We’d like to hear from you if any of these ideas inspired changes in your organization and about how your organization is innovating.
We also welcome your recommendations for areas to focus on at future roundtables or disruptive projects or practices to consider for site visits.
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Asia is a megahub for infrastructure and, according to McKinsey’s Infrastructure Projects Analytics Tool, has attracted 39 percent of the global spending on existing and pipeline megaprojects, totaling $10.4 trillion. Asia’s infrastructure megaprojects number approximately, 1,100 ongoing and 1,460 in the pipeline, illuminating the region as an infrastructure hot spot. For these reasons, we were excited to host the fourth Global Infrastructure Initiative (GII) Summit in Singapore—our first time in Asia.
Since its inception in 2012, GII has evolved from a summit held every 18 months into a global movement that includes roundtables in cities around the world, innovation site visits to experience the greatest advances in infrastructure and capital projects, and a quarterly digital publication that shares the insights from all our programs with the GII community of more than 5,000 leaders.
GII was established for two primary reasons: to create a forum for global leaders from across the value chain to exchange ideas and to identify ways to improve the delivery of essential infrastructure and get more out of existing assets. While networking and an exchange of ideas are critical first steps, we wanted to set a higher aspiration for GII—to use GII as a means to start improving the performance of infrastructure and the entire industry. Based on our pre-event survey of GII participants, the enthusiastic dialogue at the summit, and the GII community’s collective focus on actions, we believe we are making progress.
The latest McKinsey Global Institute (MGI) research suggests that bridging global infrastructure gaps is more important than ever. To keep pace with projected economic and population growth, the world needs to invest an average of $3.7 trillion annually, or 4.1 percent of gross domestic product (GDP), in economic infrastructure until 2035. That figure is up from our 2016 estimate of $3.3 trillion annually until 2035. Yet in both the developed and developing worlds, significant gaps persist between this projected necessary investment and actual investment—a gap estimated to be $5.5 trillion worldwide between now and 2035.
MGI research also shows that this gap will not be closed by increasing infrastructure funding alone. The industry must improve the effectiveness and efficiency of project delivery—an action that could free up a substantial amount of funding for more infrastructure investment. If construction productivity were to catch up with the total economy, for example, the industry could save $1.6 trillion in value each year.
Based on the need and opportunity, we selected “New solutions for global infrastructure” as the 2017 GII theme, focusing on the levers and actions that can help close the infrastructure gap and best position global economies to meet increasing demands on their infrastructure. Notably, across our sessions at the summit we heard from leaders about steps they are taking to improve productivity and efficiency and how they are thinking about the potential of digital technologies and analytics to disrupt the industry in a positive way.
GII aspires to stimulate leaders to improve the way that they deliver critical infrastructure and to get more out of existing infrastructure and capital projects. Based on the discussions at the 2017 GII Summit, we believe this development is happening; the infrastructure industry is making progress in implementing the 25 actions identified at the 2014 GII Summit in Rio de Janeiro.
One action from the 2014 GII Summit in Rio de Janeiro was to “improve collaboration between designers, owners and contractors, and have common key performance indicators (KPIs) and incentives for all contractors.” Since then, the concept of relational contracting has increasingly emerged at our roundtables around the world as a priority for the industry. Our survey of Singapore participants revealed that 76 percent of organizations have reevaluated their approach to contracting within the last two years and more than 60 percent report using creative contacting framework.
The evolving focus of GII discussions is evidence that change is occurring rapidly in the industry. At our first GII Summit in Istanbul in 2012, many participants were reluctant to embrace the potential of technology to improve existing infrastructure assets. Just five years later, asset optimization through technology and analytics was the focus of our Innovation Site Visit to GE’s Digital headquarters and was a cornerstone of the dialogue in Singapore. Similarly, the topic of construction innovation has gained momentum at each summit, and we have shifted from talking about the realm of possibility in 2014 and 2015 to learning from proven concepts with broad applicability in 2017.
Much remains to be done if the industry is to embrace innovation, collaborate more effectively, and take the bold steps necessary to deliver 21st-century infrastructure. We are optimistic that the ideas that emerged during the summit will help to create change in how we approach infrastructure and capital projects around the world. As we prepare for the 2018 GII Summit in Europe, we will continue to identify new solutions and stimulate change through our GII regional roundtables and innovation site visits. These and more insights from industry leaders will be shared with you in our quarterly digital editions of Voices on Infrastructure.
We hope the GII community will join us in driving these actions forward. Through roundtables and site visits over the next 18 months, we will aim to make progress on the ideas and actions that surfaced in Singapore. We ask that everyone make a commitment to implement at least one of the ideas before we reconvene in Europe in 2018, as progress will only be achieved if all stakeholders take action.
We sincerely thank our partners: Macquarie, Siemens, Spencer Stuart, and Surbana Jurong. We also acknowledge our media partner, TIME, and our institutional partners, IE Singapore, the Economic Development Board, and the Monetary Authority of Singapore. Without their collective support, the 2017 GII Summit would not have been possible.
We thank those who attended the 2017 GII Summit for their energy and insights. We look forward to staying in touch—and to continuing the conversation.
About McKinsey & Company
Founded in 1926, McKinsey & Company is a global management consulting firm committed to helping institutions in the private, public, and social sectors achieve lasting success. With consultants in 109 locations in 61 countries, working in every industry and function, McKinsey brings expertise to clients around the world.
About the Global Infrastructure Initiative (GII)
Our research suggests that up to 40 percent of global infrastructure investment is poorly spent because of bottlenecks, lack of innovation, and market failures. In 2012, McKinsey established GII with the objectives of identifying ways to improve the delivery of new infrastructure and get more out of existing assets. Our approach has been to stimulate change by convening global infrastructure leaders to exchange ideas and to find practical solutions to improve how we plan, finance, build, and operate infrastructure.
Over the years, GII has hosted four global summits, dozens of regional roundtables, and innovation site visits to explore some of the industry’s most exciting advances. The best insights and practices from around the world are featured in our Voices on Infrastructure publication. Our intent is to create a platform that inspires senior leaders to drive change to help close the infrastructure gap, promote economic growth, and contribute to more resilient and secure communities.