreasing transportation volume. In this way rail transport (in both of passenger and freightservices) could be more attractive for governments because of its considerable advantages.As a result, any projects that targets rail transport development and also provide newtechnologies to the industry will be discussed.
171Economic GrowthRailTransportIncreasingMobility Demand Climate ChangeOn the other hand, as mentioned in Chapter 2, much has been achieved in recent years togive Iran a truly national transport infrastructure that includes good main highways, villageroads, a national network of airports, and a national rail system. These efforts are ongoing,and, despite weaknesses mentioned before, a great deal of success has been achieved.Improvements to transport services have not kept pace, however. The main challenge forthe future will be to develop the transport services that do justice to the new transportinfrastructure and technologies. On the other hand the new infrastructures should meetsustainable development criteria more than before.In addition in recent decades, by developing car technologies, driving became a viablealternative to going by train in terms of journey time, and as a result railway have lostmarket share. Although there has not been a decrease in the number of passenger kilometersby rail, road traffic has grown while rail traffic has remained static or grown very slowly.Furthermore, high speed rail has changed such that it has enabled rail to win back some ofthe transport market. The question I wish to raise is will history repeat itself? Is there a newfast car around the corner which will render high speed trains obsolete?
172Development of high-speed passenger rail systems such as occurred in Europe and Japan,where dedicated, high-speed passenger rail corridors, separate 350Km/hour passenger trainsfrom 80Km/hour freight trains, is a justified plan in different countries.As a result, Iran needs a robust passenger rail transportation system to create a first-classpassenger rail system that would give our nation a truly viable rail transportationalternative. Successful passenger rail systems like those in Europe and Japan rely onpublicly funded track and almost exclusively dedicated to passenger rail.The main feature of Irans railway system is its rapid expansion which is under way. Atruly national network is being developed. Unfortunately key components have not keptpace – the skilled staff and dynamic management that will be needed, the provision ofsignaling for the new lines, and the additional rolling stock (and ways to get more from theexisting rolling stock) that will be needed to carry the extra traffic. Planning has beenpiecemeal, and a corporate planning approach to take into account effects throughout therailway system, is lacking. New ways of organizing the industry have been mooted anddeserve further consideration.A-2) Irans Rail Transport BackgroundThe majority of the Iranian rail network is of comparatively recent construction, havingbeen constructed during the latter part of the twentieth century. Early lines in the countryowe their origin to the strategic requirements of the two world wars and only recently havesome rail links been established between main cities. The country is of vast size (1.65million km2), and with its substantial distances between centers of population, can be saidto favor spatial layout for the development of a quite comprehensive rail system.There are in addition a large number of rail projects totaling a further 10000 km which areunder study for possible future implementation. Also an ambitious project to develop a
173separate network of very high-speed lines for passenger services is also in an early stage ofplanning.The great majority of the railway system is owned and managed by MRT14F12through the IranIslamic Republic Railways (IIRR), also known as "Râh Ahan Iran" (Iran Railways, orRAI).A summary of the organization of the sector is shown as follows:General Status of the Irans Rail Transport SectorBody General DescriptionMinistry of Roads andTransportationAll services related to the transport industry outside the maincities are under the responsibility of the MRT. Direction andfinance of new rail projects. Sets passenger and freight tariffs.Department of Constructionand Development of RailwaysA department of the MRT responsible for construction of newrail lines under the direction of the MRT.Iranian Railways (RAI) Responsible for rail infrastructure and provision of rail freightservices, provision of motive power and movement of passengerservices throughout the country, for safe operation of railservices, and for accident investigation in conjunction withMRT.Raja Passenger TrainsCompanyA company wholly owned by RAI, responsible for marketing,selling and running almost all passenger services: alsoresponsible for developing the franchising of passenger servicesto private operatorsRailway Service andTechnical ConstructionCompany (RSTC)This sleeper manufacturing company, wholly owned by RAI, isnow responsible for track maintenance; renewal andconstruction work to RAI order.A-3) Irans Railway Internal CorridorsIrans internal railway has 6 main corridors as shown in the next map:1) Tehran-Mashed (My target project- Eastern corridor)2) Tehran-Tabriz (extent to Turkey border- western corridor)3) Tehran-Ahvaz-Bandaremam (a south corridor)12Ministry of Roads and Transportation
1744) Tehran-Yazd-Zahedan( Bam to Zahedan is under construction-a south-east corridor)5) Tehran-Gorgan ( northern corridor)6) Bandarabbas-Sarakhs (north - south corridor)A-4) Irans Rail NetworkThe RAI system is predominantly single track. Its Tehran–Mashed line has recently beendoubled, and a new double-track route has been opened between Tehran and Qom, theremainder of the system remains single track.12653 4
175In consequence of the limited infrastructure capacity and as I mentioned before due tosignificant growth of both passenger and freight traffic, RAI is facing serious track capacityproblems on most routes.In addition most of the routes are not high speed. As a result, trip time is noncompetitive incomparison to other transport modes in particular with road and air.A-4-1) Traffic LevelRAI has targeted to increase passenger journeys to 33.6 million by 2009 and freight trafficto 49.8 million ton at the same time. Currently15F13passenger traffic is at the level of 21million person and freight traffic at 32.5 million ton.Concerning freight, as mentioned the Iranian economy is highly dependent upon importedgoods. Up to 90% of all imported goods enter the country through five ports on the PersianGulf and two on the Caspian Sea. By construction of some important routes such as Bafgh-Mashed in recent years, the future prospects for rail freight are therefore extremely bright.Freight traffic accounts for about 62% and 90% of RAI’s total volume16F14and revenuerespectively.As revealed in the next map at 2009 critical routes are shown in red. Most of these routesare mixed by passenger and freight trains. But there is a special route that is called Tehran-Mashed with many special advantages:1) The route connects the countrys capital to the biggest religious city. (population of bothcities is around 15 million)2) Around 50% of total passenger trains operated there3) Most future demand is estimated for this route4) The route connects Central Asian Countries and China to Europe13RAI annual report at 200614For this calculation, volume is assessed in terms of ton-km and passenger-km (added together andtreated equally)ﻓﺚ
1765) The route is the most high priority to develop high speed trainsIrans railway critical routes(With lack of capacity) at 2009ﭼﻬﺎﺭﻡ ﭘﻧﺟﺳﺎﻟﻪ ﺑﺭﻧﺎﻣﻪ ﺩﺭ ﺁﻥ ﺷﺭﻁﻬﺎی ﻭﭘﻳﺵ ﺭﻳﻠﻲ ﻭﻧﻘﻝ ﺣﻣﻝ ﺑﺭﻧﺎﻣﻪﭼﻬﺎﺭﻡ ﭘﻧﺟﺳﺎﻟﻪ ﺑﺭﻧﺎﻣﻪ ﺩﺭ ﺁﻥ ﺷﺭﻁﻬﺎی ﻭﭘﻳﺵ ﺭﻳﻠﻲ ﻭﻧﻘﻝ ﺣﻣﻝ ﺑﺭﻧﺎﻣﻪﺍﻗﺗﺻﺎﺩی ﺗﻭﺳﻌﻪﺍﻗﺗﺻﺎﺩی ﺗﻭﺳﻌﻪ،،ﻓﺭﻫﻧﮕﯽ ﻭ ﺍﺟﺗﻣﺎﻋﯽﻓﺭﻫﻧﮕﯽ ﻭ ﺍﺟﺗﻣﺎﻋﯽSource: RAI, 4th railway development planOn the other hand, concerning passenger, as Irans economy is growing, GDP per capita isgrowing, population growth, and the many advantages for rail transport in comparison toother modes, suggests there will be a huge demand for rail travel in the future. However,there are some problems:1) Average speed of trains is slower than airplane & car2) Rail network are not wholly accessible for customers3) Fuel price is subsidized by government17F154) Existing lines have low capacity to answer new demands15As I mentioned before fuel consumption in rail transport is around 20% of road.Tehran-Mashed
177A-5) Summary of RAI’s Current SituationThe principal problem now facing RAI is lack of capacity, due to lengthy single-line routeswith inadequate signaling levels, inadequate locomotives, and the very slow speed of trains.Freight services are timed only at a maximum speed of 80 km/h and with trains having towait for locomotives; they are loaded to maximum capacity which again adversely affectsspeed. Traffic is frequently delayed on route awaiting locomotive power. This is against abackground of steadily increasing traffic levels.The above situation has made both freight and passenger customers more unsatisfied aboutthe services.Investment decisions on new routes, and their finance and construction, are theresponsibility of government (MRT). There would seem to be a need for far moreintegrated planning in consultation with RAI, to ensure that: design standards are appropriate for the business need The whole machinery of railway service delivery can keep pace with systemexpansion. Technologies and services are matched with market needsA-6) Future VisionAccording to problems that RAI is facing, there are some plans under study orimplementation to improve rail transport network in comparison to road. On the other hand,although the last parliament’s rule18F16about increasing rail market share by 30% till 2012(end of Iran’s 5thdevelopment plan) seems very unlikely it can create a new opportunity forthe rail industry to implement some important projects by achieving additional publicinvestment. In this way, implementation of high speed railway between Tehran-Mashed isone of the most important projects for the vision that was mentioned.16The rule is approved by parliament at 2007 with title of “Iran’s Public Transportation Development”
178B) Project DescriptionB-1) Tehran-Mashed, A potential route for high speed rail transportFeatures of the current route Distance: 926Km Average travel time: ~11.5 hours Maximum Speed: 120Km/h for most of trains (limit trains with 160Km/h) Track: double line Volume of Passenger at 2006-07: 6,000,000 Energy Consumption: fossil fuel (no electrified) Route Market Share: 45% of total rail transport (in passenger kilometer index)As mentioned, Mashed is an important religious city in the country and the second Islamicreligious city in the world. Millions of pilgrims plan to travel there every year. Around 50%of total rails passengers travel there. The route is 900Km and is known as long distanceroute. Although many semi high speed trains operate with maximum 160 Km/h, the averagetrip time for the route is around 12 hours. In recent years, the route has no experienced anypassenger train accident and fatalities. As a technical point of view the route is doubledtrack and in recent years many substantial projects such as signaling and tracks longwelding are done. Also the existing route is ready to operate trains with speeds of 200Km/h.
179Irans Conventional Train (120Km/h)Irans new semi high speed train (160Km/h)
180Map of Rails Passenger volumeTehran-Mashed12500-17500Passenger/day
181The Routes Current Traffic(Tehran-Mashed)Factors Transport ModesRail Air RoadAvg. Travel Time (hour) 11.5 1.2 12Avg. Price (Rial) 145700($15)430000($43)95000($10)Avg. Service Frequency (No /day)(in two way)30 train 20 280Bus-MinibusMarket Share (%) 51 13 36Avg. Passenger Traffic (M/Year) 6 1.5 4.2Travel Safety Very Good Very Good Dangerous19F17Data Source: Irans Railway Co. (RAI), Civil Aviation Organization of the Islamic Republic ofIran (CAO-IRI), Road Transport Organization.The data demonstrates that the route has good passenger potential with around 12 millionpassengers at 2006 and will be expected to increase in future. In addition rail transport has51% of the route market share, road and air transport with 36% and 13% are the next modesof transport respectively. It means rail transport is the main mode of transport in the route.As a result, it can be predicted that rails network development and in particular providinghigh speed trains technology will impact on rail transport market share. For instance,providing high speed trains such as French TGV with 350 Km/h make the route only 3hours long.17According to the 2006-07 annual report of Road Transport Organization there was 17500 fatalities forroad intercity travels. Both urban and intercity trips had around 28000 fatalities at the same time.
182B-2) A Price-Time modelTheoretically, there is a lower price for long air travel in comparison to other modes. Basedon travel time, we can classify routes in three categories; short, middle and long distances.As shown in the next figure, the cost of travel by car for short routes is lower than othermodes of transport. As a result there is more demand for road transport for short trips. Onthe other hand, long distance travels makes air transport more efficient and practical. Forinstance, travel over a 300Km route is not suitable for airplane because there are manysubjects that increase travel time, although price will be almost fixed. So travelers preferusing cars in short routes. Travel over a 1000Km long distance route causes considerableincrease in cost of travel by car and safety will be decreased.On the other hand, according to the rail transport advantages although it can play a medianand complementary role, but new generation of high speed trains will be substitute for airtransport in the long distance routes. So there are many best practices around the world tosubstitute high speed railway for long passenger travels such as European inter-countriesEurostar high speed train or Japanese long distance high speed trains.The waiting time in air travel is more than rail and road travels. The main subjects thatwaste time in both of rail and air travel are as follows:Air Travel Time Transport to Airport Time spent at the Airport (check-in, boarding- has more waste time than rail) Flight time Awaiting for the baggage + customs (exclusive for air transport) Transport from the AirportRail Travel Time Transport to Station Time spent at the Station Travel time Transport from the station
183Price–Time ModelFurthermore, as shown in the next figure there is a correlation between train travel time andmarket share in some European routes. The routes with more travel time have lower marketshare. It means that for long distance routes air travel has higher market share. Butproviding high speed railway will cut travel time significantly. For example, the Madrid-Seville Route market share for rail transport has dramatically changed from 29% to 85%after implementing high speed line.Effect of Train Journey TimeOn the Proportion of Air and Rail TravelersSource: UIC (International Union of Railways)The Zonethat RailTransportis moreefficient
184Railway Market Share Compared to Airline Market ShareOn Madrid—Seville RouteSource: RENFE and IberiaB-3) Why High Speed Trains (HST)B-3-1) IntroductionSince the automobile has become more widespread with the existence of motorways, carsmay reach speeds of up to120km/h or thereabouts depending on local laws. Standardmainline railway trains running at160km/h find it difficult to compete with the car, oncejourney time to and from the station and waiting for the trains is calculated, and thus railtravel no longer offers a significant journey time advantage over the car. On the other hand,development of High Speed Trains (HST) in last decades makes it more attractive incomparison to car. Many direct and indirect advantages such as low travel time, loweremissions and safer trip are discussed by governments to implement new HSTinfrastructure around the world.Nowadays, it seems quite exciting for rail that railways are making a come-back.Thousands of km of high speed railways has been built in the last decade, and new lines areunder construction all over the world.To have a high speed rail system, making the high speed trains is really the tip of aniceberg. What really makes systems a success or failure is the railway that they run on.Railways like roads have speed restrictions, and like on roads often the speed restrictionsare below the top speed of the train.
185B-3-2) Advantages & Disadvantages of HSTAdvantagesIt can be analyzed by two perspectives: external (social) costs point of view and consumerpoint of view.External costs are economic terms costs or benefits which are not captured by the marketprice. For example, in Tehran if you drive to your place of work, you are producing harmfulemissions and adding to congestion which other people are forced to consume.The point of this is to show that external costs play a key role in looking at high speed railprojects, and this is why government rather than private companies would be interested insetting high speed rail systems. Some of the most common kind of external costs that willbe changed by using High Speed Trains (HST) in comparison to car and conventionalrailway are as follows: Higher Capacity (low land use) Reduced Traffic Energy Efficiency Reduced PollutionIn consumer part, there are many benefits to use HST instead of car and conventionalrailway. Lower travel time More Convenience Safety
186DisadvantagesAs economic point of view perhaps the primary objection is always cost. High speedrailways are very expensive. For instance to build a 412Km high speed link between Seoul-Busan in South Korea will require US $17 billion investment from the Government andprivate companies. On average, the more typical cost of HST is US $30 million per Km.In addition as social point of view, noise of high speed rail can be the unique disadvantageof HST.B-3-3) Specifications of a high speed railway No level crossings (grade crossings) Fenced off Concrete Foundations Wide spacing between lines Curves of Radius less than 5km are avoided and are tilted. Gradients more than on conventional railway line Through stations are constructed with at least 4 tracks Tunnels usually are avoidedB-3-4) Where high speed lines runIt must be emphasized that high speed trains may run on conventional railway but areusually limited to 200km/h-230km/h. Most high speed railway services in particular inEurope spend most of their journey on conventional lines, but come together for a fast runon a new line.B-3-5) Main problems running on existing railways The primary problem with existing railways is that they can have tight curves.So it requires lower speed.
187 Other key problems running on existing railway require the new fast trains bescheduled in around the conventional trains. This can be a tricky thing,especially on a busy network; fast trains can easily become stuck behind slowrunning ones, resulting in delays. Safety is also a paramount consideration. Although since initial construction 100years ago the track will have been replaced many times, the foundations of therailways are the same which means after heavy rains for example the track maysag slightly and loose some alignment, only a real problem at speed. Level crossings also form a problem.B-3-6) Different modes of High Speed TrainsGenerally, High speed rail is defined as trains that can run at a maximum speed of at least250km/h. HST is economically efficient and respectful of the environment; its a majorasset in efforts to ensure sustainable development in transport. What is important today is toprove that HST technology which was invented in Japan 30 years ago, can be evaluated as atechnology for the future. There is a plan in Europe to implement 6000 Km20F18of high speednetworks till 2010 and it will be increased to 10000 Km by 2020. At the moment China,South Korea and Taiwan are the most important customers for high-speed trains.18At (http://findarticles.com/p/articles/mi_m0BQQ/is_10_42/ai_99511930)
188The European Union Plans to improve Road and HSTYear Highway HST Description2002 50000 Km (at 2000) 3260 Km2010 70000 Km 6000 Km Major shift from road to rail2020 10000 KmSource Data: http://findarticles.com/p/articles/mi_m0BQQ/is_10_42/ai_99511930In addition, there are different modes of using HST in different countries. The mostcommon criteria to choose different modes are as follows:1) Purpose of transport2) Level of traffic3) Geographical distribution of routes4) Alignments of routes5) Distance6) Cost-benefit analysis7) Environmental impact assessment8) Social and political expectations9) Technological and financial potentialsIn recent years, different countries used mostly three types of high speed railway. I willexplain each mode.First mode: TiltingIf an automobile driver takes a corner at high speed centrifugal forces will be felt. It is nodifferent for trains. If a train takes a corner at speed then centrifugal forces occur. Theforce needed could be enough so that all passengers on the train couldnt move and wouldbe stuck to the sides of the train. This implies there is scope for increasing the speed of a
189train round corners a great deal without it becoming unsafe. However passengers willobject.Often train operating companies face a decision in building a high speed railway transportsystem: they can either invest money in the train to make it tilt but use existing railwaylines, or they invest money in a new railway but dont need to spend money on expensivetilting mechanisms. This is why famous trains such as TGV, ICE and bullet trains do nottilt, because they have their own dedicated high speed railway lines where curves are builtwith very high radii.Trains that tilt can go up to 25% to 40% faster around curves than conventional trainswithout upsetting the passengers, and as mentioned before can significantly increaseaverage speeds and cut journey times.As a result, it costs about 20 times more per unit distance to build a dedicated high speedline than it does to upgrade existing lines for tilting trains. This is what makes tilting trainsextremely attractive. However there are disadvantages. 230km/h is about as fast as trains gowhen not on dedicated lines. And then they have to be fitted in with slower moving traffic.
