KPMG highlights ten trends that will shape the infrastructure industry in the year ahead

Ten global trends, many of which underscore a drive for more responsible leadership, both from the public and private sectors, will shape the development of infrastructure in the year ahead, the 2017 ‘Emerging Trends in Infrastructure’ report from KPMG International reveals.

“Political agendas and social expectations are changing. Global, regional and national institutions are weakening. Power is shifting and technology is increasingly important,” says KPMG South Africa infrastructure and financing deal advisory head and director De Buys Scott.
The first trend is the likely sharpening of the confluence of energy, transportation and technology. Over the coming year, more responsible governments will look for new ways to improve alignment and drive integrated planning across these three sectors.
“In some cases, this will require the establishment of new structures that encourage shared investment and planning across different government departments. In other cases, it may be driven by focused leadership and strong policy direction,” the report stated.
Evident in recent elections in Western countries, the report further found that the populist agenda would likely disrupt infrastructure markets.
This, it noted, would likely lead to three key subtrends – the first being an increase in infrastructure budgets.
The second subtrend is one of protectionism, which prioritises domestic players over international experience. The third subtrend will be a shift in infrastructure priorities, not only towards more popular assets and “people-first” projects, but also towards new technologies and models that speed up infrastructure delivery.
Meanwhile, KPMG expects governments to take a more “bottom-up” approach to infrastructure planning and development in the year ahead, taking the time to understand the changing demands of both current users and future generations to help shape their infrastructure agendas. The report also suggests that governments take advantage of these changes to solve some of their larger infrastructure challenges by "incentivising the public".

The fourth trend cited in the report identified that investors would increasingly start to care about social and environmental impacts, not just financial returns. “Over the coming year, investors (public and private) are expected to make serious efforts to measure and communicate the real impact of their investments.
“In some cases, this will lead to difficult choices as plan managers and their beneficiaries gain greater awareness of their social and environmental footprint. It will also likely lead to growing competition for projects that can demonstrate these benefits,” the report said.
The fifth identified trend noted that technology would enable greater infrastructure productivity and increase obsolescence risk.
“This year, it is expected that infrastructure owners and operators will begin to focus on developing robust technology plans, balancing the need for competitive advantage against the desire to achieve quick returns on their investments. A select number of governments will move from being technology followers to technology leaders and using the advantage to better relate to their citizens and increase the efficiency of their infrastructure.”
New investment approaches will also seek to get more out of existing infrastructure, as in the developing world, the challenge continues to revolve around the need for basic infrastructure to improve capacity.
“In mature markets, it is anticipated that infrastructure owners will focus on making smaller investments that, in turn, unlock improved performance, capacity, reliability and service delivery. Also, it is the expectation that governments – particularly at the city level – start to think about how they might incentivise behaviours that help better manage peak demand in various sectors,” the report said.
Other trends include governments looking to unlock the funding paradigm, credit enhancement facilities going back to basics and the expectation that the search for yield will drive convergence in the investment market.
This year, the report suggests, infrastructure players will also pick up steam in expanding their global capabilities and transcending national borders.
However, as cited among the report's identified trends, certain forces would act against globalisation, including rising protectionism and nationalist agendas; shifting social preferences; increasing focus on localisation; disruptive trade negotiations and other uncertainties that may dampen enthusiasm for globalisation.