Surprise yourself with innovation: 13 development projects in Latin America

Innovation is a path, not a destination. Its raison d'être is to solve problems that affect many and to offer solutions that generate well-being. This publication analyzes 13 IDB case studies.

Surprise yourself with innovation: 13 development projects in Latin America
Hope of progress of Latin America and the Caribbean towards the developed world. Image: Pixabay

Trout farms with Artificial Intelligence or digital radiography for mining, are some of the projects in which a recent report by the Inter-American Development Bank seeks to share cases of innovation and success in the Andean region, which serve as a mirror in which others can look, inspire and confirm the hope of progress of Latin America and the Caribbean towards the developed world.

Advanced ultrasound, electron microscopes, guided waves, digital radiography, and electromagnetic techniques. All of them, technologies that look here and there, without disarming, to see the troubled future.

It is that the wing of an airplane or a valve that regulates the extraction of oil from the bottom of the sea, cannot be delivered at random. Their malfunction or an extinguished useful life could end in human tragedy. Why not, in an environmental catastrophe.

This is what NDT Innovations avoids in Peru, in sectors such as aeronautics and hydrocarbons, but also mining, energy, nuclear, aerospace, petrochemical, naval, defense, industrial, and agro-industrial sectors. To this end, they inspect and diagnose different types of parts that are fundamental to the daily operation of these industries. Specifically, they determine their wear and calculate what is left of their life.

The recent development of NDT, co-financed with more than 100 thousand dollars from Innóvate Peru, is one of the projects highlighted by the Inter-American Development Bank (IDB) in its recent report "How to innovate in development projects: 13 cases of success in Latin America", from its Department of Andean Group Countries, a deep document that seeks "to share cases of innovation and success in the Andean region, which serve as a mirror in which others can look at themselves, inspire themselves and confirm the hope of progress of Latin America and the Caribbean towards the developed world (...) A great stimulus to innovate is to have a challenging problem to solve and the 13 cases that we present are a good proof of this", comments Rafael de la Cruz, manager of the Department of Andean Group Countries.

Paul Kradolfer, general manager of NDT Innovations, exemplifies through the "mine products" - which on the outside are made of steel and internally are covered with a plastic that resists much more the abrasion of the mineral concentrate they transport - the innovative strength of the company, deserving of a place in this list of "great successes" detailed in the IDB report.

"A pipeline that transports a mineral concentrate can be broken by wear and tear, by the abrasion of the component it transports. What we do is inspect the pipe from the outside and determine the thickness of the remaining life of the inner wall, which allows us to know when a change would have to be made and where the change would have to be made. All this without completely stopping the operation of the pipeline," explains Kradolfer.

The power of the NDT Innovations project lies in the fact that until now there has not been a method to inspect the state of the plastic above the steel. And thanks to the support of Innóvate Peru, they came up with a solution using digital radiography, a recent technological advance - increasingly used in the world - that means an evolution of X-ray radiography.

"We are now reviewing the latest validation exercises to launch it on the market," says Kradolfer. "We believe it will help not only the mining industry, but also the petrochemical industry and, in general, the industries that transport corrosive or abrasive liquids in mixed plastic-steel pipes.

Global benchmark

Innovation also climbed to the Middle of the World. As a planetary example of a novel execution for the Ecuadorian capital's Metro, another of the projects chosen by the IDB in its report "How to Innovate in Development Projects: 13 Success Stories in Latin America".

In Ecuador, little or nothing was known about the construction of metros at the beginning of 2010, when implementing such a system in the country's capital was just an idea. Nine years later, in March 2019, Quiteños were celebrating the first test run of their metro, including passengers, between Iñaquito and Jipijapa stations.

Of the planned 18 trains, 14 have arrived in the city. The progress of the work is greater than 87 percent; the entire tunnel has been drilled -almost 23 kilometers- and its 15 stations are finishing up to be adequate. After four managers and three mayors, the construction of the first line of the subway is very close to being completed without major delays or additional costs that have meant additions to the initial contract. Moreover, the estimated total investment of more than 2,000 million dollars means that its cost per kilometer is 87 million dollars when the average for projects with similar characteristics is 97 million dollars. History has a finishing touch: on two occasions they surpassed a world record. First, in August 2017, when one of the three tunnel boring machines used drilled 1,131 meters in 30 days. Then, less than a year later, another of the project's machines excavated 1,489.5 meters in 30 days. A new record.