190Second mode: Conventional HSTThe Japanese Shinkansen (or “bullet” train), the French TGV and the German ICE are allexamples of steel-wheel-on-steel-rail systems. These are high-tech train systems that vastlyimprove upon traditional passenger rail technology.In particular, High-speed trains operate through and connect England, France, Belgium,Germany, Italy and Spain. Ultimately, there will be a fully integrated high-speed trainnetwork throughout Europe. In general, the conventional high-speed train system will bebuilt at-grade. The system will use electric propulsion on a double track or guide way toprovide the necessary high capacity, flexibility, and reliability. The system will becompletely grade separated, with no potential for conflict with pedestrian or vehiculartraffic.The modified TGV was powered by two enginesThe average travel speed of the conventional high-speed railways ranges between approx.130 km/h and 220 km/h, strongly depending on the distance between the stations. Themaximum speed record of conventional HST has been registered at 2007 by TGV France at574.8Km/h. as mentioned previously there exists 3260 Km of HST network in Europe andwill be increased to 6000Km at 2010.As a result, this kind of HST is and will be the most important mode of high speed trains inthe next decades.
191Third mode: MaglevThe principal of a Magnet train is that it floats on a magnetic field and is propelled by alinear induction motor. They follow guidance tracks with magnets. These trains are oftenreferred to as Magnetically Levitated trains which are abbreviated to Maglev.Many rail transport experts see the future in Magnetic Levitation (maglev) trains. It wouldno longer need physical contact, so no wearing out would occur and there would be thecapability of aircraft speeds.Germany is the first country with definite plans for a commercial maglev service, a projectcalled transrapid. Such trains may reach speeds of 500km/h. At 2003 also China built theonly commercial world’s 30 Km Maglev train between Shanghai’s airport and downtown.The route has built by a German consortium with a max speed record of 432Km/h.Advantages: It does offer certain benefits over conventional steel rail on steel wheel railways.The primary advantage is maintenance. Because the train floats along there is nocontact with the ground and therefore no need for any moving parts. As a result
192there are no components that would wear out. This means in theory trains and trackwould need low maintenance. The second advantage is that because maglev trains float, there is no friction. A third advantage is less noise, because there are no wheels running along there isno wheel noise. However noise due to air disturbance still occurs. The final advantage is speed, as a result of the three previous listed it is more viablefor maglev trains to travel extremely fast, i.e. 500km/h.Disadvantages: Maglev trains are more costly than other modes. Guide paths and vehicles are boundto be more costly than conventional steel railways. The second main disadvantage is incapability with existing infrastructure. The highspeed trains could go for a fast run on the high speed line, and then come off it forthe rest of the journey. TGV France and ICE Germany are the most commonexample. On the other hand, Maglev trains wouldnt be able to do that; they wouldbe limited to where maglev lines run. This would mean it would be very difficult tomake construction of maglev lines commercially viable. For instance, there will be6000 Km of high speed railway that isn’t compatible with Maglev trains. If Europewants to build Maglev it needs to make dedicated routes that will be more costly. There is also the energy problem with Maglev; it would take a lot of energy to floatthe trains. The problem is that the faster trains go, the greater the resistive force interms of air resistance they face. To counter this force vast amount of energy mustbe consumed.
193B-3-7) Speed Records21F19Speed Records of High Speed Trains in different Modes1 Fastest conventional train574.8 km/h (357 mph) France, TGV-POS set 4402, 3 April 2007.2 Fastest gas turbine-powered train318 km/h (199 mph) France, TGV001, 8 December 1972.3 Fastest diesel-powered train238 km/h (149 mph) UK, HST, 1 November 1987.4 Fastest steam locomotive202 km/h (126 mph) UK, A4 class Gresley pacific No. 4468 "Mallard", 3 July1938.5 Fastest narrow gauge (1,067 mm) train245 km/h (152 mph) South Africa, class 6E electric locomotive, December1978.6 Fastest third-rail electric train174 km/h (109 mph) UK, class 442 (Wessex Electric) emu, 11 April 1988.7 Fastest maglev train581 km/h (363 mph) Japan, MLX01 maglev train (manned), 2 December 2003.8 Fastest rail vehicle10,300 km/h (Mach 8.6) USA, Holloman Air Force Base High Speed TestTrack, unmanned rocket sled, 30 April 2003.9 Fastest scheduled average speed between two stations stops263.3 km/h (165 mph) France, TGV between Lyon-St Exupéry and Aix-en-Provence, from 2005.10 Fastest scheduled average speed between starting and terminatingstations242.5 km/h (152 mph) Japan, 500 series "Nozomi" between Shin-Osaka andHakata, from March 1997.11 Fastest closing speed between two trains (maglev)1,026 km/h (641 mph) Japan, MLX01 3-car sets, 16 November 2004.12 Fastest non-stop run over 1,000 km3 hrs 9 mins (average speed 317.5 km/h) France, TGV-Reseau set 531between Calais and Marseilles, 26 May 200119http://www.h2.dion.ne.jp/~dajf/byunbyun/speeds/records.htm
194Source: at (http://news.bbc.co.uk/2/hi/europe/6521295.stm)
195WORLD FASTEST SCHEDULED TRAIN SERVICES22F20(As of 2005)This table lists the top ten countries with the fastest stop-to-start times for scheduledservices. The speed data is based on the 2005 speed survey published byRailway Gazette International in November 2005.Position Country Train From ToDistanceAve.SpeedMax.Speed(km) (km/h) (km/h)1FranceTGVLyon-StExupéryAix-en-Provence 289.6263.3320(SNCF)2Japan NozomiHiroshima Kokura 192261.8300(JR West)(500series)3International TGVThalysSoleilBrusselsMidiValenceTGV 831.7242.2300(SNCF/SNCB/DB)4 Germany ICE FrankfurtFlughafenSiegburg/Bonn 144233.5300(DB) (ICE3)5Spain AVEMadridAtochaCiudadReal 170.7204.8300(RENFE)(Class100)6SwedenX2000 FalköpingKatrineholm 209.7190.6200(SJ)7 Republic ofKoreaKTX Seoul Taejeon 155189.8300(Korail)8UnitedKingdom IC225Stevenage Grantham 125.3181.1200(GNER)(Class91)9ItalyEurostarRomaTerminiFirenzeSMN 261166.6250(FS)(ETR500)10U.S.A.Acela Wilmington Baltimore 110.1165.1240(Amtrak)20http://www.h2.dion.ne.jp/~dajf/byunbyun/speeds/world.htm
196C) The problem and MethodologyAccording to the high passenger traffic in the Tehran-Mashed route that is still increasingrapidly and also the critical capacity of the route, the RAI is going to provide an electrifiedhigh speed railway there. Previous feasibility study23F21shows that the route has the highestpriority to implement an electrified conventional high speed railway. The project is mostlytechnology-based and estimated at around $15 billion and will be implemented in 15 years.On the other hand, to implement this project, RAI needs to make government moreconfident about the situation that will be emerged in projects life cycle. Some of theproblems that may occur are as follows:1) The RAIs exist structure will not be able to absorb disruptive technologies2) The provided technologies may not be matched to strategies and target markets3) The investment may be underestimating and also involve in weak allocation4) Time scheduling may not match with real situation5) The technologies that will be provided have insufficient specifications6) No integrated between R&D, Technical and Marketing departments7) There may be no readiness after implementing of the project to operate andmaintenance (providing a supply chain management objective)8) There may be many pressures from government, parliament members, NGO’s andlocal organizations to canalize project toward a specific services or technologies9) No documentation and transferring of the project knowledge10) Training programs involved in current structure21“Electrification of railway in Iran” , Iran’s Science and Industry University, Faculty of Railway,March 2004
197In addition, the crucial questions are:1) Which kind of high speed railway is more efficient to implement in the route As consumer point of view As technical and economical point of view2) How related technologies should be chosen3) How related departments should be involved in integrate decision processAs a result, it’s very important for RAI to know what the best plan to implement project is.Previous experiences for the same projects show that usually there has been a lack ofintegrated strategic planning to use all of the potentials that each part of project has aloneand usually there is no synergy between departments. Furthermore in most of previousprojects providing technologies were being insufficient or over design. It means afterimplementing those projects the results will not be adapted to the target strategies.Now, the project is approved by government and the preliminary study is going done butbased on previous experience, conventional planning models will not be efficient to use. Sothe RAI needs to prepare a roadmap to monitor any aspects of project.In this way it will be a big challenge for RAI to manage obstacles by using a new approachto project management. As a result I want to choose Technology Roadmapping as mymethodology. In the next chapter it will be explained how it works as an integrated strategicplanning tool.
198Chapter FourTechnology Roadmapping,(A Strategic Way for Change)
199Chapter Four: Technology Roadmapping, a strategic way for changeIntroductionThe body of this chapter focuses on the ways in which technology advances can helpachieve the Roadmap objectives. In developing the linkages between technologies andobjectives, the participants noticed that certain technology trends or drivers have a strongenabling role for more than one objective. Also this chapter provides an overview to thetechnology roadmapping approach, starting with an introduction to the topic of ChangeManagement. Also important is the process that is required to develop a good roadmap, andin this chapter I will describe most common method for rapid initiation of roadmapping inthe business strategy.Roadmapping is a very flexible approach and Technology Roadmapping24F22(TRM) is one ofthe uses of Technology Planning. After Motorola became first successful user of that in the1980s, the methodology became a popular planning tool in the 1990s among industryassociations, individual companies and government agencies for development of relatedtechnologies over the coming generations. Corporations such as Motorola, Philips andLucent have used technology roadmapping to make plans for technology development.On the other hand, Technology Roadmapping is categorized as technology planningprocess.Its a planning process that is driven by the projected needs of tomorrow’s markets. It helpscompanies to identify, select and develop technology alternatives to satisfy future service,product or operational needs.22Prepared by Robert Phaal, Centre for Technology Management, University ofCambridge, United Kingdom
200The main benefit of technology roadmapping is that it provides information to make betterdecisions for technology investment by identifying critical technologies and technologygaps and identifying ways to leverage R&D investments.Furthermore, a technology roadmap is the document which is generated by the technologyroadmapping process. For a set of product/service needs, a technology roadmap identifiesthe system requirements, the product/service and process performance targets, and thetechnology alternatives and milestones for meeting those targets. Under differentcircumstances with uncertainty or risk, one or multiple paths can be selected and pursuedfor achieving those objectives. Because we use TRM as a change model, we need tounderstand any change characteristics and processes and how it should be managed bybusinesses.A) Anticipating and Managing ChangeA-1) what’s the force behind change?People in today’s organizations are living with continuous change. The complexity and rateof change are constantly increasing in private and public sector organizations as they adaptto environmental changes as a result of technological advances, global competition, orgovernment policy initiatives. Over the last 10 to 15 years change and the management ofchange has been a ubiquitous topic particularly in the emerging economic regions.On the other hand, there are also some business-based reasons that impose extra pressureson businesses to change status quo, they are as follows:1 Antiquated legacy systems2 Expense pressures3 Market expectations4 Business responsiveness
201A-2) Literature ReviewAccording to Lewins Force Field Analysis Model (K.Lewin, Field Theory in SocialScience (New York: Harper & Row, 1951), there are many Driving & Restraining forces tochange current situation of any organization. Lewins also categorized any change in 3phases: Unfreezing, Changing, and Refreezing. He believed that effective change occurs byunfreezing the existing equilibrium, moving the target system to a new level of equilibriumand then refreezing the system at the new level of equilibrium. Lewin assumed that in anysituation there are both driving and restraining forces that influence any change that mayoccur. Driving forces are those forces affecting a situation that are pushing in a particulardirection; they tend to initiate a change and keep it going. Restraining forces are forcesacting to restrain or decrease the driving forces.Therefore, Lewin’s model illustrates the effects of forces that either promote or inhibitchange. Specifically, driving forces promote change while restraining forces opposechange. Successful change management consists of winning the emotional commitment ofstakeholders. One of the challenges is ensuring that the initiatives has sufficient support andbuy in from relevant individuals.Hence, change will occur when the combined strength of one force is greater than thecombined strength of the opposing set of forces (Robbins 564-65).
202D.FR.FD.FR.FD.FR.FBeforeChangeAfterChangeCurrentConditionDesiredConditionLewins Force Field Analysis ModelSource: Canadian Organizational Behavior, Steven L.McShane,Universityof Western Australia, page 478As shown in the diagram, driving forces (D.F) will be more effective and stronger than atthe stable time both before and after change. Also managers at the change period mustprevent the increase of restraining forces (R.F).Direct cost, saving face (people resist), fear of the unknown and incongruent teamdynamics are some of restraining forces. For instance, apathy, hostility, and poormaintenance of equipment may be examples of restraining forces against increasedproduction. As a result, managers are often in a position in which they must consider notonly output but also intervening variables and not only short-term but also long-term goals.It can be seen that force field analysis provides a framework that is useful in diagnosingthese interrelationships. So creating a balance between driving and restraining forces is amain responsibility of any change manager.Subsequently, Lippitt, Watson, and Westley (1958) extended Lewin’s Three-Step ChangeTheory. Lippitt, Watson, and Westley created a seven-step theory that focuses more on therole and responsibility of the change agent than on the evolution of the change itself.Information is continuously exchanged throughout the process. The seven steps are:
2031 Diagnose the problem2 Assess the motivation and capacity for change3 Assess the change agent’s motivation and resources4 Select progressive change objects5 Choose a change agent role6 Maintain the change7 Terminate the helping relationshipA-3) Different Perspectives to ChangeAccording to Peter Senges the Fifth Discipline: the Art and Practice of the LearningOrganization, there are some of the most important laws as follows:1 Todays problems come from yesterdays "solutions"2 The harder you push, the harder the system pushes back3 The cure can be worse than the disease4 Faster is slower5 Small changes can produce big resultsSenge also contends that approximately 70% of all change initiatives fail25F23. It means therecan be many crucial factors that have direct or indirect influences on the change processand nobody pays attention to it. Furthermore, evaluation of the needs and internal/externalpotentials play an enormous role in defining define a new change plan. Usually changemanagers face common questions:1 To be Innovator or Early Adopters?2 Is there any competitive advantage for our company to push new technology?3 Should we focus on product or process?23The Dance of Change, Peter Senge
2044 Does continuous improvement prefer to a jump?So it depends on business internal (strengths and weaknesses) and external (opportunitiesand threats) situations, which organizational change model will be chosen. As a result therecan be three perspectives of managing change in any organization.1) Organizational driven change (push, when an organization develops a new processor technology, in a research and development unit) vs. Market driven change (pull,when n organization adopts a new technology or process that was developed elsewhere)2) Products/Services oriented vs. Process oriented3) Incremental (Kaizen base) vs. Revolutionary change (disruptive)A-4) Managing change, A step-by-step approach“Only I can change my life. No one can do it for me.” — Carol BurnettIn spite of the fact that today every business needs to adapt to rapid global changes and theneed to be more flexible, there is another theory that argues that organizations could not beeffective or improving performance if they are constantly changing (Rieley and Clarkson,"How companies shift organizational behaviors to improve performance", 2001). It meansthat business needs to be routine for a period and then make a new target for another step.Otherwise relative areas cannot adapt to the new situation in an appropriate manner. So thisconcern needs to be attended by change managers. They should create a balance betweenthe need to change and the potential to change. Sometimes more emphasis on changewithout necessary potential not only destroys opportunities but may create a negativeapproach between employees and causes a new crisis for company. As a result, anyorganizational change needs to plan in a systematic process. Change management is amanagerial concept that helps a company move toward a new successful situation. It isproactive technical support focused on preventing incidents and problems by effectiveplanning. Some of the benefits are:
2051 Consistent planning for change2 Consistent planning in case of failure of change3 Communication with appropriate parties before change occurs4 Approval received from appropriate parties before change occurs5 Reduction in incidents and problems caused by unplanned change6 Time spent on preparation and prevention rather than fire fighting anddowntime.There are usually four phases in the change management process: Assessment1 Identify the problem or the opportunity2 Collect data3 Analyze data Planning Implementation4 Methods to change individuals5 Methods to change groups Evaluation6 Evaluate effectiveness7 Stabilize the changeAs shown in the next figure there is a loop between the four stages. The loop is also thesame as the PDCA diagram. It shows Demings Plan-Do-Check-Act (PDCA) cycle. At alllevels of the organization in ongoing management activities, we find a similar use of thecycle. What we are trying to avoid by using the PDCA discipline is jumping to a solutionwithout identifying the problem and determining if the proposed solution fixes it or resultsin another problem.
206Demings PDCA Cycle Change Management ProcessA-5) Key Relative AreasUsually there are many common factors that determine successful planned change:1 Relative advantage, change is thought to be better than the status quo2 Compatibility, change should be compatible with existing values of theindividuals or groups3 Complexity, simple techniques are more readily adopted4 Divisibility, changes tried out on a small scale have a greater chance of success5 Communicability, the easier the change is to describe, the more likely it willspreadIt is obvious that any change needs to ensure top management support for successfulimplementation. It means there are many risks for a non-planned change. As a result theyneed to understand key areas of management that have enormous effect on anticipating andmanaging change.In general term, managing change looks at four of the key areas of management; customers,technology, finance and people (Human Resource Management). As a result it requiressolid partnerships and commitments.
207ChangeManagementTechnology FinanceEmployeesCustomersKey Areas of Change ManagementIt is built on dialogue and a common understanding of the challenges and the opportunitieschange brings. It integrates the four areas into a practical framework for more effectivedecision making. The anticipating of any future changes and managing its consequences isthe crucial task for the business.Although customer expectations and financial resources have considerable influence on anychange in an organization, there are two other important forces that simultaneously havemore influence on organizational change; Technology and Employees (Involvement ofworkers, Fair compensation, Prevention and resolution of disputes, KnowledgeManagement…).A-6) Boosting Technological ChangeIn the next decades, technology will be our main challenge in the global economy. It willhold the key to improving the quality of our lives and resolving longstanding conflictsbetween economic goals and resource constraints. The pace of technology change isaccelerating as our global economy stimulates vigorous competition for new products, and
208new scientific discoveries are rapidly put to use. In response, consumer expectations fortechnology have increased dramatically. Technologies and technological change, not onlyhave an impact on manufacturing, but on all sectors of the economy, as well as all activitiesare affected by technologies (Lowe, 1995). Thus, a key objective of technologymanagement is to ensure that technological resources are well linked to businessrequirements (Phaal, Farrukh, Probert, 2000)26F24.In todays world of rapid technological change, managing changes in both technologies andprocesses are among the foremost challenges for high-tech organizations.Everett M. Rogers Diffusion of innovations theory27F25Underpinning the idea oftechnological change as a social process is general agreement on the importance of socialcontext and communication. According to this model, technological change is seen as asocial process involving adopters and others who are profoundly affected by culturalsetting, political institutions and marketing strategies. Emphasis has been on four keyelements of the technological change process:1) An innovative technology2) Communicated through certain channels3) To members of a social system4) Who adopt it over a period of time?These elements are derived from Everett M. Rogers Diffusion of innovations theory.As it shown in the next figure he proposed that adopters of any new innovation or ideacould be categorized as innovators (2.5%), early adopters (13.5%), early majority (34%),late majority (34%) and laggards (16%), based on Bell curve mathematic division.24Technology and innovations in the global economic geography, IFSAM 200625Rogers, Everett M. Diffusion of Innovations (1962)
209Source: from Norman, D.A. 1998, (The Invisible Computer)On the other hand, the acquisition rate of new technology, either products or processes, isone indicator of economic innovation (OECD/Eurostat 1997, Schumpeter 1942).The adoption and dissemination of technologies are vital to economic growth anddevelopment. Nowadays providing new technology plays an enormous role in enhancingany company’s success. It is through providing new technologies that new products andservices are introduced to the market, new production processes are developed andintroduced, and organizational changes are made. Through adoption of newer, moreadvanced, technologies and practices, industries can increase their production andoperational capabilities, improve their productivity, and expand their lines of new productsand services.But the crucial question is "Why it is so difficult for large companies to bring disruptivetechnologies to market?"Clayton Christensen (1997)28F26provides an answer in his book "The innovators dilemma"provides a detailed and thorough analysis of this phenomenon. He finds that innovative,disruptive technologies are, at first, perceived as toys. The companies evaluating them and26Christensen, C. M. (1997) The innovators dilemma: When new technologies cause greatfirms to fail. Boston: Harvard Business School Press
210their best customers see them as overpriced and underpowered. In fact, Christensen showsthat asking your customers is the wrong approach. In the end, these "toys" dominate, killingthose that went before. (e.g., hydraulic shovels, small disk drives, personal computers ...).
