As technology starts to play an increasingly valuable – and highly disruptive – role in markets, government and society, KPMG in Australia partnered with the Chartered Accountants Australia and New Zealand (@Chartered_Accts) to explore how new technologies will change the way we plan, fund, deliver and operate infrastructure around the world. The following is a summary of the partnership’s findings. Get ready for a glimpse into the future.
Technology has changed the challenges of infrastructure. It has become a disruptive – and powerful – source of innovation and renewal for the industry. The way that priorities are set and met has been transformed by the collaboration of technology in infrastructure.
The problem is that – whilst governments and communities can usually identify what infrastructure should be developed and where – the impact of technology on our future infrastructure requirements is often missing from the conversation. This is a shame: technology is already reshaping national infrastructure requirements and will increasingly influence how businesses and individuals use infrastructure.
How technology is influencing the way we plan and prioritise infrastructure is evolving. Not all technology is the same and different innovations will impact infrastructure differently. According to our report, there are five themes that collectively capture the technological trends reshaping national infrastructure requirements:
While the specific impacts of these trends may not be immediately apparent, it is entirely likely that future infrastructure requirements will be dramatically different than they are today.
Consider, for example, how the combination of driverless vehicles and the establishment of secondary employment hubs could significantly reduce the number of vehicles on the road and, therefore, the need for more road infrastructure. Or how advancements in eHealthcare combined with innovative service delivery models will lead to improvements in health solutions that may reduce the requirement for expanding traditional hospital infrastructure.
Unless we carefully consider the impact technology will have on our communities, businesses and society, we run the risk of planning and building infrastructure that is outdated or unnecessary even before it is operational. With the prospect of declining living standards, people will look to alternative locations for opportunity.
With this in mind, it seems clear that the conversation on future infrastructure requirements needs to be reframed from “How much more infrastructure do we need to build?” to “How can technology improve the infrastructure we have, how will technology influence what new infrastructure is required and will technology significantly reduce our future infrastructure requirements?”
Focusing on the right questions will not be easy. Our governments and societies are addicted to infrastructure and are always looking for more. And investing into capacity improvements offers fewer photo opportunities than opening a new plant. Yet changes to how services and infrastructure are delivered promise to provide greater choice to users, reduce costs and allow governments to essentially do more with less: a winning situation for everyone.
However, governments also increasingly recognise that new technologies have the potential to disrupt the entire business and regulatory model of monopoly services. The transmission and distribution of electricity using ‘poles and wires’ is a typical example. Solar generation and battery storage electricity is creating unprecedented uncertainty in the electricity supply sector.
However, to date, regulatory frameworks for infrastructure services have not been designed to address either planned or unexpected service or infrastructure obsolescence. New technologies have the potential to disrupt regulatory paradigms too and this is an issue that regulatory policy makers have yet to tackle.
While there remains significant uncertainty as to what the future will bring, what is immediately clear is that we all need to take urgent action to harness the power of technology and recalibrate infrastructure plans and strategies as the world swiftly evolves. Demographic change, work force mobility and technological change are creating a perfect storm for infrastructure.
Without a commitment to understanding how our infrastructure needs have and will change and a willingness to invest in innovative thinking, we will find ourselves pedaling backwards and investing in projects that will be underutilised in the long term.
Our paper calls on communities, businesses and governments around the world to take notice of how the times are changing, why they’re changing and what needs to be considered in the response.
We firmly believe that the community, business and government will need to embrace innovation and change to meet the infrastructure challenge. At the same time, future infrastructure projects with long term pay back periods must be reviewed now to ensure that precious capital is not being wasted on infrastructure which, through advances in technology, may not be required.
The winners will be the countries and organisations that can adapt and lead improvements and innovation throughout the infrastructure asset lifecycle and drive better outcomes with their scarce resources for their communities. The race is on to see who can do it!
To read more, charteredaccountantsanz.com/futureinfrastructure
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