Édison Yánez, general manager of the Public Company Metro de Quito, says without hesitation: "This is one of the construction milestones in Latin America. What has happened in the last decade to make Ecuador's capital a benchmark in the matter today? How have you successfully advanced a megaproject of transport infrastructure, after starting from scratch and without experience? The four managers who have led this initiative, at different times, agree on three keys that have made the difference: the advice of an expert travel companion laid fundamental foundations; a flexible contract has allowed the work to be optimized and have a savings bag; and the exceptional confluence of four multilateral that provide technical advice.

"There was absolutely nothing going on," says Édgar Jácome, the first manager to have the Quito Metro project, referring to what was found at the beginning of 2010. But "a critical success factor is to have had a world-class travel companion, who accompanied us absolutely in everything". On the advice of the Madrid metro experts, they took one of the most transcendental decisions for the future of the project: to draw up their design for the first line, instead of delegating this task to whoever was subsequently contracted to do the work.

Then, there was a change of travel companion. The Spanish consortium GMQ joined the train as a new expert -and after a bidding process-. He assumed the so-called "project management", in charge of providing first-class technical assistance during the execution of future works, attending to the designs, but without ignoring that the reality in the field always requires adjustments. The purpose was to continue counting on someone who would watch over the success of the project and, at the same time, could have a technical dialogue with the constructor who would later be chosen.

In the case of contract flexibility, the contractual models of the International Federation of Consulting Engineers (FIDIC), based in Geneva, Switzerland, are standard models highly valued in the world of construction. They collect good practices and unify criteria that facilitate understanding between actors from different countries and regions. Mauricio Anderson, general manager of Empresa Metro de Quito, between 2014 and 2018, affirms that this type of contract "allows a lot of flexibility (...) but never letting (the work) cost more than what was agreed". A good part of this "flexibility" has to do with a section that has been essential for the best development of the project: the "variation clause". Thanks to this provision it is possible to make adjustments. On the one hand, it introduces the concept of "value engineering": the contractor is free to propose improvements; and if the changes lead to savings, the resources saved are divided with the contractor -by halves.

Finally, on December 6, 2013 - the same day the city of Quito celebrated its 479th anniversary - an extraordinary event became official: four of the world's main multilateral banks signed a collaboration agreement to jointly support the construction of the subway in Ecuador's capital. As the then-mayor of Quito, Augusto Barrera had already said: "This is the first time that a project of this magnitude has been financed with the participation of four multilateral organizations.

The World Bank, the European Investment Bank (EIB), the Latin American Development Bank (CAF), and the IDB, in addition to financing the mega-object, undertook to contribute their experience and good practices. Within the framework of this synergy, the IDB has been the lead agency and, among other decisions, it was agreed to work with its procurement policy (which regulates the bidding of contracts for goods and services for those projects financed by the bank).

According to Yáñez, the multilateral increased the level of demand: "Fortunately, as far as environmental and social safeguards are concerned, we have had to raise the standard of what we had planned a lot. Bank requirements are much stricter than national law.

The multilateral played a determining role in ensuring that the project continued in a difficult moment. In July 2014, the bids for the bidding to award the first line were discovered. The cheapest proposal was US$1.587 billion, almost US$500 million above budget. The gap was significant and the decision was now in the hands of Mauricio Rodas, the new mayor.

Anderson, then manager of Empresa Metro de Quito, admits that the mayor was very cautious in his decision to move forward. He also remembers, however, that Rodas received "well-informed technical advice" from IDB President Luis Alberto Moreno: "(He told him that) according to the different costs, of the different meters around the world, the Quito subway was going to be at an unbeatable price [...] that this opportunity could not be missed, because it is like when we let a train pass: who knows when the next one will come".

They moved on. Banks, which had originally approved more than US$900 million, increased funding to almost US$1.6 billion. Everyone did their part, from multilateral and the private sector to technicians and political leaders. While there are challenges ahead - such as urban planning associated with the metro and the consolidation of an integrated transport system (see annexed notes) - the world now sees Quito as an inspiring case, that of a city that knew how to do things well and did not let the train pass.

Farm with AI

They say that the "better half" complements each other, as long as they are perfectly matched to each other. The same could be said of problems and solutions: a solution can be the "better half" of a problem and vice versa. The difficult thing is that they find each other.