211Source: from Norman, D.A. 1998, (The Invisible Computer)The needs-satisfaction curve of a technology, new technologies start out at the bottom leftof the curve, delivering less than the customers require. As a result, customers demandbetter technology and more features, regardless of the cost or inconvenience. A transitionoccurs when the technology cannot satisfy the basic needs.
212 Risks of technological changeThink comprehensively about risks. Given the number of risks associated with climatechange, efforts to gauge the benefits of reducing them should be as broad as possible.Elements to consider include the impacts on market goods and effects on human health29F27.There are several specific challenges that can add to the costs, increase the risks and reducethe ability to handle change safely. Every technological advance brings potential risks,some of which are not easy to predict. The hidden costs of technologies can be devastating.For instance nuclear power, can be a limitless source of energy, but it came to be seen as adangerous threat to health and the environment after accidents at Three Mile Island (UnitedStates) and Chernobyl (Ukraine). Some risks are directly associated with technologies. Forinstance using mobile telephones cause brain or eye cancer, it depends on how radiationfrom the handset affects human tissue. So economic, social and environmental risks are inthe face of such concerns, why adopt new technologies?Although best practices respond to these uncertainties by seeking to maximize the benefitsand minimize the risks of technological change but its not easy, managing such change canbe complex and politically controversial.Businesses ultimately face choices in the timing and extent of embracing technologicalchange. As a result, a full risk assessment needs to weigh the expected disadvantages of anew technology against its expected benefits, and compare these to: The expected value of disadvantages and benefits of existing technologies The expected value of disadvantages and benefits of alternative technologiesIn addition there are some important reasons that increase risk of any technological changeparticularly in developing countries:27Climate Change Risks and Policies: An Overview, Michael A. Toman, March 1997,Revised June 2000 • Climate Issues Brief No. 1
213 Lack of skilled personnel Insufficient resources Weak collaboration & communications strategies Inadequate feedback mechanismsA-7) Do employees must be change?Employee involvement can be an effective way to reduce the restraining forces because itcreates psychological ownership of the decision30F28.According to Mahoney (2003)31F29, people are all ‘conservative’ in their mental outlook andhence more resistant to change. We are all subject to change, both organizationally andpersonally, but how do we adapt to these changes and adopt them in our working lives?How have we helped employees to understand and cope with them? We are now required towork in an interdependent way. Teamwork is vital. The work way we do is also changing.These changes require that we alter what we expect from the people we work with. Wehave to change the values we live by. Values like awareness, teamwork, tolerance,responsibility and information are paramount just as flexibility and change readiness.Engaging and motivate teams, and create understanding for the process as a whole.As a profession therefore, we need to remember that, for an organization to change,individuals within that organization must change.On the other side, in the change period people with specific knowledge have vital role andextra power to resistance. One of the most important responsibilities of each changemanager is to cope with resistance to change. Knowledge Management is a method on this28Canadian Organizational Behavior, Steven L. McShane, University of WesternAustralia29A Time for Change?, JOHN M. FISHER, Human Resource Development International,Vol. 8, No. 2, 257 – 263, June 2005
214way. Both tacit and explicit knowledge and information channels should be addressed inthe change period.A-8) Look at the Past, Present and FutureAnother important factor to managing any change is information that comes from differenttimes and become the basis of change. There are three different focuses to time as follows:1 Focus on the past practices2 Focus on the present practices3 Focus on the future practicesAlthough, businesses try to become more flexible in future market and prepare for anyrequired change, it is very important for them to use past and present practices forimplementing an appropriate change. As a result it will be obvious that a change withmaximum results needs to use all of the different time practices simultaneously.FuturePastPresentFull of SuccessFailRatherSuccessAs shown in the above figure, the maximum result is identified as the common area. So anychange plan based-on only future feedbacks will fail. Also any change plan based-on pastand present situation alone, will not be completely successful.
215B) Distinction of Planning ParadigmsB-1) what is the conventional paradigm?According to Michel Porters strategic planning model there are three main steps:1) Industry analysis2) Competitor analysis3) Value chain analysisThe model is enough good for making our business successful today but the crucialquestion is how companies should prepare themselves for future market?Moreover there are some problems for the model:1 In this model each part of analysis should be evaluated individually and thenmaking integration together2 The analysis is prepared by using existing data in all of sections. As a resultthere is no necessary effective prediction for future market3 There is no any effective decision making process in organizations value chainto involve R&D activities towards future targets4 No effective integration between departments in the value chain process (eachdepartment play as an island)5 Decisions have no credible guarantees to implement properly at the baselines6 No guarantees to provide effective technologies needed7 No guarantees to allocate financial resources to provide technologies as targetmarket needed8 The existing mechanism makes decisions on existing solutions instead ofcreating new solution or technologies
216B-2) Why new paradigm?As mentioned before, there are many important reasons to increase sensibility of companiesabout the future market.1 Global economys discipline has changed in last decades.2 Globalization has made world trade more competitive for companies.3 Basic and Applied sciences have grown rapidly.4 Pioneer companies innovate to make competitive advantages for its futuremarket5 The life cycle of products and services is shorter than before6 Market and customer expectations will rise rapidly7 R&D has became the most important part of each businessesIn this situation, companies are looking to provide models to increase their sustainability inthe target market. On the other hand, nowadays technology is the most important part ofeach business and those companies that creates a new product or services by using newpioneer and disruptive technologies will have a greater chance to conquer the market. Forinstance cell phone companies by using new technologies developed in recent years canincrease its market share today. It means they need to plan for the future now; otherwisethey will lose the market tomorrow.As a result, since 1990s some pioneer companies changed their approach concerningmonitoring future markets and technology roadmapping recognized as one of the mostimportant strategic models and now it plays a strategic role to cope with future market.
217C) An Overview to the Technology Roadmapping (TRM) Approach It’s no secret that the companies with the greatest productivity and more marketshare know how to forecast, analyze and plan. On the other hand to be competitive inthe future, and ensure their long-term success, companies must focus on their futuremarkets and apply a well-researched technology development strategy. That’s wheretechnology roadmapping comes in. In addition given a set of needs, technologyroadmapping recognize the crucial requirements and performance targets that must besatisfied by certain time frames if a company is to meet the demands of future markets. TRM also recognizes the technologies that a company need to develop to meet thosetargets. Finally, it provides the information needed to make trade-offs among differenttechnology alternatives. Furthermore, TRM provides a clear direction towards a goal.Many of us have witnessed unclear direction to an industry, which technologyalternative to pursue, how quickly it is needed, or when an industry should coordinatethe development of multiple technologies. At times like these, technology roadmappingis essential. Linkages of business objectives to technology resources: The success of companiesfollows the general rules for business operations and markets. For that reason, projectsaimed at business development should be based on initiatives from companies and beadapted to the companies’ needs.
218What Service/ProductWhich Market Which TechnologyVision - MissionBusiness StrategyTechnologyRoadmapHow TRM links with Business StrategiesThe real challenge for companies is to make their technologies commercial andinternationally marketable, and to develop and improve the business skills needed forthis. As a result its vital to businesses in developing a new set of technologies, that thefirm must make an appropriate linkage between their vision, objectives, strategies,projects and tools.In order to cope with these challenges, technology planning and business planning cannotbe regarded independently. Both technology planning and business planning revert to anumber of different methods for technological foresight and planning, such as portfolioanalyses, scenario techniques and technology roadmapping. Portfolio analyses are suited toanalyze and depict the company’s current situation as well as to compare target and actualbusiness or technology results. Portfolio analyses, however, provide insufficientinformation concerning future expected developments. By means of scenario techniques,future developments in different economic, technical, scientific, and social environmentscan be forecast. Thereby, not only a particular future state is described but also the path of
219development to achieve this state. The application of this method aims at the considerationof as many relevant factors of influence as possible.C-1) Definition and literaturesTechnology Roadmapping is a powerful technique for managing any technology. It is veryimportant to understand the definition of each part of the context.1) Technology;According to the importance of Technology in our life there are many published definitionsfor it. For a better sense of the word, I choose some of the most important definitions asfollows:The Merriam-Webster dictionary offers a definition of the term: "the practicalapplication of knowledge especially in a particular area" and "a capability given bythe practical application of knowledge"Bernard Stiegler, in "Technics and Time, 1", defines technology in two ways: as"the pursuit of life by means other than life," and as "organized inorganic matter."ZDNet Definition for Technology: "Applying a systematic technique, method orapproach to solve a problem".As defined, technology can be most broadly defined as the entities, both material andimmaterial, created by the application of mental and physical effort in order to achievesome value. In this usage, technology refers to tools and machines that may be used tosolve real-world problems. The word "technology" can also be used to refer to a collectionof techniques. In this context, it is the current state of humanitys knowledge of how tocombine resources to produce desired products, to solve problems, fulfill needs, or satisfieswants; it includes technical methods, skills, processes, techniques, tools and rawmaterials32F30.30At (http://en.wikipedia.org/wiki/Technology)
220There are a number of factors that characterize technology, which can be considered as aspecific type of knowledge. The characteristics of technology which distinguish it frommore general knowledge types are that it is action-oriented and focuses on the know-howof the organization. While technology is often associated with science and engineering(hard technology), the processes which enable its effective application are also important,for example new product and innovation processes, together with organizational structuresand supporting communication / knowledge networks (soft aspects of technology).On the other hand there is a life cycle for each technology. Next figure shows thatEmerging, Growth and Maturity are three stages of development of any technology towardgoals and objectives of providing it. It means to provide a new set of technology we need toknow current situation of exist technologies to avoid using those technologies that arematured in our target market.TechnologyIs evolvingEmerging Growth MaturityObjectives & GoalsTechnology Life Cycle
2212) Technology Management;According to the European Institute of Technology Management (EITM) the followingdefinition is adopted33F31:"Technology management addresses the effective identification, selection, acquisition,development, exploitation and protection of technologies (product, process andinfrastructural) needed to maintain a market position and business performance inaccordance with the company’s objectives".Technology management addresses the processes needed to maintain a stream of productsand services to the market. It deals with all aspects of integrating technological issues intobusiness decision making, and is directly relevant to a number of business processes,including strategy development, innovation and new product development, and operationsmanagement. Healthy technology management requires establishing appropriate knowledgeflows between commercial and technological perspectives in the firm, to achieve a balancebetween market ‘pull’ and technology ‘push’. The nature of these knowledge flows dependson both the internal and external context, including factors such as business aims, marketdynamics, organizational culture, etc34F32.3) Technology Planning;The following is a working definition of technology planning established by the RTECTechnology Plan Task Force35F33:31EITM is a collaboration between a number of European universities: see http://www-mmd.eng.cam.ac.uk/ctm/eitm/index.html32Technology Roadmapping: linking technology resources to business objectives, RobertPhaal, Clare Farrukh and David Probert, Centre for Technology Management, Universityof Cambridge33At (http://www.ncrtec.org/capacity/guidewww/whattech.htm)
222"A technology plan serves as a bridge between established standards and classroompractice. It articulates, organizes, and integrates the content and processes of educationin a particular discipline with integration of appropriate technologies. It facilitatesmultiple levels of policy and curriculum decision making, especially in school districts,schools, and educational organizations that allow for supportive resource allocations."Implementing new technologies at any companies is no easy feat. They must understandwhat youre asking of a given technology, budget for it, put a risk management plan inplace, and be prepared to evolve.A technology plan is the single most important ingredient to effectively using technology inany organization. The technology planning process will help minimize technology-relatedcrises, use staff time efficiently, and avoid wasting money on equipment. Create a plan tohelp you think through your priorities in order to use technology in a way that directlyfurthers your mission36F34.4) Technology Readiness Level(TRL);Is a measure to assess the maturity of evolving technologies (materials, components,devices, etc.) prior to incorporating that technology into a system or subsystem. It wasoriginally developed by NASA in the 1980s.The primary purpose of using Technology Readiness Levels is to help management inmaking decisions concerning the development and transitioning of technology. Advantagesinclude:Provides a common understanding of technology statusRisk managementUsed to make decisions concerning technology funding34At (http://www.techsoup.org/learningcenter/techplan/index.cfm)
223Used to make decisions concerning transition of technology5) Technology Roadmap;There is a good definition for Roadmap by Robert Galvin 37F35(chairman of the ExecutiveCommittee of Motorola in Schaumburg, IL):"A roadmap is an extended look at the future of a chosen field of inquiry composed fromthe collective knowledge and imagination of the brightest drivers of change in that field."Another definition from Vähäniitty, et al38F36:"Roadmapping is a popular metaphor for planning and portraying the use of scientific andtechnological resources, elements and their structural relationships over a period of time.The process of roadmapping identifies, evaluates and selects strategic alternatives that canbe used to achieve desired objectives, and the resulting roadmaps summarize andcommunicate the results of key business decisions".Generally, technology roadmap is a document that identifies key requirements for a set ofproducts or service needs. These include critical system requirements, the product andprocess performance targets and the technology alternatives with milestones for meetingthose targets. Technology Roadmap also translates vision into a set of technologydevelopment initiatives and ultimately the needed R&D pathways. The technology roadmapprovides the ‘big’ picture view of the technology required to meet the various business and35Science Roadmaps, Science 8 May 1998, at(http://www.sciencemag.org/cgi/content/summary/280/5365/803a)36A ROADMAPPING METHODOLOGY FOR STRATEGIC RESEARCH ON VO, Luis M.Camarinha-Matos, New University of Lisbon, Hamideh Afsarmanesh, University ofAmsterdam, ISBN 1-4020-7823-4, Mar 2004
224market needs. This ensures that any technology introductions are relevant to the companyand will have a direct impact to its business39F37.6) Technology Roadmapping;“Industries that have technology roadmaps are moving to the next stage - joint technologyinitiatives that will prepare them to deliver what tomorrow markets will demands.”Industry Canada - StrategisRoadmapping can be described as a systematic approach to forecasting and includes thepossibility of result visualization (Specht, Behrens, 2005b). Even if roadmapping has a longhistory - Charles H. Willyard and Cheryl W. McClees (1987) describe Motorolastechnology roadmap process in 1987 - as recently as 2004, two journals published specialissues on roadmapping. Also at that time, research centers concentrated on technologyroadmaps and roadmapping were established in the U.S. and U.K. By now, the subjectroadmapping has been dominated by practical application and field reports rather thanscientific treatment in the published English-speaking literature (Schaller, 2004)40F38.Furthermore, Technology Roadmapping is particularly useful for coordinating thedevelopment of multiple technologies, especially across multiple projects. Thiscoordination is critical when dealing with technologies that are related to a corporation’score competencies. The information about and analysis of needs and technologyalternatives is far more important than following a precise process and format41F39.37Operation and Technology Roadmapping( Reduce risk, identify opportunity,plan for the future), Science and Engineering Research Council38Integration of strategic business planning and technology planning in globally operatingcompanies by means of roadmapping, IFSAM 200639Fundamentals of Technology Roadmapping, Marie L. Garcia and Olin H. Bray,Strategic Business Development Department
225What do they all have in common?In summing up, when an organization has a written plan outlining and knows clearly whereit is headed in terms of technology use its more likely to be successful.It is apparent that systematic planning--whether simple or complex--can help maximize theinvestment of resources in technology. In all of the way that mentioned administrativeinvolvement and leadership are crucial to the technology planning and implementationprocess. If organizational leaders do not understand and support the technology plan, it willbe difficult to implement and can be either intentionally or inadvertently sabotaged.On the other hand effective implementation of any kind of technology requires a change inculture--one that encourages people to think differently about the teaching and learningprocesses and the possibilities for technology use.C-2) Differentiations of technology roadmapping & technology planningAs mentioned before Roadmapping is nowadays recognized as an important strategicplanning tool to forecast both the critical development needs and the steps required to reachmajor advances in an area; and thus provides a valuable tool for decision making. Also itpromotes enhanced collaboration, sharing of knowledge and reduces the risks of investingin technology. It differs significantly from other planning and analysis tools. Also it is ledby industry and driven by market needs. Some important reasons are as follows:1) It is driven by “market pull,” that is, the technological innovations needed ifcompanies are to serve anticipated future markets.2) Roadmapping is NOT driven by “technology push,” what can be done with theexisting stock of technologies.3) It builds on a vision of where a company or industry wishes to go and whattechnologies are needed to get there.
2264) It provides a route for achieving the vision, going from today to tomorrow, by helpingcompanies or organizations identify, select and develop the right technologyalternatives needed to create the right products/services for future markets.Roadmaps also differ from foresight methods in one important respect. Unlike somemethods where the end-point is forecast, the roadmap process starts with the end-point orvision clearly in mind and then traces the alternative technology paths to achieve it.Roadmapping is a tool for companies to predict future market demands and to determinethe technological processes and products required to satisfy them. This process is unique inthat it encourages firms, R&D organizations, governments and industries to develop ashared vision of the future and explore the opportunities and pathways to achieve it.C-3) Evolution of technology roadmappingOver the last 20 years, roadmapping has become a popular metaphor for strategic planningin technology. Generally, a technology roadmap provides a consensus view or vision of thefuture landscape available to decision makers. When conducted properly, a roadmappingeffort provides a way to involve critical stakeholders as well as to identify, evaluate andselect alternatives that can be used to achieve a desired objective.As shown in the next figure, since the 1970s strategic planning has become the mostimportant method for businesses to provide better condition in the future markets, it hasdeveloped by different industries to useful tools and applications. Motorola has developedTRM approach and took up it in electronics sector and aerospace at 1980’s. At first it wasused as an estimating tool but the method has become one of the most famous models tomake policies for providing required technologies at 1990s. So the desired model that willbe support by TRM approach, is Integrated Strategic Planning. It means the need tocoordinate and optimize all the activities of the company have mandated a corporate levelapproach to the management of the process.
227Centre for Technology ManagementCo-evolution1970 1980 1990 2000 2010Motorola developstechnologyroadmappingapproachStrategicplanningTake up inelectronicssectorSemiconductorTechnology RoadmapPolicyFutures & Scenario planningForesightForecastingTake up inother sectors- companies- consortia- governmentRoadmappingapproachsupportsintegratedstrategicplanningScience fictionSince TRM has emerged as a planning tool, it has been presented in three different ways:1) Wall paper roadmaps2) Digital Roadmapping3) Online RoadmappingAs shown in the next figure, at the third phase there is used an integrated roadmappingbetween affiliated companies and subsidiaries simultaneously to share their visions,knowledge and resources to each other.
