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  • Sharad Somani, Partner |

Digital transformation has accelerated across all industries due to COVID-19. This is particularly evident in the infrastructure sector, where organizations have become acutely aware of the need to future-proof (and pandemic proof!) their operations. It is expected that digital technologies will play a growing role in driving infrastructure projects and ensuring operational resilience.

This was the topic of a roundtable discussion at Asia Infrastructure Forum, where speakers pointed to a number of initiatives in this space.

As highlighted in KPMG’s latest Emerging trends in infrastructure report, digital systems such as the Internet of things (IoT), robotic process automation (RPA) and 5G broadband cellular networks are redefining the infrastructure industry. But rather than an end in themselves, these developments are a means to an end. Most importantly, they can be leveraged in various ways to help improve traditional infrastructure.

Digital era in infrastructure

Firstly, digital technologies can be integrated into new developments. Today the transport (ports, airports, metro-rail, etc.) and energy infrastructure projects (power, renewables, water, waste treatment, etc.) are relying on technology for better design, construction and operations leading to whole of life cycle efficiency. While human resources are being optimized in places requiring repetitive and voluminous activities, the project delivery and maintainers is increasingly becoming more cost efficient and transparent.

Secondly, remote-monitoring systems such as drones and robotic process automations (RPAs) can be deployed for optimal reporting — technologies which help overcome many of the risk and governance challenges associated with typical infrastructure projects. There is already existing software — including that in use at KPMG — that synthesizes lengthy analyses into easy-to-digest digital dashboards. These methods provide a real-time overview of progress on infrastructure sites, can hone in on key activities and help identify red flags that immediately need addressing.

Finally, digital solutions can help improve the operations and management of existing projects, including airports, power plants and utility providers. The latter has greatly sped up its digital transformation in the wake of COVID-19. Systems implemented include smart metering, which can automatically record and communicate usage information to providers, thereby eliminating manual monitoring.

Transporting into the future

Similar technologies are being applied in the transportation sector, where IoT, RPA and data analytics are being harnessed for the predictive maintenance of rail networks. For example, through IoT sensors and data analytics, organizations can determine which nodes are under stress or are malfunctioning. This also helps with predicting future breakdowns by implementing condition-based monitoring in the system.

Digital technologies are also having a strong impact in emerging markets, where rapid and extensive infrastructure development is essential for economic growth. As these systems become widespread and increasingly more cost-effective, developing countries can employ them to leapfrog infrastructure growth in mature markets.

Consider, for instance, the mobile networks in various developing countries, have rapidly moved from 2G to 4G network infrastructure. The emerging markets have been able to leverage cost-competitive and state-of-the-art technologies that have been successfully rolled out in more developed countries. Emerging markets can embrace such digital systems to gain a considerable advantage in terms of infrastructure service delivery.

Making it happen

As digital infrastructure evolves and more opportunities for public-private partnerships (PPPs) emerge, there is a wealth of capital flowing in from different sources. Besides governments themselves, commercial and multilateral banks have also historically been financers. Now, alternative capital is being injected by institutional investors, pension funds and capital markets, who are all eager to fund these projects. This is a positive development.

While there is an abundance of funding available, the real challenge lies in the execution. Infrastructure projects need commitment from the highest ranks, including governments. They require stakeholder buy-in at all levels, from investors to C-suites to on-the-ground employees. And they need confluence of right partners, optimal technology providers and bets in class advisors to see a project through from start to finish — which is where KPMG professionals come in. Ensuring that all the stakeholders are on board should remain paramount for successful outcomes.

Going forward, cyber security and data protection is expected to be at the top of the agenda. This is especially true for utility providers integrating digital technologies into their operations, as a breach can have far-reaching consequences. To guard against potential threats, organizations can leverage sophisticated cyber security tools to help ensure robust and resilient system. The infrastructure sector can also look to the financial industry as a leading example in deploying effective cyber security solutions.

The exciting convergence taking place between technology, renewable energy and sustainability will likely be the key to defining the future of infrastructure. Companies constructing digital infrastructure, such as data centers, want to run on green power. Simultaneously, countries are committing to ambitious net-zero targets for carbon emissions. These incentives make it vital to harness the appropriate technologies to develop, manufacture and deploy renewable energy solutions to meet these demands.

At the same time, the technology is getting increasingly cheaper and ubiquitous, making the integration into infrastructure projects more compelling given the benefits — especially in emerging markets. Countries in Southeast Asia have started implementing solar projects in large scale to benefit from its cost competitiveness and as a complement or replacement to the traditional sources of electricity, given the grid parity of solar photovoltaic (PV) tariffs. Given the trend in solar technology developments, Southeast Asia is expected to nearly triple its solar power capacity by 2024 to 35.8 GW.

As countries further expand their infrastructure, it is important to maintain multilateral and bilateral initiatives for the sharing of knowledge. This work is currently being done by the Association of Southeast Asian Nations (ASEAN) Secretariat, which coordinates regional infrastructure initiatives, and by the Cities Development Initiative for Asia, which helps countries devise best practices for smart cities. Multi-country alliances that deal with sustainable finance for infrastructure will likely be key as the sector evolves.

In another 10-15 years, we believe large-scale digital integration in the infrastructure industry will lead to better implementation and operations. This vision should keep evolving as better technological systems are created to help build a smart and sustainable future which are resilient to any challenges of the future.

Want to glean further insights into the themes highlighted in this article? Explore more insights on smart infrastructure, sustainable infrastructure and sustainable finance.

This article refers, in part, to remarks at a roundtable hosted by Sharad Somani, Head of Infrastructure, KPMG Asia Pacific at KPMG in Singapore at the Asia Infrastructure Forum.