Piscifactorías de Los Andes (Pisces) is located in the city of Puno -on the shores of Lake Titicaca-, a Peruvian company that cultivates, processes, and exports rainbow trout, those that are distinguished by the purple stripe on their sides. Andrés Miyashiro, the company's executive director, explains his problem: "In the growth model of aquaculture farms, the feed delivery process is fundamental. We have tried to fine-tune it, but it still accounts for 65 percent of the total cost of production.

The better half of this need could be 16,000 kilometers away. Umitron is a startup based in Japan and Singapore, offering computerized aquaculture services. It was one of the winners of Slingshot Singapore 2018, a competition between more than 1,000 newly created companies from 80 countries.

Umitron has developed an intelligent fish feeder. It uses cameras, sensors, and artificial intelligence, potentially combined with satellite data. It analyzes everything from the behavior of the animals to the temperature and oxygenation level of the water. Thus, by combining a series of variables, it determines the best times to throw the food on the farms and the optimal quantities in each case, to waste the minimum. Great technological and productive advances that made the IDB also include them in its selection of innovative projects of the report "How to innovate in development projects: 13 success stories in Latin America", from its Department of Countries of the Andean Group.

According to Victor Camacho, general manager of Piscis, you can understand some behaviors of fish by simple human observation, but it is not enough: "When the trout is restless and nothing on top, it means it has an appetite. By feeding it, it becomes more active and needs enough oxygen for that and digestion. If the oxygen levels in the water are low, the trout can die. These are the variables that Umitron's technology crosses.

Its benefits go beyond saving fish food. It is known, for example, that by throwing more food than the animals are going to consume, the surplus can contaminate the water. By reducing this waste, there is a positive environmental impact. Even the safety of the farmer's benefits, since they would no longer have to enter the waters so often, to continue feeding the fish manually from small boats - sometimes they have to do so in adverse conditions, and falling into the lake is always a risk.

Did Piscis find Umitron or the other way around? The fact is that everything is ready to start testing the prototype of its "Umitron Cell" technology solution in the Latin America and Caribbean region. The BID Lab provides 550 thousand dollars of non-reimbursable technical cooperation and Piscis another 500 thousand. The person responsible for that connection, who saw two points so distant from each other and united them, is Tetsuro Narita, a specialist at BID Lab. He explains that, in this arm of the IDB group, they have a recent mandate to "test innovations and technologies to see if they can solve development challenges in a disruptive and scalable way. That's why they are "proactively looking for solutions that come from new companies.

Narita adds that this project is very different from what they have usually been doing: "Here is an emphasis on the intensive and experimental use of new technologies. What we are talking about now - for the specific case of Pisces and Umitron - is artificial intelligence and the internet of things to increase productivity".

Another expected impact is that Piscis improves trout fattening and thus expands its commercial horizons. Narita says that some markets, including Asian ones, want heavier trout and this project can serve that purpose. In this regard, Miyashiro comments that, in Pisces, it used to take 12 months to achieve an average fattening of 650 grams of trout. Now they do it in 10 months and they are waiting to know how much they can improve with their new ally.

Carmen Mosquera, also a specialist at BID Lab, points out that connecting a need and a solution so far away "is uncommon, but it is beginning to be a trend that we would like to mark, to take advantage of existing technologies and not start from scratch. It doesn't mean using solutions as they are in other parts of the world, but it does mean working on the bricks that exist.

How do make these connections a trend? "Opportunities sometimes meet by chance and sometimes in a systematic way," responds Mosquera. "The important thing is to be careful to take advantage of them.

Coincidence or not, this story has another interesting ingredient. Umitron is of Japanese origin. Piscis, on the other hand, is owned by Abaco, a credit union founded mostly by the children of Japanese immigrants. Miyashiro is part of the third generation (grandson of these immigrants). Narita is also Japanese.

They say the concept of the "better half" comes from Plato's book, "The Banquet. Aristophanes, one of the characters in the work, states that "all men had round shapes [...] four arms, four legs, two physiognomies, attached to a circular neck". The god Jupiter split them in two. "Once this division was made, each half made an effort to find the other half from which it had been separated. It seems that Pisces and Umitron - like the round forms narrated by Aristophanes - are two halves with a common past and now meet again after a long time.

* This article is based on a compendium of innovation stories documented by the IDB in the publication: "How to innovate in development projects: 13 cases of innovation in Latin America".