228Source: Technology Roadmapping, linking technology resources to company objectives,Robert Phaal, University of CambridgeC-4) Why Technology RoadmappingAs briefly mentioned before, below are some of the indications that an industry needs toproduce a roadmap:1 Demands made by the markets the industry serves are changing dramatically.2 The industry has reached a strategic juncture with regard to entering new markets,seeking out new technologies or acquiring new skills.3 Companies within the industry are losing market share, failing to increase marketshare as new markets open, or facing a competitive threat.4 Companies within the industry have a vision of their place in future markets but nostrategy for making that vision tomorrow’s reality.5 Companies, or the industry, are facing uncertainty about what technologies andapplications future markets will demand, and when new technologies will beneeded.Sharing VisionsVisionKnowledgeResources
2296 There is no consensus among companies, or within the industry, as to the besttechnology option from among the choices for future development.7 Each company within the industry is conducting separate R&D efforts devoted totechnology problems, that all have in common.8 Individual companies within an industry sector lack the resources and skills neededto boost innovation, and would benefit from joint efforts in R&D, sourcing, orsupply-chain arrangements.C-5) what are the main benefits of TRM?Like other planning tools at both the individual company and industry levels, technologyroadmapping has several potential uses and resulting benefits as follows:1 It helps an organization to predict markets future technology needs2 It defines the road that companies must take to compete successfully in futuresmarket3 Linking technology to business and market drivers4 Identifying and prioritizing technology investment5 Identification of critical and disruptive technologies6 It plays as guidelines for technology R&D decisions7 It reduces the risk of costly technology investment8 It helps companies to seize futures market opportunities9 It increases integrated collaboration, partnership and sharing knowledge
230C-6) Why R&D involvement?Neither government nor private sector can fulfill the Roadmaps vision alone. Policymakerinvolvement will be an important component of the Roadmap implementation.Particularly important to progress will be the creation of proper strategic documents andnew financial incentives for participation in public/private collaborative research initiativesto share the costs and risks of strategic technology development in the transition from basicresearch to the competitive marketplace.BasicResearchPre-CompetitiveDevelopmentCommercialDevelopmentAppliedResearchR&DInvestmentPublicSectorPrivateSectorPublic & Private sector in theR&D investmentAs a result, to provide a new set of technologies, related R&D activities in both of publicand private sector should be integrated with business objectives and market needs.At the end of the technology roadmapping process, the company will have a definedtechnology roadmap created by key staff with support from the relevant research Centerstechnology specialists. This will enable the organization to link its business strategies andobjectives with the required technology development and to plan a R&D strategy with thekey themes identified.
231C-7) Why should be avoid from exist solutions?As was mentioned, Technology Roadmapping fits within a firm’s broad strategic planningand business development framework and provides a way to fill technology gaps andcapture opportunities. But without a roadmap, firms instead of focusing on the market andcustomer needs, often focus on existing solutions to cover technological gaps. In thissituation providing any new technology can be a managerial mistake because there is noproper interaction between market needs, business strategies, R&D advances, resourcelimitations and technology alternatives.Also, existing solutions do not create competitive advantages for our business because theyare used to in other businesses and customers have previous experience with them. On theother hand, because of technology obsolescence there is a strong logic to providetechnology required by future needs and make a long-term plan to achieve it. For instance,transportation strategists responsibility is looking for hybrid and other replaced fuels forfuture vehicles.C-8) Different Modes & Approaches of TRMFirst of all as previous best practices there are usually different modes of roadmaps asfollows42F40: Science and research roadmaps Industry roadmaps Technology roadmaps Product roadmaps Product-technology roadmaps40Technology Planning for Business Competitiveness, A Guide to DevelopingTechnology Roadmaps, August 2001
232 Project and issues roadmapsOn the other hand, Roadmaps can be developed at three broad levels of targets; industry,technology and product. As shown in the next figure the range of TRM is going to bebroader from product to industry level. Also participation of stakeholders and impact ofTRM on them will be much more at the same flow.• Industry roadmaps define broader market goals that are applicable across an entiresector and provide focus for industry to identify and address market, regulatory andother barriers to growth and define a clear set of industry actions.• Technology roadmaps identify, evaluate and promote the development ofcollaborative projects within and between industries to fill technology gaps and/orcapture technology related opportunities.• Product roadmaps provide business managers with a comprehensive, long rangetechnology assessment of their future product needs. This type of roadmap provides acomplete description of the product line, division or operating group of an organization.On the other hand there are two different approaches for providing TRM by firms orindustries; backward or forward looking.IndustryTechnologProductParticipation ImpactLarge LargeLow Low
233Backward Roadmapping, or "customer needs" approach, is preferred by firms andindustries that are market-driven and interact closely with customers. It also involvesfinding out how to reach a given target set by the marketplace. This could be a businessgoal, product, process and fulfillment of a legislative requirement or a technology.Forward Roadmapping or a "technology push" approach is used by firms or industriesthat are largely technology-driven and more likely to use forward roadmapping andoften set their own targets based on scientific knowledge. Also it involves the process ofbuilding upon existing technologies until new targets appear. It aims to evaluate thepotential of a given technology by considering the possibilities for the satisfaction offuture needs.Furthermore, to develop an appropriate Roadmap we need to provide different informationfrom different sources. There are usually used internal and external sources. By thiscategory for developing a Roadmap we often use three different methods as follows:Expert based Approach: A team of experts comes together to identify the structuralrelationships within the industry/firm and specify the quantitative and qualitativeattributes of the roadmap.Workshop based Approach: This technique is used to engage a wider group ofindustry, research, academic, government and other stakeholders to draw on theirknowledge and experiences.Computer Based Approach: Large databases are scanned to identify research,technology, engineering and product areas of relevance.C-9) Technology Roadmapping ProcessThe TRM will focus on the role of future technologies in eliminating waste in operation andproduction processes. As was mentioned, Technology Roadmapping is a useful technology
234planning tool in an increasingly competitive environment. For a successful technologyroadmapping process, it is critical to identify why you are doing the roadmapping and howit will be used.In general view, a roadmap consists of three main parts:1) The characterization of the current state2) The vision or the desired “future”3) A structured set of actions to achieve the vision.Each part needs to be supported by a SWOT analysis. For instance identifying the gapbetween the current situation and the desired vision is one of the most important steps. As aresult, to install new vision for the business we need to implement a gap analysis that willhelp us know how to fill the gap: Where are we now – to – Where be us going. Next figuresshow that how different parts of a TRM work together simultaneously.As shown in the next figure, not only technology is not target but also it is driven by theintersection of market needs and technology assessment.Centre for Technology ManagementMarket InformationProduct-Market analysisProduct-TechnologyOptions EvaluationTechnology AssessmentIdentification of TechnologyAvailable / Feasible / PossibleRoadmapCreationDefinedTargetsProjectProposalsWhere are theboundaries ofthe roadmappingprocess?Source: EIRMA, 1997Technology roadmappingRelationship to the strategic planning process
235On the other hand, Roadmaps are surrounded by different potentials and limitations toimplement successfully. Financial, technological, knowledge, people and culture areusually most of each companys limitation to implement a technology roadmap. In additionthere are usually specific resources and competitive advantages as a companys potentialtoward successful execution of a roadmap.Between different processes defined by researchers Marie L. Garcia and Olin H. Bray, thereis a logical process for it and I use it in my project. There would be three main phases forimplementation of a TRM43F41:Phase 1: preliminary activity Satisfy essential conditions. Provide leadership/sponsorship. Define the scope and boundaries for the technology roadmap.Phase 2: Development of the Technology Roadmap Identify the “product” that will be the focus of the roadmap. Identify the critical system requirements and their targets. Specify the major technology areas. Specify the technology drivers and their targets. Identify technology alternatives and their time lines.41Fundamentals of Technology Roadmapping, Marie L. Garcia, Olin H. Bray, April1997
236 Recommend the technology alternatives that should be pursued. Create the technology roadmap report.Phase 3: Follow-up activity Critique and validate the roadmap. Develop an implementation plan. Review and update.As shown, the main activities to develop a TRM will be done at the second phase. On theother hand, there needs to be a step by step approach to identify market needs and providenecessary technologies to satisfy business targets. So the dynamic cycle of the project willbe done as follow:Corporate& BusinessStrategyMarketNeeds TechnologyOpportunityIndustryPotentialsProjectValueChainProjectRequirementsSWOTAnalysisDynamic effect of different dimension
237As a result the key steps or decision points in producing a technology roadmap are asfollows:1. IDENTIFY NEED & BENEFITSIs a technology roadmap required, what are the benefits?2. IDENTIFY INDUSTRY CHAMPION & LEADERSWho will lead the process from within industry?3. IDENTIFY RESOURCE NEEDS AND SOURCESWho will provide the resources to run the process?4. ESTABLISH PROCESSWhat process will be adopted for developing the roadmap?5. DEVELOP ROADMAPCan use expert-based or workshop-based approach6. IMPLEMENTATIONHow will the roadmap be taken forward?In addition to developing a TRM for my project, I need to make an algorithm for betterunderstanding of activities relationships. In the next diagram I try to show how each stageshould be done.
238MarketNeedsTechnologyOpportunityCompanyNeedsServiceRequirementsMarket-ServiceAnalysisCriteria forAlternativesIdentifyAlternativesBusinessVisioningTechnologyAssessmentService-TechnologyEvaluationNoNoNoNoRoadmapCreationImplementationIsThe RoadmapValid?NoYesResourcesAre in accessNoProject’s Process AlgorithmSWOT
239C-10) which Challenges are in face of TRMs?As previous experiences of TRMs implementation, there are many challenges for industriesand firms to develop it. According to CTM survey, 1999 (following diagram) there are 4key challenges that make the most important difficulties to implement a TRM; Keeping the TRM process "alive" on an ongoing basis with 47% priority Starting up the TRM process with 26% priority Developing a robust TRM process with 10% priority Roll-out of the TRM process with 5% priorityAs a result it is very important that people, who are responsible for TRMs implementation,understand these challenges and use previous experiences to improve the chance ofsuccessful execution.Centre for Technology Management05101520253035404550Starting upthe TRMprocessDeveloping arobust TRMprocessRoll-out ofthe TRMprocessKeeping theTRM processalive on anongoingbasisOtherResponse(%)Source: CTM survey, 1999Roadmapping challengesOn the other hand, according to CTM survey, 1999 there are many critical success factors(CSF) to increase chance of TRM’s successful implementation as follows:
240 Clear business need with 73% priority Commitment from senior management with 69% priority Right people / functions were involved with 63% priority Desire to develop effective business processes with 58% priority Company culture & politics supported, participation / progress with 42%priority Timing of initiative was appropriate with 42% priorityCentre for Technology Management0 10 20 30 40 50 60 70 80Clear business needDesire to develop effective business processesCompany culture & politics supportedparticipation / progressRight people / functions were involvedCommitment from senior managementRequired data / information / knowledge availableTiming of initiative was appropriateClear and effective process for developing TRMEffective tools / techniques / methodsEffective facilitation / trainingOtherResponse (%)Roadmapping success factorsSource: CTM survey, 1999End of Chapter Four
242Chapter Five: Technology SelectionIntroductionIn the new economic climate, the competition between companies is getting harder and thefight for their place in the global networks is getting tighter. Companies have long engagedin head-to-head competition for competitive advantage, market share and differentiation.Firms have to create new strategies to keep their inner vitality and position themselves inthe global competition. Finding a strategy which emphasizes the right strengths andpotentials of the firm can result in a new position in the global economic hierarchy. FordModel T, Japanese fuel-efficient autos and Chrysler minivan are examples of strategies inthe auto industry.Furthermore, in todays global economy, any competitive advantage is temporary and thosecompanies will be competitive that develop a coherent Operations Strategy. In this waymatching the market requirements to the company’s capabilities is the best approach. Inaddition, matching between costumer requirements by gathering customer feedback andproduct/service specification is a key and rapid response to the market.As a result, in this situation companies need to manage strategically. Strategic means theset of managerial actions and decisions involved in creating a new business offering.Strategic moves deliver products and services that open and capture new market space, witha significant leap in demand and value.An efficient and good strategy should have three major elements: focus, divergence, and acompelling tagline. Without these qualities, new strategies can cause the firm to bemuddled, undifferentiated, and with a high cost structure.Generally, there are many activities that play as success keys:• Rapid response to changing markets, technologies, economics
243• Become market driven in design and agile in manufacturing• Pursue a global strategy for prosperity, education, freedom of choice• Promote flexibility, systems thinking, and long term gains, against rigidity, localthinking, and short term gains.As mentioned before, rising demand for mobility has led to an increase in demand for railtraffic in Iran, which has led to a growing demand for new railway technology products andservices. According to M. Porters corporate strategy there is a dynamic relationshipbetween customer and corporate value with implementation of new projects and corecapability development. As shown in the next figure, in a general view projects must makemoney and build capabilities. On the other hand, execution of new projects is derived frommarket needs and costumer satisfaction.Costumer ValueCore Capabilities New ProjectsCorporate Value
244Preliminary Analysis to Roadmap CreationAs mentioned in the last chapter, there is a process to implement a new set of requiredtechnology start from creating our vision based-on market expectations. Also I wasmentioned that the most important difference of Technology Roadmapping with otherplanning process is that TRM not only start from exist solution but also it focused onmarket needs and requirements.On the other hand, providing a proper service to satisfy our costumer requirements need toassess justified and adaptable technology alternatives. This is a two way assessment thatleads us to make an appropriate decision for technology providing. There are six mainphases to create an appropriate roadmap and I will develop my project roadmap by thesesteps. The concept is shown as schematic in the next diagram. Market Requirements Service-MarketAnalysis Service-TechnologyAnalysis TechnologicalGap Analysis Identification ofTechnologies(Available/Feasible) Roadmap
245Moreover, as shown in the next figure, in a roadmap hierarchy making an appropriatevision is completely based on market and costumer needs that are crucial way for anybusinesses. There are many unsuccessful examples due to an inappropriate visionstatement. Therefore to provide a proper infrastructure for Tehran-Mashed High SpeedTrain (HST) I need to know and recognize projects vision and customer expectations. Thencritical system and technologies will be matched to the needs.4/26/02NEEDS – VisionCRITICAL SYSTEMSTECHNOLOGY DRIVERSand TIMELINESLINKAGESGAPSRENEWROADMAP HIERARCHYSo the critical point is market & costumer expectation that leads companies to make themcompetitive by new capabilities. As a result understanding customer requirements is crucialfor businesses. Every decision requires qualitative and quantitative analysis to reach aconclusion. In this way there are many tools and techniques such as QFD (Quality FunctionDeployment), focus groups, AHP, interviews. The key goal of those techniques is toidentify all potentially relevant issues.
246Phase 1) Market Requirements, Visions and ObjectivesPhase 1-1) Conceptual Framework of Technological RenovationThe rapid development of service industries and the inevitable rise in competition betweenrival companies have resulted in an increasing need for service providers to identify gaps inthe market in order to improve service provision and retain customers. In the service sector,the provision of high-quality customer service is of fundamental and paramountimportance. Objective methods by which to assess the quality of service provision aretherefore vital for attaining and retaining high-quality services.Parasuraman et al. (1988) devised SERVQUAL, a multiple-item scale for measuringconsumer perceptions. The scale was based on a concept of ‘perceived’ quality (theconsumers’ judgment of the services they had received). They represent importantinfluences on consumer perceptions. Research indicates that consumers evaluate the levelof perceived service quality based on their perception of tangible cues evidenced during theservice encounter. He argued that perceived service quality is best seen as the degree anddirection of the discrepancy between consumers’ perceptions and expectations.44F42When examining a utilitarian service such as rail transportation, a number of tangiblecomponents exist. These include indoor and outdoor services. In a conceptual frameworkwe can recognize two kind of variables; Independent Variables (I.V- are known ascustomer needs) and Dependent Variable (D.V- is known as customer satisfaction)42Measuring service quality, A review and critique of research using SERVQUALLisa J. Morrison Coulthard, University of Leicester, International Journal of Market ResearchVol. 46 Quarter 4
247The effects of service conditions were modeled using a structural conceptual frameworkillustrated in the next figure that identified nine service elements, specified as independentvariables, are the parameters that recognize degree of satisfaction among customers.Phase 1-2) Customer RequirementsThere are defined a set of targets for rail user requirements. These targets are provided tosteer researchers towards appropriate technologies that may be able to meet essentialperformance requirements. They generally reflect the required and desired performance ofthe rail transport system.1) Accessibility of rail transport2) Availability of transport (at required time)3) Travel duration4) Reliability of arrival timeCostumerNeedsVisions & ObjectivesCostumerSatisfactionRecognizeCriticalSystemsTechnologicalGapRenewRoadmapConceptual Framework of Technological Renovation
2485) Cost of travel6) Safety of traveler7) Convenience8) Air quality9) Noise levels10) Equitable access (.mobility for all.)11) Vehicle security12) Travel qualityFinally the mentioned targets would be listed in seven final criteria for customerrequirements as follows:Ticket Price, High Quality & Comfortable Services, Aesthetic Design, Travel Time,Accessibility, Environmental Friendliness and Travel Safety are chosen among manydifferent criteria as original customer needs.Below is a brief explanation of those service quality criteria that each selected as anindependent variable: Ticket Price: The price by which the ticket is purchased. High Quality & Comfortable Services: the level of service quality that providefor customers at the both of trains indoor & outdoor services. Aesthetic Design: Beauty design for car body and trains accommodations. Travel Time: The time of the journey from the origin to the destination. Accessibility: The accessibility of the train from different locations (Stations)on the route. Environmental Friendliness: the level of rail technology impacts onenvironment. Safety: The safety of passengers during the trip.Phase 1-3) Visions & ObjectivesAs previously mentioned, making an appropriate visions for any business is directlydepends on its internal and external situation. Firms strengths and weaknesses can be goodsigns for our business vision. Moreover, markets and different modes of drivers around the
249organization are very important for any threats or opportunities for business. As a result tobuild an appropriate vision we need to make SWOT analysis at first.According to Irans TESP analysis and Irans railway situation provided in Chapter 2 and 3I try to build a brief SWOT analysis45F43to develop strategic visions.Irans Railway SWOT AnalysisStrengthsInternal&Positive1. Passenger services are relatively reliable2. Traffic levels are rising rapidly creating demand for stock built tomodern standards3. Traditional railway design skills exist4. Projects are prioritized by political/social/regional planningconsiderations rather simply existing transport demand5. There are good potential for engineers and skilled workers6. Significant construction experience has been obtained7. New permanent-way private contractors are emerging8. Some foreign investors are interested in railway development projects9. Competent infrastructure contractors are available10. Finance/EPC contracts are approved for some railway projects11. Adequate raw materials for railway construction are availableWeaknessesInternal&Negative1. Freight trains are too slow2. Slower speed vehicles inhibit service acceleration3.There is no strict safety regime4. There is a lack of modern/specialized high speed vehicles5. There are shortages of certain types of vehicle6. The fleet is now very inadequate in terms of age, speed and haulagecapacity7. New rail construction is to insufficiently high standards8. There are insufficient passenger and freight services to convey the43Extract from Iran’s comprehensive transportation plan (a draft report)
250traffic on offer9. Freight services are not timetabled and traffic is subject to longdelays10.Freight tariffs are applied nationally at government level and areinflexible11.There is very little risk-sharing or financial involvement with theprivate sector12.Lack of planning control leads to a mismatch between budget andrequirements13.There are no corporate planning or traffic costing offices on theorganizational chart14.Some training programs do not match practical requirements15.Training to create a safety culture needs to be instigated16.There is no corporate approach to planning, coordinating provisionof lines, rolling stock and support facilities17.Project approvals do not sufficiently make allowance for the effecton business results18.The planning and decision-making process needs review.OpportunitiesExternal&Positive1. Passenger demand is very high with the present low fares tariffpolicy2. Construction of new lines opens up passenger travel opportunitiesand demand for new types of vehicle3. Introduction of new high capacity/high speed trains will reducetravel times and costs4. The rail system expansion enables implementation of higher leveltraining programs5. Acceleration of services would improve rolling stock utilization6. Several private factories are now able to build new rolling stock7. Wagon Pars and other builders are available to meet the demand fornew stock8. An integrated planning procedure will optimize investment and lead
251to reduced costs9. Government policy is to support and enlarge the rail system10. The trend is towards increased foreign investmentJoint ventures between domestic and foreign consulting engineers aredevelopingThreatsExternal&Negative1. Increased road competition might reduce demand for rail travel2. Inflated costs will discourage rail traffic3. Many projects are under financial constraints4. The absence of a specific future rolling stock procurement strategycould lead to reactive management decisions5. Supply of rolling stock may not keep pace with network expansion6. System extension and traffic increase renders the acquisition offurther new locomotives imperative7. Government investment in rail might decrease8. There could be a lack of harmony between Government and therailway regarding prioritization for passenger servicesAs shown in the above table, there are recognized different needs, shortages and potentialsin both internal and external range that help us to understand our position on transportationmarket. Network capacity, new rolling stock facilities, safety, speed of trains, planning,training programs, and governmental intermediation are some of the important issues incurrent situation of Irans railway.In addition, according to the project vision there are many crucial questions:What is the vision of new Tehran-Mashed railway?What do the policy makers want the project to be at aparticular future time?Which components of the project have focused more on market needs?
