Infrastructure challenges: SCRA Comment August 2020

Covid-19 offered up a new set of challenges to infrastructure-related companies around the world just as many layers of the transport and construction industry were already juggling various global disruptions connected to capital availability, evolving social and environmental priorities and increased urbanisation.

With global interruptions in travel and transport, supply chains and consumer behaviour overall, what we once took for granted in terms of market stability and basic infrastructure planning is now being reconsidered from just about every angle.

It’s also hard not to consider both the immediate and long-term impacts on the air travel and freight industries – will airport designs change; will volume demand at the ports alter supply chains and operational practices as well?

While it’s difficult to predict exactly how the impact of Covid-19 will alter the course of the infrastructure sector in general, there are some key areas that will likely feel it more immediately.

As mentioned, supply chain disruption is a conversation being had around the world on multiple levels and within near-endless sectors. The operational resilience needed to maintain the integrity and efficiency of construction and transport supply chains around the world is imperative, even if adapted on the local level with secondary suppliers.

To that end, as it stands, the reliance on international supply chains, particularly connected to manufacturing, has never been more obvious. Rebuilding them probably isn’t realistic in the current environment but industry leaders should consider it a top priority once we’re out of the woods with the pandemic. Built-in operational resilience tools – like adaptable multi-supplier relationships, predictive assessment criteria and capacity-constraint recognition for all supplier tier levels – should be high on the list of modifications once the rebuilding begins.

Aware and connected

The labour problem certainly hasn’t subsided, with or without a pandemic. For many industry companies around the world, projects came to either a temporary or longer-term close as Covid-19 evolved. Travel bans also impacted worker availability. But technology played an important role, as teams were able to come together offsite and continue with various duties given the circumstances. What many companies have begun to realise is that offsite staff operations can be productive and, as a result, project workflows, such as modular and offsite production, are a realistic possibility moving forward.

Pandemic or not, the infrastructure needs of the world haven’t slowed down, they’ve just been delayed. The need for investment in large-scale projects certainly isn’t waning. In fact, Covid-19 has taken the infrastructure stress already pressing on the global economy and catapulted any pre-existing funding and finance challenges into even greater visibility. As almost every study reveals, the gap between infrastructure capital demand and supply is not narrowing, it’s widening. And as is often the case, not enough investment is making its way to underdeveloped countries.

Experts suggest that the one possible solution to meeting tomorrow’s need for infrastructure financing is to help direct more private finance into infrastructure, particularly in emerging markets – and to better prepare projects, better implement de-risk investments and use a broader range of financing mechanisms.

Perhaps the more ongoing challenge within the infrastructure conversation is the need to identify projects that provide significant long-term contributors to economic livelihood – and recognise priorities that have emerged over the last several months, like the need for greater digital connectivity, robust utility infrastructure and healthcare provision.

While it’s not exactly each individual company’s obligation to solve these challenges, we can certainly both better serve our own objectives, as well as the efficacy of the industries in which we operate, by remaining as aware of and connected to the many conversations like this one that inevitably impact our futures.