Trend 5: Technology enables greater productivity and increases obsolescence risk

Trend 5: Technology increases productivity and risk

In 2016, we expect to see the discovery and application of new technologies, new uses for existing technology and increased collaboration between asset owners/operators and consumers.

Red Car in Motion from Above

Last year, we predicted that technology would fundamentally change how we plan, design, develop and operate our infrastructure. In many sectors, we were right: the falling cost of solar power generation and energy storage, for example, is already changing the dynamics of centralized generation. The availability of inexpensive sensors is transforming the way owners and operators can manage their assets. The rise of collaborative decentralized navigation tools is changing driving patterns and usage trends.

This year, we expect to see the impact of technology widen and deepen. The widening will come from the discovery and application of new technologies, new uses for existing technology and increased collaboration between asset owners/operators and consumers. The deepening will be driven by the infrastructure owners and operators themselves as they strive to achieve greater efficiency and value from their investments.

At the macro level, we expect to see entirely new technologies start to gain traction and broad commercialization. Distributed distribution is already here. So, too, are driverless cars but we have touched the surface of their application. Even the Hyperloop (maybe one of the most audacious ‘leaps’ in transportation technology) is quickly moving from research to pilot.

But it is at the micro level where much of the action will be this year. We believe that this will be the year that the use of data and analytics takes off helping to improve capacity, performance, reliability, reduce operational costs and transform operational performance. Automation and robotics tools that eliminate human error and enhance performance. The dawn of the age of personal service robots is upon us with tremendous implications from health care and elder care. Slick consumer apps and visualization interfaces that allow customers to control their usage. Indeed, it will be the incremental technologies that will have the greatest impact on infrastructure over the coming year. This will be the year that infrastructure productivity becomes mainstream.

In 2017, we expect infrastructure owners and operators to start focusing on developing robust technology plans, balancing the need for competitive advantage against the desire to achieve quick returns on their investments. Last year we spoke about the need for an infrastructure CEO to think like a technology CEO. We expect this trend to continue and intensify. The big question in 2017 will be when to invest in new technologies and which ones to invest in, not whether to invest.

Infrastructure investors are increasingly faced with the requirement to assess the risk of technical obsolescence of their investments, possibly the most challenging risk to evaluate given its impact and the inevitable technological changes which will take place over the operational lives of the underlying assets.

The long view

Infrastructure owners and operators will become much more comfortable with understanding, assessing and adopting new technologies. However we are coming off a low base But infrastructure planners and investors will likely continue to struggle with the longer-term challenge of forecasting consumer/citizen behaviour and demand in an ever-changing technology environment. The challenge will be particularly acute in the energy and transportation sectors where the pace of technological change seems to be picking up speed. Those who fail to take into account technological change are making a losing bet. The importance of bricks and mortar solutions will continue to decline.  

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