252As a result, if the overall goal is to increase efficiency, productivity, and communication inthe following tables, I extract five Visions and objectives for Irans railway that would beproper to develop for the Tehran-Mashed high speed train. In this way I define the purposeand long term goals of the project that focus on the desired results.Tehran-Mashed new Electrical Railway(Visions & Objectives)Vision 1: Cheap, safe, convenient, clean, secure and equitable rail transport# Objectives1 Provide appropriate Mobility and congestion2 Increase the rail traffic on the line3 provide for new Lifestyle and attitudes4 Increase Health, safety and security5 Enhance the quality of rail services offered6 Enable easy and fast access to the trainVision 2: Successful and sustainable rail transport industry# Objectives1 Increase share of rail transport at National Economy2 Moving more Freight and passenger3 Increase speed of trains (Passenger & Freight)4 Develop network capacity ( new tracks, rolling stocks, signaling &telecommunication)Vision 3: Environmentally sustainable rail transport system# Objectives1 Accepting of Environmental Burden and Social Responsibility2 Become the green mode of transport3 Decrease energy consumption4 Making lower PollutionVision 4: Effective and appropriate technological innovation for rail transport# Objectives1 Providing technologies with low energy consumption2 providing integrated technologies3 Processes and systems would be flexible for technological adaptation4 R&D plans must be implement in advance of providing new technologies5 Passenger trains would be provide by aesthetic design and equipped by newfacilities & special accessories
2536 enhance self sufficiencyVision 5: Effective, integrated, competitiveness and sustainable rail transport system# Objectives1 Develop physical rail infrastructure2 Develop CRM & online ticketing system3 Provide know-how and knowledgeable & skilled people4 Improve training system for critical technologies5 Rail transport tariffs become float by services6 Cost management would be expected by departmentsPhase 2) Service-Market AnalysisPhase 2-1) Matching Visions with Costumer and Technical RequirementsAs previously mentioned, to provide an appropriate technology for new rail track we needto find proper link between costumer requirements and our service technical specificationsthat will be offered. Therefore the next step is finalizing costumer needs and matching tothe appropriate service.2-1-1) Using QFD for service development Definitions & LiteratureQuality Function Deployment (QFD)46F44was conceived in Japan in the late 1960s, during anera when Japanese industries broke from their post-World War II mode of product/servicedevelopment through imitation and copying and moved to product/service developmentbased on originality. QFD was born in this environment as a method or concept for newproduct/service development.Quality can be defined as meeting customer needs and providing superior value. This focuson satisfying customers needs places an emphasis on techniques such as Quality Function44QFD: Past, Present, and Future, Yoji Akao, Asahi University
254Deployment (QFD)47F45to help understand those needs and plan a product to provide superiorvalue.Quality Function Deployment is a structured approach to defining customer needs orrequirements and translating them into specific plans to produce products to meet thoseneeds. The "voice of the customer" is the term to describe these stated and unstatedcustomer needs or requirements. The voice of the customer is captured in a variety of ways:direct discussion or interviews, surveys, focus groups, customer specifications, observation,warranty data, field reports, etc. This understanding of the customer needs is thensummarized in a product planning matrix or "house of quality". These matrices are used totranslate higher level "whats" or needs into lower level "hows" - product requirements ortechnical characteristics to satisfy these needs.As a result, the main concept of QFD is translating of customer requirements into servicespecifications and then into key process operations and finally related to service deliveryoperation. This process implement in three matrixes as follows:1) Voice of Customer2) Competitors evaluation3) Prioritize of service specificationsThis method is used to ensure that the design team has a complete understanding of theproblem before potential solutions are generated. Several steps in the method will providefurther input in downstream decision-making. The steps are as follows: Identify the Customer(s) Determine the Customer’s Requirements Determine Relative Importance of Requirements45CUSTOMER-FOCUSED DEVELOPMENT WITH QFD, Kenneth Crow, DRM Associates
255 Evaluate the competition (existing solutions) Translate Customer Requirements into Measurable Technical Requirements Set Technical Targets Value Purpose of implementation of QFD in my projectAs mentioned before, Irans railway is looking to develop Tehran-Mashed railway into anelectrical high-speed line. On the other hand, it is important to know which kind of serviceswill satisfy customers. As a result, it is important to recognize those criteria that have moreeffect on customer expectations.By expanding QFD model (House of quality), we can explore different perspectives of ournew service from different points of views; customer, competitors and technicalspecifications.The main steps for drawing "house of quality" are as follows:1) Refining Customer Requirements2) Technical Characteristics3) Strong Negative Interactions4) Follow-up Actions5) Competitors’ Evaluation
256 Refining Customer RequirementsAs previously mentioned, we are looking to ensure that the customer’s requirements drivethe design process and not what the design engineer thinks the customer should want. Adesign which does not properly address customer needs and wants may be poorly receivedin the marketplace. Customers in a general manner are looking for some commonrequirements in a rail transport system. In this project, I prefer to choose those commonrequirements that I extracted from previous questionnaires and also my rail transportexperiences. The criteria that I chose are as follows:Refining Customer RequirementsOriginal CustomerRequirementsConsolidated CustomerRequirementsDescriptionTicket PriceTravel Quality level of quality in eachpassenger railway isdepends on indoor &outdoor servicesHigh Quality & ComfortableServicesAesthetic DesignTravel TimeTravel ReliabilityReliability of travel iscompletely depends ontrain scheduling andaccessibilityAccessibilityEnvironmental FriendlinessSocial EffectivenessSafety is the mostimportant factor to satisfyrail travel costumer. ourservices also needs toimprove our lifeenvironment qualityTravel Safety
257 Technical RequirementsIn the next table, the goal is to develop a set of Technical requirements (designspecifications) that are measurable and may therefore be used to evaluate proposed designsolutions. The first step is to transform each customer requirement into a technicalrequirement. Second, we will need to ensure that each technical requirement is measurable.If no measurable technical requirement exists for a customer requirement, then thatcustomer requirement is not well defined. It means we need to break the customerrequirement down into smaller parts.Technical Requirements to Satisfy Customer Needs46Source is from Railway Electrification Department, Irans railway Co47CCTV- Closed Circuit TelevisionConsolidated CustomerRequirementsTechnical Requirements48F46DescriptionTravel QualityHigh Track Curvesto satisfy high quality forhigh speed train customerswe need to appropriatetrack and comfortableaccommodationsCCTV49F47, Internet, Phone…Travel ReliabilityHigh Speed Vehicleshigh speed travel will bereliable when we usepotentially vehicles andspecial train schedulingTrains Robust SchedulingSocial EffectivenessHigh Reliable Signaling &TelecommunicationCustomers Safety &Environmentalexpectations will be morecover by high speedrailway specificationLow Track Gradient(Low Energy Consumption)
258 Strong Negative InteractionsIn the next step, we need to recognize major obstacles for each customer requirement. Ithelps us understand the main problems that we should solve in our service developmentprocess. In addition, it can be use as a primary technical gap in our decision-makingprocess in comparison to technical target value.Strong Negative Interactions(Among the Technical Requirements)Technical Requirements Opposing TechnicalRequirementsCommentTrack CurvesExist rail track curves is lowerthan 4000RHigh speed trains only use inexpand curves with radius morethan 4000R because of securityand higher speedCCTV, Internet, Phone… No ITC infrastructures in train Train need to order with IT-based infrastructureHigh Speed Vehicles Non-electrical vehiclesTo improve train speed up to350Km/h need to order trainpower supply as electricalpackageTrain’s Robust SchedulingMix train scheduling and noblock permission priorityHigh speed trains always mustbe prioritized in case ofschedulingHigh Reliable Signaling &TelecommunicationUsing traditional and upgradedmonitoring operational systemsimultaneouslyBecause of train safetyimportance it needs to removetraditional monitoring systemMaximum Gradient >.015 Execution of new special highspeed track with lower gradient
259 Follow-up ActionOne of the most important phases in developing a house of quality is defining target valuefor each technical requirement. In this step we will specify targets for the measurabletechnical requirements. These will be target values that will be used to evaluate our finaldesign during its evolution. These targets should be identified, feasible and practical in bothtechnical and managerial point of views. Furthermore, in this step we need to recognize ourfuture action plan to achieve technical target value for each customer requirement.Follow-up ActionsTechnical requirements Technical Target Value50F48Planned ActionTrack Curve >4000R Execution of new specialhigh speed trackCCTV, Internet, Phone… Full package Passenger vehicles shouldbe ordered IT-based & fullfacility servicesHigh Speed Vehicles 350Km/h Vehicles’ operationaldesign speed should cover350Km/hTrain’s Robust Scheduling No delay, No unplanned stop Using integrated automaticsystem, GPS clocksynchronizingHigh Reliable Signaling &TelecommunicationZero mistake on monitoringsystem, Zero accident, highestcapacity on accessUsing DispatchingManagement system andalso SCADA system on thebasis of remote computernetwork technology withstandard digital interfaceMaximum Gradient <15 meter/Km=.015 Execution of new specialhigh speed track48Source is from Railway Electrification Department, Irans railway Co.
260 Competitors’ EvaluationThe last part of developing a house of quality is the competitors’ evaluation. As mentionedin Chapter Two (Industry Analysis), competition amongst Iranian railroads is emergingslowly. There is a short list of competitors in passenger train services. Between thosecompanies, three firms are identified as major competitors; Iran’s railway Co, Bonyad andRaad-e-Tabriz. As a result, I only try to evaluate each of these three.As shown in the BCG Matrix51F49, the Tehran-Mashed existing railway is mostly used byIran’s railway Co that has the highest market share between competitors. As previouslymentioned most rail passengers in Iran and in particular the Tehran-Mashed line are movedby this company. As a result, they have higher market share and growth rate in comparisonto other companies. On the other hand, some other companies such as Bonyad and Raad-e-Tabriz have experienced rapid growth in recent years. The main reason is that they usemore facilities for passengers in the whole of indoor and outdoor train services. Also othercompanies such as Mania, Sabz and Simorgh have low market share and growth. They haveno motivation to increase their performance because of many financial and governmentallimitations to support private rail companies.49BCG Matrix (Boston Consulting Group Matrix)
261Iranian Railway companiesAnnual passenger performance (2006), number in 1000Row Company Name Owned byCarriedPassengersMarketShare1Raja(Associated to Iran’s Railway Co.)Public 13400 62.6%2BonyadPublic 3930 18.4%3Raad-e-TabrizPrivate 1312 6.1%4Mania RailPrivate 1104 5.2%5Marbin (Sabz)Private 456 2.1%6JooparPrivate 407 1.9%7Rail Seir KosarPrivate 224 1.0%8SimorghPrivate 216 1.0%9Tamin Tarabar-e-SabzPrivate 211 1.0%Total 21260 100%Data Source: Raja Passenger Train’s CoCompetitor’s Market Share and Growth rateCompany Name Market Share Growth RateIransRailway 63% 10%Bonyad 18.4% 8%Raad-e-Tabriz 6.1% 6%Mania 5.2% 3%Sabz 2.1% 3%Simorgh 1% 3%Data Source: Raja Passenger Train’s Co
2632-2) Project’s House of Quality Required QuestionnaireTo implement an appropriate QFD we need to design a data gathering process. Aspreviously mentioned, the main parts in the “house of quality” that requires gathering ofprimary data are as follows:Methods of Data Gathering for developing of “House of Quality”As shown, there are three simple questionnaires (questionnaires No. 1-3) and two specificAHP52F50-based questionnaires (questionnaires No. 4-5).50Analytical Hierarchy Process#QuestionnaireforCompletebySubject ofQuestionsDataGatheringMethodNo. ofSampleDataGatheringLocation1 CompetitorEvaluationCustomer CustomerRequirementsQuestionnaire 50 TehranStation2 CompetitorEvaluationTechnicalExpertsTechnicalRequirementsQuestionnaire 50 RailwayResearchCenters3 InterrelationshipMatrixTechnicalExpertsReactionbetweenCostumer &TechnicalRequirementsQuestionnaire 50 RailwayResearchCenters4CustomerRequirementsPriorityCommercialExpertsCustomerRequirementsQuestionnaire&AHP50RailwayResearchCenters5 TechnicalDifficultyTechnicalExpertsTechnicalRequirementsQuestionnaire&AHP50RailwayResearchCenters
264 The way of data gathering and results calculation:To address people with different perceptions we made easy tables to replace questions. Forsimple questionnaires (No. 1-5) the scores are defined as Likert scale (1 to 5) and for AHP-based questionnaires (No. 4-5) the scores are defined under Expert Choice software (1-9).In addition, the average scores for whole of completed questionnaires will be used as thefinal result of the first three questionnaires. In the AHP-based questionnaires, finalpriorities will be used in the “house of quality”.To evaluate factors and alternatives I’ve used trial Expert Choice software which does notpermit original print of results and make results on the tables. Conclusion of questionnaires:As previously mentioned, there are five questionnaires that filled-out by customers and railtechnical and commercial experts. In the following tables the conclusion of eachquestionnaires will discussed and will be used at the project’s house of quality.
