PLAN

While much attention is given to the cost overruns and schedule delays that occur in the delivery phase of major projects, a more strategic, outcomes-focused effort in the planning phase can pay dividends. For example, a transportation project might identify a target number of passengers to move each hour. Choosing the right project objectives can help keep a project on track and improve the use of an asset over the course of its operations. Importantly, the planning phase should include sustainability and resiliency considerations as needs are growing and investment appears to be following suit.

Innovate early in planning processes and design for the future

Rethinking the planning process

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Projects frequently lack a short, crisp articulation of objectives, including environmental, social, and economic outcomes. And the long-term nature of major project construction often means that original concepts could be outdated by the time a project reaches commissioning. This irregularity is exacerbated by rapid advances in technology and changing user behaviors. Moreover, public-sector owners often face the challenge of balancing specific objectives with a need to satisfy multiple stakeholders—sometimes with divergent interests—to maintain support for a major project. It can be a struggle to communicate benefits when the public focus is on time and cost alone.

Participants at GII identified several keys to improving how the industry can structure major projects for success:

  • Define outcome-focused metrics of success before developing a project concept.
  • Incorporate full life-cycle costs in initial planning and procurement decisions.
  • Design assets that can serve multiple uses in the immediate term, such as parking garages that can serve as cold-storage facilities, while also incorporating flexibility for future needs.
  • Disrupt traditional government-run planning processes with competitive formats, such as challenge funds, and involve contractors earlier in the process to provide creative ideas.
  • Communicate projects’ benefits through new visualization platforms—like augmented and virtual reality—to go beyond a cost-benefit analysis.

“There are some models where the contractor comes in early and helps with better risk identification. Power plants do that, oil and gas wants it, infrastructure isn’t having enough of this conversation yet.”

Digitize and automate systems and processes: the future of engineering is centered on unlocking digital

Harnessing the promise of digital

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Technology and digitization of design and engineering processes are beginning to disrupt—and stand to significantly improve—how the industry works today. This will impact all aspects, from the common business model based on billable hours, to the core design tools used.

Contractors and owners can seize this opportunity by doing the following:

  • Improve risk management through the digitization of processes. Project leadership could see near-real-time progress across projects through automated tools and feeds, allowing earlier identification of issues and mitigation, even in pre-construction project phases. While design houses may be concerned about how digitizing their core offerings will disrupt their business model, first-movers have recognized the significant opportunity to de-risk their work, which will become a competitive advantage. For example, 5D building information modeling (BIM) and virtual reality help identify problems during the engineering phase before breaking ground.
  • How advanced analytics can benefit infrastructure capital planning

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  • Use data and standardized digital processes to make insight-driven decisions. Advanced analytics and scenario modeling can help owners identify several alternative options in the early stages of project conception. For example, one power company estimated that it saved $35 million in prevented downtime using digital twins. Cloud computing also means that every project and site, no matter how small, can be digitized at a low cost—so everyone can reap the potential benefits.
  • Increase use of on-site technologies in the equipment-planning process. Sensors were first used to track people (for safety) and products (for quality and schedule), but today data from equipment sensors should be applied regularly to improve planning and scheduling processes.
  • Develop a value proposition to recruit data scientists. Talent is at a premium when it comes to data scientists, and the industry is competing with major technology players. One suggestion was to connect societal and economic benefits to infrastructure jobs to attract younger technology professionals. One participant noted that this hiring can also be done incrementally: “You don’t need hundreds of these people; one, two, or three great data scientists could make a huge difference to your business.”

Prioritize capability building and recruiting new talent

Capital projects: Creating digital-first organizations

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As every industry undergoing digital transformation has experienced, the changes in processes and systems will demand new skills and entirely new roles in many cases. The digitization of core engineering tasks mean that more time can be spent anticipating and mitigating issues and risks, so engineers will need to increasingly move from being discipline specialists to project integrators. Owners and contractors can no longer think about holding digital talent in their IT functions alone; they must be integrated throughout project teams.

Beyond the project teams, owners need to consider the skills that are required at the top of their project organizations to effectively manage major projects. Project leaders should be empowered to manage change. They must also establish a culture that encourages the use of such technology and provides contractors with incentives to bring forward innovative ideas.

Invest in resilient and climate-smart infrastructure

Climate resilience: Asset owners need to get involved now

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Over the past decade, climate change and storm events have cost the world nearly $2 trillion and affected nearly four billion people. Projects around the world face the challenge of building and protecting infrastructure that can withstand several climate- and weather-impact scenarios that could unfold because of global warming. The industry is certainly making progress, such as with the use of sustainability ratings and the assignment of sustainability grading to potential investments, but there are no standards for defining or evaluating resilience in a similar manner. While it would be difficult, participants agreed that an established body and universally understood metrics—such as the ratings agency that offers AAA ratings to investors—could help prioritize climate-smart infrastructure measures and put best practices in place.

However, any global effort needs to be grounded at the local level. Regional and local governments are best placed to take an integrated view on how a climate or weather event will affect a community. For example, they should take a comprehensive view at how a storm could damage not just a power station but the access road and bridges critical to repair crews as well.

Given the infrastructure investment gaps facing the world today, private capital is becoming more critical to make the incremental investments in green or sustainable infrastructure. Financers can help unlock sustainable investment by structuring deals to make them investor-friendly. This is particularly promising in emerging economies, and there has been significant progress in Africa.

In developed economies with massive, established infrastructure, investment is more about spurring the use of new technologies and ways of building. The government can consider regulatory structures that do not “pick winners” and instead open the market up for the most innovative and beneficial technologies to win out. For instance, governments have instituted renewable power auctions to help create markets for offshore wind developments. Public agencies can also partner with the private sector on specific projects; for example, a commercial district and its waterfront real estate tenants can invest in flood defenses, reducing the burden on the taxpayer.

Weather events do not consider which department has responsibility for different assets.