The digital infrastructure opportunity for our COVID recovery - Infrastructure blog | Deloitte Australia has been saved
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A national economic crisis requires a big response, and the announcement of Government’s investment in new and accelerated infrastructure projects over the next four years in Tuesday’s Federal Budget means an extra $10b billion will now be pumped into our infrastructure pipeline to stimulate Australia’s economy and help to build us out of this COVID-induced recession.
There was, of course, a pretty solid pipeline in place before the virus hit – with Deloitte Access Economics’ Investment Monitor counting $769 billion in planned and committed projects that were on foot for 2020 before the virus hit.
It’s not, then, for want of dollars when it comes to infrastructure – and there will now be billions of dollars more in investment. But, let’s be honest; too often we let ourselves down when it comes to major project delivery, which is where those billions of dollars are spent and their economic and social value is realised.
Our delivery track record is indifferent, and high-profile projects including Sydney’s light rail and Melbourne’s Metro Tunnel just two examples blighted by significant cost and time blowouts.
So, with all this spend coming down the pipeline, and mindful of our need to make the most of it, there must be more we can do to improve confidence in major project delivery and optimised operation of the resulting assets.
Adopting digital technology and capability, and missing opportunities to drive faster, smarter and more certainty in project delivery, is certainly one area where our infrastructure sector tends to lag.
Of course, no one would say that building big infrastructure is easy. In terms of scale, technical difficulty, risk and compressed timeframes, major projects are getting more complex and delivery often requires bringing together capabilities across a range of organisations and stakeholders.
Anything that can deliver, for example, cost, timeframe, productivity and safety benefits, can provide a real edge; and technology and data certainly fit the bill on this front.
There is a clear need to increase transparency and improve collaboration throughout the supply chain, with data and insights shared more freely, processes more closely aligned and systems better integrated. And there is a pressing need amongst project managers for an embedded unified data model to harness the power of the vast amounts of data available through the infrastructure delivery lifecycle to optimise project execution and protect value.
According to the G20’s Global Infrastructure Outlook, capital projects globally spend 2-6% of capex on digital solutions to support their programs, and this investment is expected to increase to as much as 15% by 2040.
This investment in digital is realising significant value for project owners, partners and contractors – and ultimately for taxpayers – in terms of accelerated decision-making, improved collaboration, cost reduction, and more efficient use of raw materials, and training and upskilling of workforces driving a fundamental change in culture and mindset.
The scale of the benefits being realised is far from insignificant – Deloitte’s work with global clients has identified opportunities of a 10-30% reduction in engineering hours, a 5–10% reduction in build costs and a 10–20% reduction in operating costs.
Private sector organisations are typically more willing to take risks and try new and innovative approaches where there is upside to be realised.
But, encouragingly, we are now seeing public sector agencies increasingly take a leading role in driving digital transformation in the infrastructure sector, with both the Victorian and NSW governments releasing digital strategies to improve the planning, delivery, operation and maintenance of assets.
These strategies not only look to uplift the capability and approach for government agencies and asset owners, but to do this in collaboration with constructors, designers, technology providers and the supply chain to drive value for all involved (and that includes us taxpayers, of course) and create a solution that not only delivers the project, but also sustainable benefits into future operations.
A current example of this is Sydney’s M1 Smart Motorway which is upgrading a brownfield asset in both physical and technological ways to improve traffic flows and better predict and manage demand to optimise operation using smart traffic control systems. This merging of the physical and the digital, via smart traffic control systems, is enabling benefits well beyond the one dimensional idea of infrastructure as just being ‘bricks and mortar’.
Developing a capability where every major project delivery is better than the one before will also mean looking beyond digital and technology solutions to the capabilities, culture and mindset of those who work in the sector. Ingrained approaches and ways of working that have been in place for decades need to change to an environment where innovation is both encouraged and rewarded.
The journey to digital doesn’t need to go against grain and the fundamentals (we all want engineering excellence to remain core), and those getting it right tend to start small, test and iterate to prove, and then scale fast.
With Australia desperate to address the damage wrought by this virus, now is the time for change.
It would be a crime were we not to use this digital opportunity to maximise the $14 billion investment in our nation’s infrastructure-led COVID recovery.
Click here to learn more about our perspective on Infrastructure, including Digitally Delivered Infrastructure.
Heidi is a Partner in Deloitte’s Operations Consulting practice, specialising in complex program design and implementation in both the business transformation and infrastructure delivery space. She has over 15 years of consulting experience built across a range of sectors including mining, oil & gas, transport and utilities. Heidi is a member of Deloitte’s Asset Management leadership team and also leads Deloitte’s national Capital Projects practice. Heidi joined Deloitte in 2007, having spent a number of years working with a global engineering firm as well as in the rail sector.