267A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 B1 TicketPrice5 High quality &comfortableservices2 TicketPrice3 AestheticDesign3 Ticket Price 8 Travel Time4 Ticket Price 3 Accessibility5 TicketPrice1 EnvironmentalFriendliness6 TicketPrice9 TravelSafety7 High quality &comfortable services7 AestheticDesign8 High quality &comfortable services1 TravelTime9 High quality &comfortable services3 Accessibility10 High quality &comfortable services4 EnvironmentalFriendliness11 High quality &comfortable services5 TravelSafety12 AestheticDesign7 Travel Time13 Aesthetic Design 6 Accessibility14 AestheticDesign5 EnvironmentalFriendliness15 Aesthetic Design 9 Travel Safety16 Travel Time 3 Accessibility17 Travel Time 4 EnvironmentalFriendliness18 Travel Time 4 Travel Safety19 Accessibility 1 EnvironmentalFriendliness20 Accessibility 7 Travel Safety21 EnvironmentalFriendliness7 TravelSafetyComparison of the relative importanceA versus BWith respect to Goal: Prioritize Customer Requirements(Average Result of Commercial Experts Opinions(Questionnaire No. 4, use as input for AHP calculation)
268Final priority of Customer Requirements(Prioritize by Expert Choice software)Customer Requirements Final Score Normalizedpriority1 Travel Safety .462 1.0002 Travel Time .183 .3953 High Quality & ComfortableServices.164 .3554 Accessibility .074 .1605 Environmental Friendliness .057 .1236 Ticket Price .039 .0847 Aesthetic Design .021 .046Inconsistency rate .06A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 B1 TrackCurves7 CCTV, Internet,Phone…2 TrackCurves7 High SpeedVehicles3 TrackCurves4 Train’s RobustScheduling4 TrackCurves4 High ReliableSignaling &Telecommunication5 TrackCurves1 Low TrackGradient6 CCTV, Internet,Phone…9 High SpeedVehicles7 CCTV, Internet,Phone…1 Train’s RobustScheduling8 CCTV, Internet,Phone…7 High ReliableSignaling &Telecommunication9 CCTV, Internet,Phone…3 Low TrackGradient10 High SpeedVehicles8 Train’s RobustScheduling11 High SpeedVehicles5 High ReliableSignaling &Comparison of the relative importanceA versus BWith respect to Goal: Prioritize Technical Requirements(Average Result of Technical Experts Opinions)(Questionnaire No. 5, use as input for AHP calculation)
269Telecommunication12 High SpeedVehicles7 Low TrackGradient13 Train’s RobustScheduling7 High ReliableSignaling &Telecommunication14 Train’s RobustScheduling4 Low TrackGradient15 High ReliableSignaling &Telecommunication4 Low TrackGradientFinal priority of Technical Requirements (Difficulty)(Prioritize by Expert Choice software)Technical Requirements Final Scores NormalizedPriority1 High Speed Vehicles .530 1.0002 High Reliable Signaling &Telecommunication.228 .4303 Track Curve .099 .1884 Low Track Gradient .081 .1535 Train’s Robust Scheduling .032 .0596 CCTV, Internet, Phone… .030 .056Inconsistency rate .08
270CustomerRequirementsPriority(Normalized)-QNo.4TrackCurvesCCTV,Internet,Phone…HighSpeedVehiclesTrainsRobustSchedulingHighReliableSignaling&TelecommunicationLowTrackGradient(LowEnergy)CompetitiveEvaluation(1-low, 5-high)(Q No.1)1 2 3 4 5Ticket Price .084 5 5 3 2 2 U R BHigh Quality &ComfortableServices.355 3 4 5 5 1 U R BAesthetic Design .046 4 5 U BRTravel Time .395 5 5 3 4 4 U BRAccessibility .160 2 3 BR UEnvironmentalFriendliness.123 2 5 2 1 5 UBRTravel Safety1 4 5 5 3 UBRTechnicalEvaluation(Q No.2)5 U4B R B R3UB.RU BRU2 U B R B RU1Specification ofTarget Values>4000RFullpackage350Km/hNodelay,NostopZeroaccident<.015mTechnical Difficulty 19 6 100 6 43 15B= BonyadR= Raad-e-TabrizU= Us (IransRailwayHouse of Quality(Tehran-Mashed new HST)
2712-3) Identification of Related ServicesAccording to the market requirements and firms vision and objectives, there could be a setof new rail transport services that leads some customers to be satisfied. As previouslymentioned, each service has specific characteristics that satisfy part of market requirements.On the other hand in rail transport, new generation of trains possess different characteristicsthat the market is looking for. To satisfy market needs requires choosing appropriateservices and is a crucial step in strategic planning. Referring to the rail transport situation,we need to identify proposed service characteristics for alternative development step. Thenext figure shows the linkage between market and service characteristics.Rail Transport Market-Service LinkageVisions Objectives MarketRequirementsProposedServiceCharacteristicsCheap, safe,convenient,clean, secureand equitablerail transportProvide appropriateMobility and congestionIncrease the rail traffic onthe lineprovide for new Lifestyleand attitudesIncrease Health, safety andsecurityEnhance the quality of railservices offeredEnable easy and fastaccess to the trainTicket PriceHigh Quality &ComfortableServicesAestheticDesignTrains Speedhigher than250Km/hSecure & safesubsystems(breaking…)High quality forinternal &external vehiclesExperienced &reliabletechnologySuccessful andsustainable railtransportindustryIncrease share of railtransportMoving more Freight andpassengerIncrease speedDevelop networkcapacityEnvironmentallysustainable railtransport systemAccepting ofEnvironmental Burden andSocial ResponsibilityBecome the green mode oftransportDecrease energyconsumptionMaking lower Pollution
272As it shown in the above figure we need specific service with mentioned characteristics tosatisfy market requirements and firms objectives.In conclusion the crucial questions are as follows: Does exist service (traditional & non-electrified trains) leads market to be satisfied? Which new services are more suitable to provide for rail transport costumers? Which new services are more compatible with firms vision & objectives?To make an appropriate decision we need to know different rail transport services that inthe next tables I try to explain about them briefly.Tehran-Mashed new lineChoosing the Strategic ServicesEffective andappropriatetechnologicalinnovation forrail transportProviding technologieswith low energyconsumptionproviding integratedtechnologiesflexible Processes andsystemsrequired R&D plansaesthetic design and newfacilities on trainsenhance self sufficiencyTravel TimeAccessibilityTravel SafetyEnvironmentalFriendlinessHigh trackcapacityElectrified rollingstockRobust SignalingsystemsMatchabletechnology withexist technologyEffective,integrated,competitivenessand sustainablerail transportsystemDevelop physical railinfrastructureDevelop CRM & onlineticketing systemProvide know-how andknowledgeable peopleImprove training systemtariffs become floatCost management ondepartments
273# Services1 Using Existing rail transportby better quality2 Using Upgraded Exist Vehicles (Electrified)3 New High Speed RailwayComparison of different rail alternatives(Impact of Technology Area)CostumerRequirementsPotential of Tehran-Mashed New Service AlternativesNo. 1Using Exist rail transportby better qualityNo. 2Using UpgradedExist Vehicles(Electrified)No. 3New High SpeedRailwayLow Price High Quality&ComfortableServices AestheticDesign Travel Time Accessibility EnvironmentalFriendliness Travel Safety Total Scores 9 11 17ProposeServiceCharacteristicsNo technical change, butbetter deliveryNo considerablechange in train speedand facilitiesNew systemcompletely replacedby huge technicalchange
274As shown, High Speed Railway in most criteria is better able to satisfy customerrequirements. The reasons that two criteria (Low price & Accessibility) have lower pointsin high speed train are as follows:Price: Capital investment is much higher than conventional rail transport. So if ticket pricebecame as low as other trains, then the payback period will be higher for investorand that is not a good target.Accessibility: High Speed Trains usually use origin-destination trains and they don’t stop at linestations because the train needs to maintain a proper average speed. As a result thereis not enough accessibility for all passengers on the route. Why High Speed Trains:There are many challenges that confront Irans transportation section to 2025 and highspeed rail transport could be used as best solution for these challenges: Iran’s population will be around 100 million With average car usage alone, Iran’s carbon emissions will be very high Iran will need thousands hectares of land (mostly cropland) related to road transport. Impact on oil reserves is high as 21st century will be consuming many times that of20thcenturyAs previously mentioned, development of High Speed Trains (HST) in last decades makesit more attractive in comparison to car. The promotion of high-speed transportation is thestated aim of Iran’s transport politics, in order to relocate road and air traffic to rail and toreduce environmental pollution.
275High-speed rail is a form of rail transport in which trains are electrically propelled at speedsexceeding 250 Kilometers per hour. These trains currently operate in regular revenueservice at maximum speeds of about 300 kilometers per hour, but have been tested at over500 kilometers per hour. At high speeds, trains must be completely grade-separated,meaning there are no at-grade crossings with roads or other types of transportation; thetracks are fenced to prevent intrusion; and the trains must run on new, dedicated alignmentsthat are very straight. High-speed trains are a safe, efficient, reliable and pleasurable way totravel between destinations that are generally between 200 to 800 miles apart. Utilizing afraction of the energy per passenger of automobiles and jets, high-speed trains are the safestmode of travel, with no fatalities ever registered on new infrastructure designed for highspeeds.Many direct and indirect advantages such as low travel time, lower emissions and safer tripare discussed by governments to implement new HST infrastructure around the world. Toevaluate advantages of high speed train we should analyze parameters from both customerand government point of view. The most common advantages in both parts are as follows: Higher Capacity (low land use) Reduced Traffic Energy Efficiency Reduced Pollution (green mode of transport) Lower travel time More Convenience Safety
276In conclusion, according to customer & social requirements in transportation, although itseems that High Speed Railway is the best alternative for the future of railwaytransportation, choosing the best technology is more crucial for the industry.Phase 3) Identification of Technology Alternatives (Available/Feasible)As discussed above, the existing Tehran-Mashed line offers low-quality service, especiallywith regard to the commercial speed achieved between the two cities 120 km/hr.Improvement of the existing line is not possible due to the current state of the railwaywhich provides a limited turning radius in terms of railway track geometry.The vision of Tehran-Mashed new track is a performance-based transportation plan and thegoals of the Plan, as summarized in Chapter 3, are to maximize mobility and accessibility,ensure safety and reliability, preserve transportation system, maximize productivity ofsystem, protect the environment and encourage land-use and growth patterns thatcomplement the transportation system. The measures mentioned before were developed toensure that the adopted goals are achieved through the implementation of the new plan. Thenew high-speed infrastructure will be a state-of-the-art, proven, world-class technology thatsignificantly increases the networks transportation capacity.As mentioned in Chapter Three, choosing the specific alternatives for implementation ofhigh speed train depends on customer expectations and industry potential. Tilting,Conventional high speed and Maglev trains are three available/feasible modes of highspeed railway. To provide the best alternative we need to know which of them has pioneer
277characteristics and is more adaptable concerning the Tehran-Mashed traffic, financial andtechnical situation.On the other hand, the challenges relative to developing a sound transportation plan can bebroadly divided into three categories:1) Addressing growth in traffic2) Expanding and wisely utilizing the new infrastructure and3) Financing the new plan.If recent population and movement trends mentioned in Chapter Two continue in thefuture, by 2025 the route will face a demand of 150 million passengers.Given the challenges we face, the new plan relies on a number of strategies to address theroute’s transportation needs. These include an increased focus on operational, managementand innovative financing mechanisms. This comprehensive approach is referred to assystem management.The Tehran-Mashed route constitutes one of the most heavily-used rail routes bypassengers in Iran. As a result, the new line project between Tehran-Mashed will provide arailway service that is very attractive to passengers. In particular, origin/destinationtraveling times of four hours are projected. But the selected technology should be the onewhich: Best satisfies the selection criteria for the project. Best satisfies the route goals and requirements Good operational match particularly to the technical and financial requirementsof project.So, the question of what alternatives are appropriate for this line is crucial for dealing withthe future. Which Alternatives are available?
278Presently, two modes of HST technologies are available in the world:1) Steel-wheel-on steel-rail systems and2) MAGnetic LEVitation (MAGLEV) systemsThe Japanese Shinkansen (or “bullet” train), the French TGV and the German ICE are allexamples of steel-wheel-on-steel-rail systems. These are high-tech train systems that vastlyimprove upon traditional passenger rail technology.On the other hand, the first technology can be implemented in two formats:2) Using Tilting vehicles on existing track for running 250 km/h trains3) Using high speed vehicles in new dedicated tracks for running 350 km/h trainsAs a result, we have three alternatives to choose as a high speed train for Tehran-Mashedrailway; Tilting vehicles running 250km/h trains on the existing line High speed vehicles running 350km/h trains on the new dedicated line Maglev vehicles for running 450km/h trains on the special new magnetic line Worlds high speed trains historyFirst generation of high speed trains started at the Japanese Railway with shinkansen trainsin 1960s. European railway responded to the shinkansen challenge quickly53F51. GermanFederal Railway (DB) started a tilting train with 200km/h on an existing line near Munichin 1965.51High Speed trains Worldwide, Japan Railway & Transport Review/ October 1994
279Also French National Railway (SNCF)started 200km/h commercial servicesbetween Paris-Toulouse main line in 1967.So far world has not experienced highspeed trains but in 1980s French TGV hasregistered operational speeds more than250km/h. while in the 1990s TGV achieved512km/h record that increased to 574.8 byTGV-POS set 4402, at 3 April 2007.In recent years, a new generation ofmagnetic trains has emerged as super high speed trains that run in a magnetic levitated line.In 2003, Japanese railway recorded 581km/h speed by JR Maglev MLX01 that up to now isthe fastest record for commercial trains. However, because of technical and financialsituation, there is no plan around the world to implement this kind of tracks, but GermanTransrapid (Munich Airport) and Shanghai Maglev (Shanghai Airport) are two commercialMaglev lines. Also there are some Maglev projects under study or construction around theworld such as Los Angeles, Tokyo-Osaka and Tokyo-Nagoya by 2025 and so on.JR Maglev MLX01 Speed Record: 581km/hAbove: Swedish X2000 Tilting train, top speed200km/h or 125mph. You can clearly see ittilting here
280In summary, ongoing high speed railway plans ensure that most transportation systems inthe next decades will be replaced by high speed railway.To better understand the next diagram I try to show trip time by different high speedalternatives at the planned Tehran-Mashed line.Trip Time by Technology(Tehran-Mashed new line)050100150200250300200 400 600 800Distance(Km)TotalTripTime(Minutes)Tilting (Avg. speed- 180km/h)Conventional HST (Avg. speed- 280km/h)Maglev (Avg. speed- 350km/h)The speedgapcouldnt beimportantforPassengers
282Source: The Guidelines for the development of the Trans-European Transport network (TEN-T)
283The United State High Speed Rail plansSource: HIGH SPEED RAIL TRANSPORT DEVELOPMENT AT GLOBAL LEVEL, VipinSharma, UIC, 19/06/06High-Speed & Dedicated Passenger Railway Network Plan in ChinaSource: HIGH SPEED RAIL TRANSPORT DEVELOPMENT AT GLOBAL LEVEL, VipinSharma, UIC, 19/06/06 Features Comparison Chart
284According to the available alternatives previously mentioned, they have many differentcharacteristics that help to identify each of them as a specific alternative. Although, toimplement a general evaluation we need to know each alternatives features but because ofhigh-tech technology used for high speed railways, first we need to identify the principlesof technical selection that can be as follows54F52: The technical starting point must be at a high level Technology choice will be made according to the result of a comprehensiveresearch and comparison in all aspects such as economy, technology and market,through international bidding introduce state-of-art equipment a high-speed railway technology system adaptable to situation in Iran52Extract from Tehran-Mashed Electrification Projects pre-tender
286 Prioritize Technology Alternatives:Generally to choose an appropriate high speed railway alternative there are manyquantitative and qualitative tools such as MADM, MCDM, Linear Programming, GoalProgramming, Brainstorming and so on. But best practices demonstrate that for problemsthat include qualitative and quantitative criteria, AHP can do that in a proper form. As aresult, in this phase I will use AHP to prioritize projects technology alternatives.The AHP provides a structured framework for setting priorities on each level of thehierarchy using pair-wise comparisons, a process of evaluating each pair of decisionfactors at a given level on the model for their relative importance with respect to theirparent.As previously mentioned, there are three available alternatives to implement for Tehran-Mashed new high speed railway; Tilting, Conventional HST, Maglev.To develop Alternative Evaluation Model, we need to identify different level of model thatwas previously mentioned. They are as follows: Identify the main goal Identify the main objectives Identify evaluation criteria that will satisfy objectives Identify available alternativesThe Expert Choice is AHP-based software that I used in my evaluation model. There aretwo steps for data gathering:1) Priority of each criterion by a group of experts (Questionnaire No.6)2) Priority of each alternatives by a group of experts (Questionnaire No.7)Required questionnaires designed as AHP pair-wise comparisons completed by a group of50 rail technical experts. The average result of 50 questionnaires is as follows:
287A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 B1 MaximumSpeed7 TicketPrice2 MaximumSpeed5 AirPollution3 MaximumSpeed8 NoisePollution4 MaximumSpeed7 Land Use5 MaximumSpeed6 CapitalCost6 MaximumSpeed4 MinimumTrackCurve7 MaximumSpeed1 Safety8 MaximumSpeed5 TechnologyAdoption9 TicketPrice4 AirPollution10 TicketPrice5 NoisePollution11 TicketPrice2 Land Use12 TicketPrice8 CapitalCost13 TicketPrice4 MinimumTrackCurve14 TicketPrice5 Safety15 TicketPrice6 TechnologyAdoption16 AirPollution8 NoisePollution17 AirPollution6 Land Use18 AirPollution8 CapitalCost19 AirPollution3 MinimumTrackCurve20 AirPollution7 Safety21 AirPollution3 TechnologyAdoptionComparison of the relative importanceA versus BWith respect to Goal: Choosing an appropriate high speed railway(Average Result of Technical Experts Opinions)(Questionnaire No. 6)
28822 NoisePollution7 Land Use23 NoisePollution9 CapitalCost24 NoisePollution6 MinimumTrackCurve25 NoisePollution8 Safety26 NoisePollution5 TechnologyAdoption27 land Use 7 CapitalCost28 land Use 3 MinimumTrackCurve29 land Use 9 Safety30 land Use 3 TechnologyAdoption31 CapitalCost7 MinimumTrackCurve32 CapitalCost2 Safety33 CapitalCost3 TechnologyAdoption34 MinimumTrackCurve5 Safety35 MinimumTrackCurve3 TechnologyAdoption36 Safety 3 TechnologyAdoptionA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting 7 ConventionalHigh SpeedTilting 9 MaglevConventionalHigh Speed4 MaglevComparison of the relative importanceA versus BWith respect to: Maximum Speed(Average Result of Technical Experts Opinions)(Questionnaire No. 7)Comparison of the relative importanceA versus BWith respect to: Ticket Price(Average Result of Technical Experts Opinions)(Questionnaire No. 7)
289A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting 5 ConventionalHigh SpeedTilting 9 MaglevConventionalHigh Speed3 MaglevA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting 7 ConventionalHigh SpeedTilting 9 MaglevConventionalHigh Speed3 MaglevA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting 7 ConventionalHigh SpeedTilting 9 MaglevConventionalHigh Speed3 MaglevComparison of the relative importanceA versus BWith respect to: Air Pollution(Average Result of Technical Experts Opinions)(Questionnaire No. 7)Comparison of the relative importanceA versus BWith respect to: Noise Pollution(Average Result of Technical Experts Opinions)(Questionnaire No. 7)Comparison of the relative importanceA versus BWith respect to: Land Use(Average Result of Technical Experts Opinions)(Questionnaire No. 7)
290A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting 7 ConventionalHigh SpeedTilting 9 MaglevConventionalHigh Speed3 MaglevA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting 7 ConventionalHigh SpeedTilting 9 MaglevConventionalHigh Speed4 MaglevA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting 7 ConventionalHigh SpeedTilting 7 MaglevConventionalHigh Speed3 MaglevComparison of the relative importanceA versus BWith respect to: Initial Capital Cost(Average Result of Technical Experts Opinions)(Questionnaire No. 7)Comparison of the relative importanceA versus BWith respect to: Minimum Track Curve Needed(Average Result of Technical Experts Opinions)(Questionnaire No. 7)Comparison of the relative importanceA versus BWith respect to: Safety(Average Result of Technical Experts Opinions)(Questionnaire No. 7)
291Tehran-Mashed new HSTFinal priority of HST Alternatives(Prioritized by Expert Choice software)EvaluationFactorsCriteria Ranking InconsistencyAlternatives RankingPriority Normalized Tilting ConventionalHSTMaglev1 CapitalCost.336 1 .14 .778 .162 .0592 Safety .194 .576 .13 .063 .633 .3043 Max.SpeedKm/h.184 .548 .14 .053 .253 .694A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting 7 ConventionalHigh SpeedTilting 7 MaglevConventionalHigh Speed3 MaglevA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting 6 ConventionalHigh SpeedTilting 9 MaglevConventionalHigh Speed5 MaglevComparison of the relative importanceA versus BWith respect to: Technology Adoption(Average Result of Technical Experts Opinions)(Questionnaire No. 7)
294 Conclusion of Technology SelectionWhile Very high speed trains like the TGV could be regarded as the Rolls Royce of trains,tilting trains could be thought of as the cheap cars. The ticket price differential is fairlysimilar too; it costs about 20 times more per unit distance to build a dedicated high speedline than it does to upgrade existing lines for tilting trains. This is what makes tilting trainsextremely attractive. However there are disadvantages. Maximum speed of 250km/h isabout as fast as trains go when not on dedicated lines. And then they have to be fitted inwith slower moving traffic. With rail travel growing all over Tehran-Mashed, the problemsof railways reaching saturation point has forced new lines to be built.On the other hand, if maglev trains can be proven to be commercially viable (which has notyet been done) it should be a success. In recent years one question remained without ananswer: will Maglev replace conventional trains? Most people are watching Shanghai,where the first short line maglev is running in commercial service. This may decidewhether or not maglev will be used across the world. Maglev may become the preferredpath for new high speed railway lines although it would depend on whether services wereneeded to stretch beyond a high speed line. However, if there is no existing rail networkthen it makes sense to build a maglev line. Moreover, there are many obstacles to developMaglev trains; technological gap, higher capital cost, lack of knowledgeable people and soon.In summing up, according to the alternatives evaluation results mentioned before Tilting,Conventional HST and Maglev trains become accepted alternatives respectively. It could beconsidered as a different perspective:1) For implementation of high speed railway we need to consider step by stepapproach2) Passengers are more focused on safety
2953) Government is concerned about the budget and technological gap4) Worlds previous best practices show that we must be careful5) Speed, Safety & Low energy Consumption will be the crucial challenges for thenext transportation systems6) Super high speed railway will overcome the transportation industry in the nextdecade7) Environmental effectiveness will be a crucial factor to provide HST technologyThese challenges will be considered when choosing the final alternative in the next phases.Phase 4) Technology Gap AnalysisA comprehensive technological gap assessment was initiated to help identify where ourprojects should be encouraged in relation to the projects targets.Gap analysis is a process of finding the gap, that is, the determination of the differencebetween the current status at our company and the requirements of desired targets. Theprocess allows the identification of gaps so as to formulate actions required to achieve astructured in accordance with new system standard.In this phase for Tehran-Mashed new project, Im looking to identify significant barriers tofeasibility and to develop solutions to enable highly efficient, cost-effective andenvironmentally friendly high speed railway.Furthermore, to recognize technological gap we first need to know modes of technologythat are as follows:1) Hard technologies (machinery, equipment, spare parts, vehicles…)2) Soft technologies (knowledge, skills, management, systems and processes…)The common mistake in a technological adoption process is identifying only hardtechnologies. As a result, if we do not recognize soft technologies in an operational period
296many unpractical, inefficient and costly technologies will be on hand. So there are manycrucial questions that should be answered before going forward:• What will tomorrow’s high speed railway industry look like?• What technologies will be required to support that vision?• When should they be ready?• What actions are required?• What do we risk if our staff doesn’t understand high speed railway issues?• How can we acquire the missing-link technology we need?• Do we cost-effectively manage R&D activities? Electrification Necessity AnalysisTehran-Mashed electrified railway goes a long way toward accelerating train speed,shortening travel time, improving environment quality along the railway. It offers to:1) Optimize utilization of resourcesElectrified railway does well in developing a recycling economy, preserving ecologicalenvironment, establishing resource-efficient, environment friendly society and promotingharmonized development of economy. It also helps strengthen expansion of electricityindustry and capacity, development of new and renewable energy. Electric locomotivesconsume energy 30% less than that of diesel locomotive. Therefore it is a high priority toaggressively develop electric railway to reduce traction power consumption, especially onbusy trunk lines. According to Irans railway documents after electrification, annual savedoil will reach 30000~70000 tons which can be traded in international markets.2) Mitigate pollution and improve environment.According to Irans railway documents, electric traction mode will emit 38.6% less dust,reduce SO2 emission 26.7%, reduce NOX emissions by 87%, and produce reductions ofCO by 48.5% compared to diesel traction mode, while energy consumption may reduce by150000 tons annually. It will dramatically improve environment conditions along therailway and create better living conditions.
