NEW technologies, global political uncertainty and capability challenges are just some of the big challenges facing infrastructure developers, investors, operators and planners in the coming year.
As technology provides the scope for radically different solutions to infrastructure needs and often much more cost-effectively, it is important for infrastructure players such as planners, investors, regulators and owners to understand the changes in the infrastructure landscape and to leverage them.
KPMG’s research on ‘Emerging Trends in Infrastructure” explored the top 10 trends influencing the infrastructure sector in 2019:
Trend 1: The public sector will begin to reassert its role: With new models and solutions being introduced within the infrastructure sector, governments have been working to keep regulatory pace with these changes. In 2019, we will see governments and authorities taking a more assertive approach to define the regulations to govern new technologies and models. Regulatory frameworks need to be more flexible and durable to make sure they are able to strike the right balance between control and innovation, as well as agile enough to support future disruptions.
Trend 2: Data drives operational efficiency: Data and analytics will be used to uncover insights, enabling greater efficiency. This includes operational efficiency and better planning to create stronger alignment between supply and demand. Regulators can also use data to better govern and oversee infrastructure delivery. Governments and infrastructure authorities are starting to recognise the true value of their data in driving insights, operational performance and broader innovation. This year, we expect to see adoption spread – across sectors, ecosystems and life cycles.
Trend 3: The challenges of megaprojects are magnified: As we see megaprojects increasing in scale, such as Thailand’s Eastern Economic Corridor, infrastructure players need to address unprecedented challenges, including capacity fulfilment and project management. We expect to see much more need for benchmarking, performance analysis and knowledge sharing within the industry as traditional planning and age-old solutions are becoming less applicable.
Trend 4: Eyes shift to emerging market opportunities: As interest in new growth opportunities increases and as multilateral agencies seek to facilitate more investments, we will see more investors looking for new opportunities in emerging markets. Therefore, governments in emerging markets need to put greater emphasis on properly selecting, preparing and delivering projects.
Trend 5: Embracing the evidence: Infrastructure authorities will adopt holistic and evidence-based, decision-making processes that enable a much more informed approach to delivering society’s needs and expectations.
Trend 6: Sustainability goes mainstream: Sustainability is quickly becoming a board-level priority and not just an environmentalist’s agenda as investors are starting to direct their money towards companies deemed to be acting sustainability. Infrastructure sustainability is not just about environmental impact, but also includes financial and funding sustainability through operational and technological sustainability. We expect to see more public pressure and scrutiny on the sustainability of infrastructure planning.
Trend 7: Progress trumps divisiveness: Despite increasing global political divisiveness and economic disagreement, multinational infrastructure collaboration is going strong, such as China’s Belt and Road initiative, which spans multinational and regional collaboration. Countries will continue to coalesce around a common sense of progress.
Trend 8: Competition for new technologies heats up: The competition around new technologies will intensify as players continue to look for new opportunities to improve their services, products and revenues. This also means that different approaches and easier access to technological disruptions may see emerging markets leapfrog into mature markets, as new players and startups enter the market.
Trend 9: The customer becomes king: Today, users are impacting infrastructure in non-traditional ways; ride sharing models like Grab are causing users to shift away from set-route transportation (eg buses) and thus changing traffic patterns; and virtual working and co-working spaces are decreasing the focus on central business districts. Governments will need to focus more on understanding actual user choices and how they will affect the way people interact with infrastructure. Infrastructure plans will need to be informed by real-time and predictive customer insights.
Trend 10: Interdependence creates opportunities: Infrastructure planning can no longer be done in separate silos. For example, Thailand’s scheme to promote the use of electric vehicles will need to be supported by charging station operators and grid planning in order to distribute enough power to charge cars. Infrastructure planners will take the steps necessary to start considering multiple long-term plans, supported by robust scenario planning capabilities, as a way to maximise the growing interdependence of infrastructure.
Contributed by TANATE KASEMSARN, head of infrastructure, KPMG in Thailand