Trend 2: Infrastructure planners start to think about flexibility
Trend 2: Infrastructure planners think flexibility
We are living in an era of rapid and fundamental change.
We are living in an era of rapid and fundamentalchange. Consider this – just 10 years ago, the first iPhone was introduced; there were no ‘app’ stores; no real-time way-finders or smart maps; Twitter was in its infancy and Facebook was a toddler. Yet today, the smartphone and its applications have become indispensable in most people’s lives.
It’s not just technology that is rapidly and fundamentally changing. So, too, are social norms, demographic trends, economic truths, the boundaries between our public and private lives, environmental realities and customer expectations. In many ways, the world we lived in 10 years ago seems quaintly archaic; the world of 10 years from now, excitingly innovative.
The problem is that infrastructure is not keeping pace with the changes we are experiencing around us. We continue to develop assets with 50 to 100-year lifespan expectations. We build for the needs of today, not tomorrow. We assume fixed technology sets will remain for the foreseeable future. We spend years in planning and consultations, ignoring the risk that the completed asset will be out of date before it comes into operation. More often than not, we simply do what we have always done.
Planning for tomorrow
This year, we hope to see infrastructure planners and developers design andcontract infrastructure projects that could support a range of possible futures. When building a new high-speed rail line, for example, proponents should be thinking about how other technologies — such as hyperloops or drones — might utilize thes ame space and provide more flexible solutions. When building a new electricity grid, we should be thinking about how the introduction of electric vehicles might influence and alter the nature of demand. When looking at transport investments, and spatial planning generally, planners need to considerthat autonomous vehicles (AVs) could radically change the way people travel and indeed how they live and how they work. AVs will also create opportunities for businesses to change the way they operate including how they import materials and distribute their products. When building hospitals and signing long term concession agreements, we ought to be thinking about how those buildings and services could change if (or when) healthcare goes mobile and ‘robotic’.
To be sure, the design and development of more ‘flexible’ infrastructure will come at a higher upfront capital cost. Not knowing exactly what the future may bring, planners and designers will need to consider multiple different scenarios, identify the most likely and then build accordingly. That may mean adding more capacity than is immediately needed, choosing a different route that offers greater future flexibility or spending more to avoid a potentially obsolete design. It will certainly require planners and owners to take more risks.
For inspiration, planners may want to look to Joseph Bazalgette, a Victorian-era engineer who put so much capacity into London’s sewers that the system he completed in 1875 lasted well into the 2000’s. Or former US President Dwight D. Eisenhower who launched the National Interstate and Defense Highways Act in 1956, thereby fueling decades of economic growth and domestic trade. Or, more recently, the planners of China’s Medium- to Long-Term Railway Network Development Plan who, by building the world’s largest HSR network, drove domestic mobility, created social wealth and birthed a new generation globally-competitive Chinese rail companies.
To future-proof infrastructure, achieve greater resilience (and maybe help overcome the natural reluctance to spend more) planners and designers will need to consider the long-run value of flexibility and build those assumptions into the business case. Simply put, flexibility must become a key design and contracting principle with the costs weighed against the longer-term benefits and an evaluation methodology to match.
While the future may be uncertain, we have the opportunity to give younger generations the flexibility to shape it. If we do not, new customer demands will go unfulfilled. New technological opportunities will be missed. And, as a result, society will suffer. Better to build flexibility in today than miss the potential of tomorrow.
Planning for the autonomous vehicle
KPMG International recently launched the Autonomous Vehicles Readiness Index (AVRI) which provides an understanding of various countries’ preparedness and openness to AV technology.The Netherlands ranked as the ‘clear leader’ in the Index. The intensively-used Dutch roads are very well developed and maintained and other indicators like telecoms infrastructure are also very strong. In addition, the Dutch government Ministry of Infrastructure has opened public roads to large scale tests with self-driving passenger cars; in fact, out of the countries surveyed, The Netherlands has by far the highest percentage usage of electric vehicles. For more information please visit kpmg.com/AVRI.
- Emerging Trends in Infrastructure 2018
- Trend 1: The clash of competing forces
- Trend 3: Sustainability – in all its forms – rises up the agenda
- Trend 4: The pace of development comes under the microscope
- Trend 5: Security becomes critical
- Trend 6: Creating alignment between payers, financiers and beneficiaries
- Trend 7: Pricing models mature
- Trend 8: The benefits of sharing data become more evident
- Trend 9: Alternative asset classes start to re-converge