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Clearly, COVID-19 has directly impacted many infrastructure projects and businesses, highlighting additional risk areas that few would have taken into account in the past when making investment and lending decisions.
Infrastructure is famously prized by investors for stability and predictability – COVID-19 has turned this on its head in the short term and undoubtedly will have a huge impact on the sector in the longer term. At the same time, it will create significant opportunities for investors and other stakeholders. Attitudes to risk and how it is shared may well have changed due to COVID-19 and its impact.
The crisis has emphasised that, ultimately, only governments have the powers and resources to ensure that essential infrastructure continues to operate in the face of catastrophic disruption. But this does not mean that governments need to own and operate that infrastructure.
Governments will be eager to boost their economies post-crisis, and infrastructure spending is an obvious and necessary stimulus area. Some spending will be post-crisis related, such as health and social care projects, as well as digital infrastructure to build greater capacity and resilience.
For example, in China, the government is actively promoting large scale infrastructure projects to reduce the unemployment rate with a particular emphasis on public health related infrastructure development. In Canada and the US, it is anticipated that there will be major infrastructure stimulus packages. It seems likely that the initial focus will be on projects where construction activities can be commenced quickly. Shovel-ready projects are at a particular premium, as witnessed by the UK government confirming that the UK’s HS2 Stage 1 is to proceed even during lockdown.
But all governments are now facing huge deficits and will be less likely to borrow cheaply, so there is a need to re-assess the cost-benefit analysis and seek to explore new models where private funds are used to support public outputs. This suggests some kind of PPP model or management contracts for the delivery of services will come to the fore again, favouring investment funds and banks, and operators who are focused on providing public services efficiently and cost effectively without taking unnecessarily high levels of volume risk.
Speeding up procurement and delivery of major projects: Governments will need to look at ways of speeding up their procurement processed and delivery of projects to support their stimulus packages. This should involve shortening and simplifying procurement, planning and consenting processes.
How people behave, whether by choice or compulsion, will have significant impacts on future use of infrastructure after the crisis abates.
Social distancing and restrictions on movement seem likely to apply for months, and as a result people are increasingly becoming used to new patterns of behaviour, such as working from home, reduced travel, home delivery and home entertainment. These new behavioural shifts have also reinforced pre-existing trends, such as technological advances and climate change concerns. Businesses have rapidly adopted Zoom, Microsoft Teams and Skype and it seems overseas business travel is fast becoming a long distant memory.
So where does i3P sit in this new COVID-19 world? Identifying that the industry has a new set of challenges ahead could provide new opportunities that encourages fresh perspectives and thinking.
- What are your top tips and best practices for adapting to a C-19 world?
- What do you see being the innovation challenges and how do you see the industry adapting?
- What can i3P do to support the industry?
Share your insights or suggestions via the Innovations portal or send them to email@example.com