2973) Enhance traffic carrying capacityAs previously mentioned, Tehran-Mashed railway is the trunk line in the national railwaynetwork, which after electrification will enhance carrying capacity by 20%, and thus ensuretraffic fluency and make full use of network competency.4) Increased transportation efficiencyElectrification of this railway will bring into full play "larger capacity and fasterexchanges" feature characteristic of electric traction mode, realize long routing possibility,and improve utility of locomotives. Further travel time may be shortened by more than 3hours after electrification that is in the interest of service recipient, which will producemore income and reduce locomotive numbers by 10%.Generally, Tehran-Mashed electrified railway is of great importance for national energypolicy, structure adjustment, environmental pollution alleviation, cleaner living space, orstrong railway network competency, better service standard, lower operating cost, bettertransportation benefit etc. Therefore it is justifiable and feasible to develop Tehran-Mashedelectrified railway.As a result, to manage the challenges that rail industry will encounter in the future, I will tryto draw a specific and practical framework for technological gap analysis as follows:
298To implement the desired service at Tehran-Mashed railway, we need to compare thecurrent technological capabilities with desired technological capabilities. By thiscomparison, we can find technological gap that should be bridged by new technologies. Butthere are two points of view:1) The current situation (technological and financial limitations)will not let us bridge thegap at a suitable period, then stop technological change or choose a new compatibleserviceVision-ObjectivesDesiredTechnologicalCapabilitiesCritical GapCurrentTechnologicalCapabilitiesHow to bridge the gap?Service Desired(High Speed RailwayDevelop Roadmap(Satisfy Vision & Objectives)Choosing CompatibleTechnologies
2992) The current situation lets us bridge the gap at a mid or long term plan, then developroadmap for technological changeAs a result, recognizing current rail industry capabilities to find the level of technologicaladoption for new service is the most crucial activity at this stage. The primary capabilitiesrelated to the Tehran-Mashed railway are show in the following table. The main characterto compare criteria is Speed that plays the most important role to choose final technologies.Current Technological Capabilities for high speed railway(Tehran-Mashed Exist Line)As shown, the current technological capabilities for using a high speed railway on exist lineis very low and only for trains with maximum speed of 200km/h. The current technology isadequate but for higher speed, rail infrastructures such as track, vehicles, signaling andknowledge-based system are not appropriate. It means we cant provide high speed (morethan 200km/h) train for the existing railway.On the other hand, there are many desired technological capabilities to provide high speedtrains (more than 200km/h) shown in the following table:SpeedOptionsTrack CapabilityVehiclesSignaling &communicationR &D-KnowledgeTrackdesignElectrifiedTrackMixTransportationSingle-Double150-200Km/hOk No Yes Double Ok Yes Yes200-250Km/hNo No Yes Double No No No250-300Km/hNo No Yes Double No No No>300Km/h No No Yes Double No No No
300MaxOperationSpeed(km/h)Tracks Desired Capabilities55F53DedicatedLineRulingGrade(0/00)TrackDesignMinCurveRadius(m)Kinds ofTractionKindsofBlockSingleorDoubleMixTransportation200-250km/kNoneed15 Advancedtracktechnologyproper for300km/h1000 Electric AutoblockSingle-DoubleYes250-300km/hNecessary 10 Advancedtracktechnologyproper for400km/h3500 Electric AutoblockDouble OnlyPassenger300-350km/hNecessary 10 Advancedtracktechnologyproper for500km/h4000 Electric AutoblockDouble OnlyPassengerMaxOperationSpeed(km/h)Equipments Desired Capabilities56F54TotalAverageCapitalCost$M per/KmRollingStockSignaling& CommunicationPowerSupply200-250km/k57F55Vehicles withTilting bogieSCADA CTC Electrified 5250-300km/htrain setwithoutlocomotives(steel-wheeledbogies)SCADA,remotesignalization,telemetry,messageuploading ofremotecontrolautomatictrainprotectionsystemsElectrified25kV AC 50Hzoverheadsupply&1,500V dcsimultaneously25-30300-350km/htrain setwithoutlocomotives(steel-wheeledbogies)SCADA,integratedautomaticsystem,automatictrainprotectionsystemsElectrified25kV AC 50Hzoverheadsupply&1,500V dcsimultaneously30-3553Irans Electrification of Network Department54http://www.railway-technology.com/projects/frenchtgv/specs.html55Irans Electrification of Network Department
301 Critical Gaps– Required DevelopmentsAs previously mentioned gap analysis is a process of finding the gap, that is, thedetermination of the difference between the current status of the hard and soft technologysuch as machinery, equipment and management system/procedures at the firm and therequirements of the project. The process allows the identification of gaps in order toformulate actions required to achieve an appropriate structure for the project.To provide a new technology, there are different areas that can be a source oforganizational gaps. The most important of them are as follows:Gap Area - Facilities: Infrastructure Rolling Stock Signaling & CommunicationGap Area - Knowledge: Design Implementation OperationGap Area - Human Resources: Relative skills Training systems Experienced peopleGap Area – Technology AdoptionGap Area - Network SafetyGap Area - System Processes & StandardsGap Area - Supply ChainThe best way to identify the gap in the rail industry for implementation of high speedrailway is to seek experts’ opinion about the gap. I prepared a specific questionnaire fordata gathering from them. Managers with relative experience were asked to participate in
302the process. The questionnaire was completed by 30 people and the findings of the gapanalysis are summarized as follows:Identification of the gap on the exist line(Average Result of Opinions)(Questionnaire No.8)# Gap Area Sub Area Questions ConformityAssessment1 2 3 4 51FacilitiesInfrastructure Is exist track proper for HST58F56? Rolling Stock - Are exist Locomotives properfor HST?- Are exist Vehicles proper forHST?Signaling &CommunicationDo you think exist systems arequalified for HST?2KnowledgeDesign Is there any potential for HSTdesign?Implementation Is sufficient theimplementation’s potential?Operation Do you think operational systemcan support HST?3HumanResourcesRelative Skills Do people have relative skills? TrainingSystemsDoes training system supporthigh technologies?Experienced Do people have adequate 56High Speed Train ( more than 250Km/h)
303people experiences?4 TechnologyAdoption- Is the organizational culturefacilitating HST technologyadoption?5 NetworkSafety- Do network safety will besufficient?6 SystemProcesses &Standards- Do standards and processes willsupport HST?7 Supply Chain - Does private section involvingin the rail industry?Total Conformity Assessment 2.5Follow-up Actions# Gap Areas Sub Area Gap Information Follow-up Action1 FacilitiesInfrastructureThe existinfrastructure isinsufficient for<250km/h trains andnon electrifiedModification of currentline.dedicated line for upper250km/hRolling Stock Vehicles are dieseland adequate fortrains under200Km/hTilting bogies &change vehicles toelectrifiedSignaling &CommunicationMost of systemsdon’t design fortracks with highspeed trains andinappropriate for atrunk trafficimprove currentsystems to SCADA &Automatic trainprotection systems2 Knowledge The engineeringcapacity for networkdesign is appropriatefor non high speedtracks. Theengineering potentialcould be adaptableprovidingjoint venture betweenIranian and foreignconsulting firms
304Design with new knowledgeImplementationNo relativeexperience toimplement highspeed tracks. Noadequate knowledgeto superviseimplementationusing PPP & EPCmodelsOperation The exist operationalsystem is completelyinsufficient tooperate high speedtrainsneed to designoperational framework,also need to designmaintenance system3 HumanResources Relative SkillsNo relative skills arecompletely obvious.The traditional skillsare static and nointerest to improverecruitment of skilledpeople,implement propertraining systemTrainingSystemsNo interrelationshipbetweentechnologicalchanges and training.There is no anyadequate motivationto make people moreinterestimplement propertraining systemExperiencedpeopleThere is no peoplewith relativeexperienced but thepotential for makingrelative experiencedis goodrecruitment ofexperienced people,implement propertraining system4 TechnologyAdoption- Exist culture is veryextreme to acceptnew technologies.There are manyunsuccessfulexperiences for usingnew systemsimplementorganizational systemsto motivate people,Establish a dedicatedcompany (spin off) fornew project5 NetworkSafety- Safety at the existsystem is enough butno adequateguarantee for highspeed trainsimplement newprocedures andmechanisms,provide appropriateequipment6 R&D,System- R&D projects arentcanalized to relativeareas; most ofstandards are veryold and obsolesce.R&D management,implement TQM, TMS,ISO & provide relativestandards
305Processes &StandardsThe processes arecompletelyinefficient7 SupplyChain- Private section hasno considerableshare in rail industry.They don’t readyinvolving to supportrail industrymaking privatizationand outsourcing easier,implement SCM,Participation of foreigninvestors, domesticprivate investors,related enterprisesAs mentioned above, there aren’t any capabilities in mentioned areas to provide high speedrail technology for the Tehran-Mashed line. As shown, total assessment for the whole ofareas is an average score. It means the state of the art is not sufficient to support high speedtrain. Some areas such as Rolling Stocks, Technology Adoption and Procedures areconsiderably weaker for supporting HST.On the other hand, although Iran’s railway network has no relevant experience to operatehigh speed railway, there are some infrastructure that can support semi high speed transportup to 250Km/h. Existing infrastructures such as track alignment, signaling andcommunication systems, skilled worker and knowledgeable people at the moment aresufficient to operate high speed trains up to 200Km/h.Furthermore, external facilities such as industrial capabilities, private section involvementand economy space are ready to support semi high speed railway. One of the mostimportant criteria to implement a super high speed railway for Tehran-Mashed istechnology adoption. High speed railway is known as a disruptive technology for Iran’srailway. It has many new characteristics that are unknown for the existing system. As aresult it can be dangerous if we do not create proper situation for the implementation ofnew technology. It means we need to facilitate the situation in the whole of gap areas. Best
306practices show us that step by step implementation can be logical and also feasible solutionfor this kind of technologies.Phase 5) Service-Technology AnalysisIn the last part of this chapter I want to make a relationship between desired service andtechnology for the project. As mentioned, according to the Tehran-Mashed line there isgreat potential to increase passenger traffic in near future and the most desired service thatcan support market requirements is high speed railway.On the other hand, I explained that there are three available technologies to provide highspeed railway for Tehran-Mashed new railway; Tilting, Conventional HST and Maglev.Moreover, the result of questionnaires from rail experts reveals that the respective rankingis Tilting, Conventional HST and Maglev. So the crucial questions to choose technologyare as follows:1) Which technology is more compatible with the current situation?2) Do we consider about future opportunities?3) Do we consider about current limitations?4) Could we choose combination of technologies?As discussed previously, Irans railway current capabilities is insufficient to provide>200km/h high speed trains. On the other hand, there are many limitations that preventchoosing state of the art technologies at the first step. In addition, railway technology israpidly changing around the world and the period of construction for railway projectusually is more than one decade. If we choose a technology for Tehran-Mashed line it willbe operating in the next decade. As a result, scenario creation to implement new technologyis very crucial. Although current limitations are crucial to choosing an appropriatetechnology future opportunities are also nearby. So choosing any technology for Tehran-Mashed HST must understand the current situation and forecasting future opportunities.
307Before recognizing scenarios for implementing HST in the Tehran-Mashed railway, thefeasibility of combination of different technologies needed must be shown in the next table:Feasibility of using combination of technologiesTilting Conventional HST MaglevTilting - Yes NoConventional HST Yes - NoMaglev No No -As shown, there is only one combination between Tilting and Conventional HST. Alsoaccording to the track and vehicles limitations, Tilting can be implemented at the first phaseand then track can be improved for Conventional HST. On the other hand, Maglev trainscannot be implemented with other technologies simultaneously because it needs a dedicatedline to operate. So according to the current limitations such as budget, technology adoption,lack of relative knowledge and systems, the final scenarios for the project can be prioritizedas follows:
308Tehran-Mashed projects implementation alternatives# AlternativesImplementationPrioritizeDesiredTrainSpeedPowerSupplyRollingStockTrack1 ImproveCurrent systemup to200km/hElectrified CurrentmodifiedLocomotives& vehiclesCurrentmodified line(curves,radius,bridges…)2 TiltingVehiclesup to250km/hElectrified RelativeLocomotives& TiltingBogiescurrentmodified line(curves,radius,bridges…)3 ConventionalHSTup to350km/hElectrified train set(trainswithoutlocomotivesconventionalnewdedicated line4 Maglev up to450km/hElectrified MagneticVehiclesMagneticnewdedicated lineAs shown, there are four alternatives to develop high speed trains. On the other hand, it isnot possible to implement both Conventional HST and Maglev trains because they needdedicated lines and there is no demand for both of them. As a result, first we should selectone of them as a final technology and then develop the projects roadmap. As previouslymentioned, using different criteria conventional HST was ranked as the more appropriatealternative than Maglev. Larger capital cost, safety consideration and lower technologyadaptation are some of criteria that caused Maglev to be less attractive than ConventionalHST.
309In summary, the final technologies that need to involve in the projects roadmap are asfollows:1) Modification of current track to improve speed up to 200km/h2) Using Tilting vehicles to improve speed in the modified current line up to 250km/h3) Implement Conventional dedicated line to improve speed up to 350km/hIn the last chapter, I will prepare the projects timeline and roadmap. It should beProductive roadmapping and must encompass multiple links of the value chain, amultidisciplinary team, and the co-evolution of technology and industry.End of Chapter Five.
311Chapter Six: Roadmap CreationA) IntroductionAs previously mentioned, most roadmap studies perform a long-term procedure, led by agroup of experts (called roadmap leading team or coordinators), and involving a group ofexperts from industry, research, and universities. By characterizing the state of the art in railindustry, both in terms of research and practical experiences, and trying to integrate andconsolidate available results from a large number of other activities in the area of highspeed railway, the next step of the baseline will establish the departing point for theroadmap exercise. Further to the baseline, it is important to perceive major trends andanalyze plausible future scenarios that can be envisioned from those trends.Vision building is not a mechanism to foresee the future. Clearly, the entire future of theHST can never be fully predicted. However significant market trends, technology trends,the state of the art, and the consolidated baselines resulting from the previous steps can beused as resources, mechanisms, and/or constraints, towards establishing a vision for desiredhigh speed railway of the future.According to the project framework, as was previously mentioned the best service that canbe matched with the market trends in Irans rail industry is high speed railway. Three maintechnology alternatives; Tilting trains, Conventional HST and Maglev were chosen.Furthermore we noted that discussed Maglev trains could not be the appropriate technologyfor Irans railway. As a result, the final roadmap prepared for implementation of twoalternatives: Tilting and Conventional HST.
