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Emerging Trends in Infrastructure Summary

Core Content

The KPMG Emerging Trends in Infrastructure report for 2018 highlights a series of evolving themes and challenges that are reshaping the global infrastructure landscape. It emphasizes the need for innovative thinking, strategic planning, and collaboration to navigate a complex and rapidly changing world.

Main Trends and Key Points

Trend 1: The Clash of Competing Forces

• Context: A decade of global harmony has not materialized as expected; instead, societies, markets, and institutions are increasingly fractured.
• Key Issues: Divisiveness between the West and East, generational divides, and political polarization.
• Opportunity: Governments can use infrastructure to address long-term challenges, but must balance short-term political and social obstacles.
• Call to Action: Infrastructure planners must make decisions that align with a shared future, using better data and analytics to navigate uncertainty.

Trend 2: Infrastructure Planners Start to Think About Flexibility

• Challenge: Traditional infrastructure planning focuses on current needs, not future possibilities.
• Need for Flexibility: Infrastructure must be designed to adapt to emerging technologies and changing user demands.
• Examples: High-speed rail, electric vehicles, and autonomous vehicles (AVs) require flexible planning.
• Cost Consideration: Flexibility may increase upfront costs but is essential for long-term value and resilience.
• Inspiration: Historical examples like the Netherlands' AVRI and Joseph Bazalgette's sewer system show the importance of foresight.

Trend 3: Sustainability — In All Its Forms — Rises Up the Agenda

• Broad Definition: Sustainability includes environmental, financial, operational, technological, and social aspects.
• Importance: With increasing global challenges, a holistic approach to sustainability is critical.
• Role of Planners and Developers: They must integrate sustainability into all stages of design, funding, and operation.
• Investor Interest: Investors are increasingly focused on the long-term viability and social impact of infrastructure projects.

Trend 4: The Pace of Development Comes Under the Microscope

• Contrasting Approaches: Mature markets face slow, bureaucratic processes; developing markets often rush projects.
• Risks: Rapid development can lead to "white elephants" or obsolete infrastructure, while slow progress increases costs.
• Need for Balance: Both types of markets must rethink the speed of infrastructure planning and delivery.
• Outcome: A more balanced pace will reduce risks and ensure infrastructure meets current and future needs.

Trend 5: Security Becomes Critical

• Cyber Threats: Infrastructure is increasingly targeted by cyberattacks, including ransomware and misinformation campaigns.
• Physical Threats: Terrorist attacks and extreme weather events are raising security concerns.
• Response: Governments and infrastructure owners are enhancing both physical and digital security measures.
• Future Focus: Security and resilience will be central to infrastructure planning and operations, especially with the rise of autonomous systems.

Trend 6: Creating Alignment Between Payers, Financiers and Beneficiaries

• Misalignment Problem: Often, the people who pay for infrastructure do not directly benefit from it.
• Examples: Taxpayers funding rural highways without using them; multi-jurisdictional projects with unclear benefit distribution.
• Need for Transparency: Governments must better understand who pays and who benefits, and how to align these groups.
• Social Impact: Increased public awareness of the social value of infrastructure is driving more discussion and reform.

Trend 7: Pricing Models Mature

• Dynamic Pricing: Real-time adjustments based on capacity, demand, and supply are becoming more common.
• Examples: Airlines, rail companies, and transport authorities are adopting dynamic pricing strategies.
• Benefits: Can lead to better resource allocation and alignment between payers and beneficiaries.
• Challenges: May reduce access for lower-income users; requires ethical considerations and alternative service options.

Trend 8: The Benefits of Sharing Data Become More Evident

• Data as a Backbone: Data is essential for smarter infrastructure management and improved user experience.
• Ownership Issues: Data is fragmented between public and private entities, with some being proprietary and others open.
• Government Role: Encouraging private participation requires access to government data, which can drive innovation.
• Governance Frameworks: Permissive data access models are emerging, allowing for case-by-case sharing while ensuring control and security.

Conclusion

The report underscores that the future of infrastructure is shaped by a combination of technological innovation, political dynamics, and the need for sustainable, secure, and flexible development. While there are challenges, there is also significant opportunity for those who can adapt and lead with vision and purpose. KPMG encourages stakeholders to engage in thoughtful dialogue and strategic planning to unlock long-term value and ensure equitable access to infrastructure services.

Key Authors

• Richard Threlfall – Global Head of Infrastructure, KPMG International
• Stephen Beatty – Non-Executive Chair, Global Infrastructure, KPMG International
• Julian Vella – Asia Pacific Head of Infrastructure, KPMG International

Contact

For more information or to discuss how these trends may impact your projects and investments, contact your local KPMG member firm or the authors listed in the report.