Since McKinsey established the Global Infrastructure Initiative (GII) in 2012, the industry has changed dramatically. Projects have grown in both size and complexity—the average project value has increased by nearly 19 percent since 2012, and the number of major projects breaking ground is up 77 percent in that period. And while digitization was the topic of just one session at our inaugural summit in Istanbul, the topic now permeates nearly every GII discussion.
We hosted the sixth GII Summit in London from October 29 to 31, 2018. The event gathered more than 200 senior decision makers, from across the value chain and geographies, to explore new solutions to the way we plan, finance, build, and operate infrastructure and major projects.
The summit is organized in accordance with the four stages of the project life cycle: plan, finance, build, and operate. Some of the most prominent actions that surfaced include the following:
Plan
- Innovate early in planning processes and design for the future.
- Digitize and automate processes and systems.
- Prioritize capability building and recruiting new talent.
- Invest in resilient and climate-smart infrastructure.
Finance
- Refine business plans and forecasts using data analytics.
- Build flexible assets to capture a range of funding sources over time.
- Include diverse revenue sources in financing plans.
- Build and broaden investors’ in-house digital expertise.
Build
- Scale the use of interoperable and modular components.
- Measure progress against a well-defined, outcome-focused business case.
- Use real-time management data to enable early identification of project issues.
- Adopt collaborative contracts that incorporate risk sharing and clear requirements.
Operate
- Adopt a user-centric view.
- Use technology to break down barriers between assets and systems.
- Consider regulatory and procurement changes to set the conditions for innovation.
- Plan for changes in mobility as the biggest disruptor across all types of infrastructure.
Additionally, summit participants identified several opportunities to increase performance and productivity across all four stages. Some of the ideas included the following:
Seize the digital opportunity
The industry must improve its current processes, tools, capabilities, and operations to capture the benefits of digitization, automation, the Internet of Things (IoT), and analytics. This requires taking an end-to-end perspective throughout the project life cycle.
Summit participants identified two actions to help the industry come together. First, develop a single, global platform to share data on digital best practices that is open and accessible to all players in the industry. Second, create an industry-level group that sets data and technology standards to unlock opportunities presented by analytics, artificial intelligence, and IoT.
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Develop and invest in future-focused definitions of success
Change is needed to how we design projects, define their success, and invest in the long term. Mobility is becoming increasingly autonomous, connected, electrified, and shared. And, emerging technologies are advancing faster than any one project can keep up. Analyzing potential future states in planning processes, designing and building flexible assets that can serve multiple uses, and identifying diverse revenue streams over an asset’s life cycle will be critical to ensuring infrastructure projects deliver the intended benefits—economic, environmental, and social.
The increased use of data and analytics to support decision making will help optimize existing assets and further refine project selection and design. The use of interoperable, modular components will unlock the opportunity to be more flexible over the course of an asset’s life.
Use collaborative contracts that set expectations beyond financial incentives
Increased use of collaborative contracting models can help align all stakeholders and establish outcome-focused measures of progress that consider the impacts on end users. It will be important that collaborative contracts include appropriate risk sharing, set clear expectations, establish a problem-solving mentality, and offer financial incentives for each stakeholder. Such contracts will also be critical in reconfiguring the supply chain in a world with increasingly industrialized and prefabricated components.
One recommendation was to establish industry working groups for a sustained and concerted exploration of collaborative models in specific geographies.
Attract and develop the workforce to evolve with industry needs
New skill sets are required in every phase and by every actor involved in infrastructure projects. While 100 percent of GII participants who have undertaken digital transformations cited processes and systems as the focus, only 36 percent also focused on talent management and 27 percent on corporate culture. The experience of other industries shows that without a focus on organizational structures and talent, digital transformations are not likely to succeed in the long term.
Importantly, there was widespread recognition that gender and ethnic diversity matters. McKinsey research shows that setting diversity and inclusion priorities and tracking progress is critical in attracting and retaining diverse talent at all levels of an organization.
Download London 2018 Summit: Major project delivery and digital transformation, Outcomes report (PDF–7MB), or view the full report online, for more of our findings.