312B) Influence MatrixTo create a roadmap for Tehran-Mashed HST railway, integration between organizationalStrengths & Limitations and Project’s Visions is needed. As a result, the influence ofimportant Strengths & Limitations on the visions will be considered to achieve a validateroadmap. It helps us to identify the level of those Strengths & Limitations by positive ornegative influence on the visions.The most important Irans railway Strengths and Limitations are as follows:Strengths: Traffic levels are rising rapidly creating demand for stock built to modern standards Traditional railway design skills exist There are good potential for engineers and skilled workers Significant construction experience has been obtained Adequate raw materials for railway construction are availableLimitations: There is no strict safety regime Passenger tariffs are applied nationally at government level and are inflexible There is very little risk-sharing or financial involvement with the private sector Some training programs do not match practical requirements The planning and decision-making process needs reviewTo facilitate a better understanding, I will show the relationships of them in the InfluenceMatrix and Map as follows:
316C) Roadmap CreationTo draw an appropriate roadmap for Tehran-Mashed HST, I need to identify the whole ofthe related tasks around the project. There are two parts: Auxiliary and Main tasks.C1) Auxiliary TasksThe auxiliary tasks are those tasks that indirectly help to provide new technology but themain tasks are directly related to the project.The best way for identification of auxiliary tasks is to examine the gap areas mentioned inChapter 5. Each task has a specific term that is related to the project’s gap areas.As previously mentioned, current potentials of Iran’s railway is not adequate to providehigh technologies such as high speed railway. There is a lack of sufficient knowledge,skilled and knowledgeable people and related R&D’s activities. Moreover, there isinsufficient support from the private sector that has made rail industry more public anddependent on foreign suppliers. To provide HST technology, Iran’s railroad needs toundertake pre-actions to improve rail industry potentials for supporting furtherstechnologies.The gap areas mentioned before are as follows:1) Facilities, 2) Knowledge, 3) Human Resources, 4) Technology Adoption,5) Safety & Standards, 6) R&D and Processes, 7) Supply ChainAccording to previous studies59F57there are many auxiliary tasks to bridge the gaps asfollows:57Irans railway, department of network electrification
317Tehran-Mashed HST Roadmap(Identification of Auxiliary-Tasks)Short term Mid term Long TermAction#Gap AreasA B C D E F GFacilities Knowledge HumanResourcesTechnologyAdoptionSafety &StandardsR&D andProcessesSupplyChain1 development of afocused fundingstrategy andtimelineForimplementationProduce code ofpractices forHST networkdesigners toreduce problemsImplement ofField basedanalysistechniquesSupport forpilot trials,simulations,controlledlive trialsReview ofrisks andeffectivenessofcontrolmeasuresReview ofdocumentationQualificationof Suppliers ofSafety CriticalEngineeringequipmentsand Services2 Cost benefitanalysisDetermine keyfeatures of HSTrailwayaccessoriesperformanceReview ofinspectiontechnologiesImplementStrategicProjectManagementServicesDescriptionofRail Safetyand StandardsCoordinate withTechnicalConsultant(s)prepare Vendor/Consultantlist3 Immunization ofSignaling andcommunicationsSystemsAgainstElectricalInterferenceDetermineTechnicalSpecificationsforInteroperability(TSI)Analysis ofcommunications/ socialnetworks incurrent andproposedsystemsPeopleTechnologicalAwarenessImplementSafetyManagementInformationSystem(SMIS)Process forEnvironmentalImpact Statement(EIS)ImplementSupply ChainManagementSystem4 recognize trackmodificationpointsUnderstandingofpossible issuesrelated to theprojectImplementCompetenceAssessmentSystems forpersonsAccelerate theintegration andautomation oftheorganizationDemonstratingof the ReliableOperation ofTrack CircuitsRank currentvehicle designsby their adhesionperformanceCreate networkand partnershipwith leadingsuppliers5 ImplementIntegratedFacilityEngineering(IFE)ImplementknowledgeManagementImplementSecurityScreening ofPersonnelStreamliningnew equipmentadoptionUsing PortableWarningEquipmentImplement ofReplacementComponentCertificationIdentification offacilities’ source(internal &external)6 Facilitation toImplementRFIDtechnologyMakingintegrationbetween expertsat theorganization &industry levelImplementTrack’sPersonalSafety systemImplement dataIntegration andinformationmanagement7 Provide a saferworkingenvironmentProvision,RiskAssessmentand Review ofLevelCrossings8 Create higherskilled jobs thatcan attract newworkforceimplementAccidentManagementSystem
318Categorization of Auxiliary-Tasks by TermGapAreaAuxiliary Tasks of project implementationShort Term Mid Term Long TermA development of afocused fundingstrategy andtimelineForimplementationImmunization of Signalingand communicationsSystemsAgainst ElectricalInterferenceCost benefit analysis forrequired technologiesandequipmentImplement IntegratedFacility Engineering (IFE)recognize track modificationpoints(Curves, Gradient, Bridges,Stations...)Facilitation to implementRFID technologyB Understandingofpossible issues related to theprojectProduce code of practicesfor HST network designersto reduce problemsImplement knowledgeManagementDetermine key features ofHST railway accessoriesperformanceDetermineTechnical Specifications forInteroperability (TSI)C Review ofinspection technologiesImplement of Field basedanalysis techniquesCreate higher skilled jobsthat can attract newworkforceAnalysis of communications/ socialnetworks in current andproposed systemsImplement CompetenceAssessment Systems forpersons who carrying outsafety critical workImplement SecurityScreening of PersonnelMaking integration betweenexpertsat the organization &industry levelProvide a safer workingenvironmentD Support for pilot trials,simulations,Implement Strategic ProjectManagement ServicesPeopleTechnological
319controlledlive trialsAwareness(as potential users becomeaware of what it does andhow to use it, they willadopt)Streamlining newequipment adoptionAccelerate the integrationand automation of theorganizationE Review of risks andeffectivenessofcontrol measuresDescriptionofRail Safety and StandardsImplementSafety ManagementInformation System (SMIS)Demonstrating of theReliable Operation of TrackCircuitsUsing Portable WarningEquipmentImplement Track’sPersonal Safety systemProvision, Risk Assessmentand Review of LevelCrossingsimplement AccidentManagement SystemF Review of documentation Implement of ReplacementComponent CertificationCoordinate with TechnicalConsultant(s)Implement data Integrationand informationmanagementProcess for EnvironmentalImpact Statement (EIS)Rank current vehicledesigns by their adhesionPerformanceG prepare Vendor/ConsultantlistQualificationof Suppliers of SafetyCritical Engineeringequipmentsand ServicesImplementSupply Chain ManagementSystemIdentification of facilities’source(internal & external)Create network andpartnership with leadingsuppliers
320C2) Main TasksAs mentioned in Chapter 5, the phases to improve travel time in the Tehran-Mashedrailway are as follows:1) Modification of current line ( improve trains speed up to 250 Km/h)2) Execution of dedicated HST line (350 Km/h)The first phase has three parts: Increase speed of trains through stations Electrification of current route to increase speed of current trains up to 200Km/h Using Tilting trains in the current route to use 250 Km/h trainsFinal tasks for the first phase are as follows:1. Preliminary & Detailed design to improve current line speed2. Increasing the speed of trains through stations from 80 to 140 km/h3. Track Electrification as an EPC contract to operate 250km/h trains4. Modification of exist track to operate Tilting trains up to 250 km/h5. Operate electrified trains with 160 km/h for exist vehicles6. Implement Automatic Train Control (ATC) system for 250 km/h7. Improve exist systems to use 160km/h electrified trains8. Modification of exist vehicles breaking system to increase speed up to 200km/h9. Order and purchase Electrified Locomotives for 200Km/h to operate 160km/h trains10. Order and purchase Tilting trains (Train Sets)11. Operate Tilting trains (Train Sets) with 230-250 Km/hThe second phase is completely related to the implementation of a dedicated line for HSTtechnology. This part of project is predicted to start in 2012 and the first phase (Tehran-Semnan) will operate by 2020 and the entire route will be completed by 2025. The mainreason to start HST dedicated line at 2012 is technology adoption by current system. Aspreviously mentioned, HST technology is known as a high technology and Irans railwayneeds to make related potentials before operating it. On the other hand, to achieve this goal
321the auxiliary tasks musty start in 2008 and will be finished at 2017 in order to implementthe HST dedicated line. The main tasks for the second phase include:1. Preliminary & Detailed design2. Prepare tender document & choosing contractors3. Track Construction include full package of civil work, Power supply, signaling…(purchase and installation)4. Order and providing Rolling StockC3) Auxiliary Tasks RoadmapThe main assumption to execute auxiliary tasks is to create sufficient potentials for theimplementation and operation of the HST project. As mentioned, Irans railway hassignificant shortages in the gap areas. On the other hand, the proper time for these tasks isthe next five years before the main project starts in 2012. As a result, according to the termof each task I draw a specific roadmap for the tasks in the next table.Tehran-Mashed HST Project(Auxiliary Tasks Roadmap)GapAreasTasksCode&Term200820092010201120122013201420152016201720182019202020212022202320242025VisionsFacilities(A)A1, SA2, SA3, MA4, SA5, MA6, MCheap, safe,
323R&DandProcesses(F)F1, SF2, SF3, SF4, SF5, MF6, MSuccessful andsustainable railtransportindustryEffective,integrated,competitivenessand sustainablerail transportsystemSupplyChain(G)G1, MG2, SG3, LG4, LG5, SC4) Main Tasks RoadmapAs previously mentioned the projects roadmap will be analyzed in two parts: improve thecurrent line and implement the dedicated line. Also in each part, many tasks will be neededto achieve the goal which is to increase the train’s speed. On the other hand, the whole ofthe project will be executed by 2025 that is identified as a boost point for Irans economy.Moreover, the most crucial and important activity to implement an appropriate roadmap isto integrate different departments in the organization and industry for better collaboration inthe further tasks. It is one of the most important managerial roles such that insufficientefforts will lead the project to failure.The projects final roadmap is shown in the next table:
324Tehran-Mashed HST Project(Main Tasks Roadmap)1) Modification of current lineAreasTaskDescription200820092010201120122013201420152016201720182019202020212022202320242025VisionsTrack,ElectrificationPreliminary &Detailed designto improvecurrent linespeedCheap, safe,convenient, clean,secure andequitable railtransportEnvironmentallysustainable railtransport systemEffective andappropriatetechnologicalinnovation for railtransportSuccessful andsustainable railtransport industryIncreasing thespeed of trainsthrough stationsfrom 80 to 140km/hTrackElectrificationas an EPCcontract tooperate 250km/htrainsModification ofexist track tooperate Tiltingtrains up to250 km/hOperateelectrified trainswith 160 km/hfor exist vehiclesSignaling&TelecommunicatioImplementAutomatic TrainControl (ATC)system for 250km/hImprove existsystems to use160km/helectrified trainsRollingStockModification ofexist vehiclesbreaking systemto increasespeed up to200km/h
326Tehran-Mashed HST Project(Main Tasks Roadmap)2) Execution of Dedicated HST Line (350 Km/h)AreasTaskDescription200820092010201120122013201420152016201720182019202020212022202320242025VisionsHSTDedicatedLine(350Km/h)-Preliminary &Detailed designCheap, safe,convenient, clean,secure andequitable railtransportEnvironmentallysustainable railtransport systemEffective andappropriatetechnologicalinnovation for railtransportSuccessful andsustainable railtransport industryEffective,integrated,competitivenessand sustainablerail transportsystem-Prepare tenderdocument &choosingcontractors-TrackConstructioninclude fullpackage of Civilwork, Powersupply,Signaling…(purchase andinstallation)-Order andprovidingRolling Stock-Opening of thefirst phasebetweenTehran-Semnan-Opening of thewhole of theroute betweenTehran-MashedTask Duration Opening Time
327Tehran-Mashed HST ProjectIntegrated RelationshipsFocused MarketChosen ServiceAcceptedTechnologiesAuxiliary Tasks(R&D)ResourcesFinancing: Public Private PartnershipHuman Resources: Training for skilled peopleSuppliers: SCM, Joint Venture, Strategic AlliancesKnowledge: KM, Joint with foreign consultantsHigh SpeedTrainsElectrifiedDieselElectrifiedConventional HST(Second Phase)Tilting Trains(First Phase)Tehran-MashedTravelersA1 B1 C1 D1 E1 F1 G1. . . . . . .. . . . . . .An Bn Cn Dn En Fn GnTime
328C5) Next Steps and Recommendations: Develop local funding to finish analysis, including preliminary engineering andEnvironmental Impact assessment Establish innovative financing strategies in government and, if necessary, Statelegislation to complete deployment of the HST system, and coalesce communitysupport and private funding for operation of the HST by 2025. Create a Spin-off to split Tehran-Mashed HST line to improve technologicaladoption in the projects life cycle. regulatory reform in the transportation sector that private companies increasinglyparticipate in investments in new transportation systems.( Public-PrivatePartnerships)
329Conclusion:By complete of this project Ive tried to answer this question that why TechnologyRoadmapping approach is important in the field of technology management. Its meaningfuland useful because:A) Change in Global Economy• Information technology and globalization are changing the history of the world.• Emerging markets and developing countries are expected to continue to growstrongly.• The new global economy poses several threats for firms.• During the past two decades international trade and investment have sharplyincreased and global economy has grown steadily.B) Technological Change• New generation of science and technologies help companies to facilitate servingnew product and services to satisfy customer expectations.• Rapid advances in technology, especially information and communicationtechnology• We live in an era of increasing use of diverse technologies in all aspects of ourlife• The world is undergoing a global technology revolution; technology not onlyplays a role stimulating invention and innovation, but works simultaneously as aproduct.• There are usually limitations for using current technologies that haveenvironmental and economical impacts such as air pollution, land use andenergy consumption.In this situation using traditional planning couldnt be answered to market requirementsand extreme competition leads companies to use practical tools and methodologies.Nowadays the Technology Road-Mapping (TRM) approach is strengthened byintroducing flexibility, dynamic, and comprehensive effect on processes. Although
330making integration between different stakeholders to improve quality of decisions isone of the most important advantages for TRM but its a big challenge for firms to keeproadmap alive. Also using other qualitative and quantitative tools such as AHP andQFD allow the impacts of technology to be measured in both intangible and tangibleways.On the other hand by using TRM, managerial focus instead of exist solutionsconcentrate on further innovative technologies and as a result R&D play central role toprovide technology for future markets.In Summing up, I believe in the next decade TRM will be use as robust methodologyand the first strategic tool to provide appropriate technologies for the further marketsbut according to many implementation challenges only some of pioneer companies canuse it commercially.
331Tehran-Mashed HST Project(FAST FACTS)What High Speed Railway Deployment ProjectDistance Approximately 800 KilometerWhere Tehran-Mashed RouteMaximumspeed350 Km/hAveragespeed180Km/h for the First Phase and 280Km/h for the second PhaseAveragetravel time4.5 hours for the first phase and 3 hours for the second phaseCost Approximately $15 billion for the whole of projectWhen Could begin operating as soon as 2013 for first phase and 2025 for second phaseEstimatedDailyPassengers30000 passenger at the second phases operation time
335CostumerRequirementsTechnical RequirementsTrackCurvesCCTV,Internet,Phone…HighSpeedVehiclesTrainsRobustSchedulingHigh ReliableSignaling &TelecommunicationLow TrackGradient(Low EnergyConsumption)Ticket PriceHigh Quality &ComfortableServicesAesthetic DesignTravel TimeAccessibilityEnvironmentalFriendlinessTravel SafetyCompare the effects of technical requirements on costumer requirements(Questionnaire No. 3 – high effect 5, low effect 1)
336A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 B1 TicketPriceHigh quality &comfortableservices2 TicketPriceAestheticDesign3 TicketPriceTravel Time4 TicketPriceAccessibility5 TicketPriceEnvironmentalFriendliness6 TicketPriceTravelSafety7 High quality &comfortableservicesAestheticDesign8 High quality &comfortableservicesTravelTime9 High quality &comfortableservicesAccessibility10 High quality &comfortableservicesEnvironmentalFriendliness11 High quality &comfortableservicesTravelSafety12 AestheticDesignTravel Time13 AestheticDesignAccessibility14 AestheticDesignEnvironmentalFriendliness15 AestheticDesignTravelSafety16 Travel Time Accessibility17 Travel Time EnvironmentalCompare the relative importanceA versus BWith respect to Goal: Prioritize Costumer Requirements(Questionnaire No. 4)
337A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 B1 TrackCurvesCCTV, Internet,Phone…2 TrackCurvesHigh SpeedVehicles3 TrackCurvesTrain’s RobustScheduling4 TrackCurvesHigh ReliableSignaling &Telecommunication5 TrackCurvesLow TrackGradient6 CCTV, Internet,Phone…High SpeedVehicles7 CCTV, Internet,Phone…Train’s RobustScheduling8 CCTV, Internet,Phone…High ReliableSignaling &Telecommunication9 CCTV, Internet,Phone…Low TrackGradient10 High SpeedVehiclesTrain’s RobustScheduling11 High SpeedVehiclesHigh ReliableSignaling &Telecommunication12 High SpeedVehiclesLow TrackGradient13 Train’s RobustSchedulingHigh ReliableSignaling &TelecommunicationFriendliness18 Travel Time TravelSafety19 Accessibility EnvironmentalFriendliness20 Accessibility TravelSafety21 EnvironmentalFriendlinessTravelSafetyCompare the relative importanceA versus BWith respect to Goal: Prioritize Technical Requirements(Questionnaire No. 5)
33814 Train’s RobustSchedulingLow TrackGradient15 High ReliableSignaling &TelecommunicationLow TrackGradientA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 B1 MaximumSpeedTicketPrice2 MaximumSpeedAirPollution3 MaximumSpeedNoisePollution4 MaximumSpeedLand Use5 MaximumSpeedCapitalCost6 MaximumSpeedMinimumTrackCurve7 MaximumSpeedSafety8 MaximumSpeedTechnologyAdoption9 TicketPriceAirPollution10 TicketPriceNoisePollution11 TicketPriceLand Use12 TicketPriceCapitalCost13 TicketPriceMinimumTrackCurve14 TicketPriceSafety15 TicketPriceTechnologyAdoption16 Air NoiseCompare the relative importanceA versus BWith respect to Goal:Choosing an appropriate high speed railway(Questionnaire No. 6)
339Pollution Pollution17 AirPollutionLand Use18 AirPollutionCapitalCost19 AirPollutionMinimumTrackCurve20 AirPollutionSafety21 AirPollutionTechnologyAdoption22 NoisePollutionLand Use23 NoisePollutionCapitalCost24 NoisePollutionMinimumTrackCurve25 NoisePollutionSafety26 NoisePollutionTechnologyAdoption27 land Use CapitalCost28 land Use MinimumTrackCurve29 land Use Safety30 land Use TechnologyAdoption31 CapitalCostMinimumTrackCurve32 CapitalCostSafety33 CapitalCostTechnologyAdoption34 MinimumTrackCurveSafety35 MinimumTrackCurveTechnologyAdoption36 Safety TechnologyAdoption
340A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting ConventionalHigh SpeedTilting MaglevConventionalHigh SpeedMaglevA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting ConventionalHigh SpeedTilting MaglevConventionalHigh SpeedMaglevCompare the relative preferenceA versus BWith respect to: Maximum Speed(Questionnaire No. 7-1)Compare the relative preferenceA versus BWith respect to: Ticket Price(Questionnaire No. 7-2)
341A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting ConventionalHigh SpeedTilting MaglevConventionalHigh SpeedMaglevA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting ConventionalHigh SpeedTilting MaglevConventionalHigh SpeedMaglevCompare the relative preferenceA versus BWith respect to: Air Pollution(Questionnaire No. 7-3)Compare the relative preferenceA versus BWith respect to: Noise Pollution(Questionnaire No. 7-4)
342A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting ConventionalHigh SpeedTilting MaglevConventionalHigh SpeedMaglevA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting ConventionalHigh SpeedTilting MaglevConventionalHigh SpeedMaglevA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting ConventionalHigh SpeedTilting MaglevConventionalHigh SpeedMaglevCompare the relative preferenceA versus BWith respect to: Land Use(Questionnaire No. 7-5)Compare the relative preferenceA versus BWith respect to: Initial Capital Cost(Questionnaire No. 7-6)Compare the relative preferenceA versus BWith respect to: Minimum Track CurveNeeded(Questionnaire No. 7-7)
343A VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting ConventionalHigh SpeedTilting MaglevConventionalHigh SpeedMaglevA VS BA 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 BTilting ConventionalHigh SpeedTilting MaglevConventionalHigh SpeedMaglevCompare the relative preferenceA versus BWith respect to: Safety(Questionnaire No. 7-8)Compare the relative preferenceA versus BWith respect to: Technology Adoption(Questionnaire No. 7-9)
344Identification of the gap on the exist line(Questionnaire No.8)# Gap Area Sub Area Questions ConformityAssessment1 2 3 4 51FacilitiesInfrastructure Is exist track proper for HST60F58? Rolling Stock - Are exist Locomotives properfor HST?- Are exist Vehicles proper forHST?Signaling &CommunicationDo you think exist systems arequalified for HST?2KnowledgeDesign Is there any potential for HSTdesign?Implementation Is sufficient theimplementation’s potential?Operation Do you think operational systemcan support HST?3HumanResourcesRelative Skills Do people have relative skills? TrainingSystemsDoes training system supporthigh technologies?ExperiencedpeopleDo people have adequateexperiences?4 TechnologyAdoption- Is the organizational culturefacilitating HST technologyadoption?58High Speed Train ( more than 250Km/h)
3455 NetworkSafety- Do network safety will besufficient?6 SystemProcesses &Standards- Do standards and processes willsupport HST?7 Supply Chain - Does private section involvingin the rail industry?
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