InfraTech

Approach: Develop a national, regional, or sectoral InfraTech strategy

Our recent work on sustainable infrastructure provided strong evidence that the availability of national long-term strategies was a key driver for scaling up private sector participation and investment into sustainable infrastructure. The same can be said of scaling up investment into InfraTech. These strategy documents make governments’ plans more transparent to private investors, technology providers, and consultants that may be looking for better certainty that they will not be investing in stranded assets technology.

Transparency enables private stakeholders to plan their participation and manage their risk, encouraging them to invest in and adopt technology. Our research has found that all G20 countries have national or sectoral strategies for InfraTech, and more than half of the national plans we analysed identified the adoption and scaling up of InfraTech as a transition pathway to reach net-zero emissions. Overall, the infrastructure sectors that G20 countries are prioritising for investment will encompass investment in InfraTech. By simply linking together these elements into a national scaling and investment strategy for InfraTech, governments can realise the benefits of InfraTech and attract private investment in InfraTech.

Approach: Adopt progressive and innovative procurement tools and policies

Progressive and innovative procurement tools and policies have clear potential to drive investment into InfraTech, but can be challenging to implement. On the one hand, policies need to keep pace with rapid technological advances; on the other hand, it takes time to understand the costs and potential risks of applying new technology.

Policymakers need evidence that will enable them to develop and implement innovative procurement methods that effectively incentivise InfraTech. The adoption of innovative procurement tools and policies would also benefit from having clear national or sectoral InfraTech strategies. Governments can also use InfraTech as an innovative procurement tool, as is the case with the example below.

Adopt innovative delivery models for better risk sharing

Successfully delivering InfraTech projects can rely on the process of choosing the delivery model and subsequently structuring the project at the early stage. New approaches are emerging for managing interfaces, securing efficient solutions, building local delivery capacity and capability, managing technology integration risk, and managing uncertainties about utilities or ground conditions. Sharing best practice about delivery models can help practitioners make more informed decisions on effective solutions and how to implement them.

Create an international InfraTech ecosystem platform

The InfraTech landscape can be categorised into three layers: at the core is investment in InfraTech development, which includes the activities of start-ups, small and medium enterprises (SMEs), and venture capital investors in developing the technological solutions for infrastructure. In the outer layer is investment in infrastructure projects, which includes the procurement and implementation of technologies within infrastructure projects. The interface between the two is what we call the InfraTech ecosystem.

Image courtesy Asian Infrastructure Investment Bank

Currently, the InfraTech ecosystem – which involves the two-way collaboration and communication between technology developers and investors/financiers of infrastructure projects – is in its infancy and is not operating in an effective way. A new platform that enables better collaboration between the public and private sector through better access to data, knowledge, and insights, could help enable and grow the InfraTech ecosystem.

Integrate data platforms and digital twins

InfraTech is an important contributor to, and element of, the digital economy. Big data sets contribute to economic efficiencies, and advanced data analytics can facilitate informed decisions and help track and maximise the social and environmental effects of projects for sustainable development. With the digitalisation of infrastructure and the movement to Infrastructure 4.0, a foundational activity for the infrastructure sector is the effective capture and management of large pools of data in data platforms, in compliance with relevant laws and regulations.

One ‘big data’ technology application that is increasingly used in the infrastructure sector is digital twins. A digital twin is a virtual replica of a physical object or system. Digital twins are compiled of several layers of real-world data related to the object or system and can produce predictions or simulations of how that object or system will be affected or influenced by certain operational inputs. Digital twins have potential to attract private investment into infrastructure by helping to reduce upfront costs and/or operational and maintenance expenditure throughout the life of the asset.

Safeguard cybersecurity and privacy

With the increased connectivity of infrastructure and data collection comes an increased risk of cybersecurity vulnerabilities. Increased digitalisation, data-sharing, and data-driven decisionmaking must be supported by appropriate policies, governance, and regulation. These should safeguard privacy, protect against new and emerging risks, and also incentivise innovation.

Direct public investment toward InfraTech

Governments are leveraging technology and mandating the use of standards and processes (such as Building Information Management) to improve the productivity, efficiency, value-for-money, and affordability of infrastructure projects with respect to lifecycle costs and efficiency. To meet key challenges, such as net zero targets and pandemic response, governments are also directly funding development, trials, and deployment of novel InfraTech solutions.

Analysis from Deloitte found that use of new technology is expected to deliver 5–10% cost savings on project delivery and maintenance. Reforming government internal procurement processes is essential to achieving these potential savings. Procurement approaches should be technology-neutral and solution-agnostic, focusing on standards and outcomes.

Governments can employ collaborative procurement and contracting approaches that involve close work with technology experts to encourage innovation. Evaluation models based on outcomes and a focus on lifecycle costs in determining overall value-for-money will allow greater adoption of InfraTech during the procurement process.

Increase access to innovative funds, platforms, and de-risking mechanisms

The availability and accessibility of more diverse financial and risk mitigation instruments for InfraTech helps to grow a pipeline of bankable projects and increases the affordability of these investments.

Here again, national or sectoral strategies and policies that signpost a government commitment to InfraTech can be helpful, as can strategic and financial investments into InfraTech start-ups and InfraTech adoption programs. Similar initiatives like ADB Ventures, IFC Venture Capital, EBRD – Venture Capital Investment Programme, and Engie New Ventures have been shown to fast-track development and adoption. Applying these kinds of initiatives to infrastructure could deliver similar outcomes. This can include innovation sandboxes or embedding innovation through government procurement processes.