With demand for infrastructure at an all-time high, governments around the world are thinking about how they might squeeze more from their existing investments.
“Canada’s individual municipalities should not only consider how they can extend the life of existing assets, but also how they can make those assets more efficient.”
- Gary Webster, National Leader, Infrastructure, KPMG in Canada
With demand for infrastructure at an all-time high, governments around the world are thinking about how they might squeeze more from their existing investments. Not surprisingly, investments geared towards demand management and capacity enhancement are coming to the top of the agenda.
The reality is that much of our existing infrastructure – our roads, our transit networks, our electricity generation and our airports, to name but a few – are designed to meet peak demand. Rather than build entirely new capacity to meet ever-higher peaks, governments at all levels are now thinking about ways to smooth out the peaks instead. Staggered work days, time-of-day billing, pricing incentives and regulatory measures are all on the table for consideration. But most have been slow to implement.
At the same time, infrastructure owners are looking for opportunities where incremental investments can deliver significant capacity enhancements. New signaling systems that allow trains to run closer together, for example, or better maintenance analytics that prevent system outages and reduce system downtime. Major gains will be achieved as infrastructure owners learn to do more (and often better) with less.
Interestingly, efforts to smooth out demand and improve capacity will largely depend on two other trends identified in this document. The first is the rapid pace of technological change (Trend 4) which is influencing the way consumers interact with infrastructure and may ultimately make some existing infrastructure obsolete. The second is the shift in social norms and work patterns (Trend 9) which is also reshaping demand as people start to work remotely and change how they interact with infrastructure to suit the way they want to live their lives.
In the developing world, the challenge continues to revolve around the need for basic infrastructure to improve capacity. In the mature markets, we expect infrastructure owners to focus on making smaller investments that, in turn, unlock improved performance, capacity, reliability and service delivery.
We also expect to see governments – particularly at the city level – start to think about how they might incentivize behaviors that help better manage peak demand in various sectors. France, Belgium and the UK have all experimented with subsidizing commuters to ride bikes to work. Other schemes will likely be floated.
As this trend evolves, the interplay between the ‘macro’ (society-wide) and the ‘micro’ (consumer/citizen level) will be fascinating, particularly at the municipal level.
As consumers get more (and more timely) data and information on their infrastructure, they will increasingly be able to adjust and change their usage patterns and behaviors. And as infrastructure systems become more sophisticated, owners will find increased ability to adjust pricing to manage demand and more finely calibrate their operations.
In some cases, technology will allow infrastructure to be delivered at a much smaller – more personal – scale, which should also gradually reduce peak demand on existing power infrastructure in developed markets and create new power models in the developing markets.
This may dismay the politicians, however: cutting the ribbon on massive new infrastructure almost always attracts more headlines than flicking the switch on a capacity enhancement.