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There  is something about a new year that prompts us to step back, to reflect on what has passed and then to contemplate the future. Many of us make new year resolutions.

I write in my diary a reflection of the year behind me and my hopes for the one ahead. But, in discussions with other KPMG colleagues, I also debate what the future holds for the infrastructure sector. 

We have done this every year for the past decade and publish it as Emerging Trends in Infrastructure. It is a deliberately short read, but with 2022 now up and running, here is the ultimate distillation of what we were thinking at the start of the year.

Fail to change and your business will cease to exist. Fail to try and your children will disown you

No surprise what comes first: decarbonisation. It has rocketed up the agenda of every business globally. Infrastructure and construction – holding the keys to solving 70% of the world’s existential carbon emissions crisis – is on the front line of it.

Look back and we see much more talk than action… but no longer. Fail to change and your business will cease to exist. Fail to try and your children will disown you.

The second trend is coping with uncertainty. Infrastructure is 100-year stuff, but we are in a world where the needs we are trying to meet seem constantly in flux with evolving aspirations for how we live, work and play – and technology disruption which changes both the rules and the solutions.

We will respond by gathering and analysing ever larger quantities of data, building digital twins, and engaging more closely with communities. But ultimately we need more flexible infrastructure, if that is not a contradiction in terms.

Third is the translation of that uncertainty into the world of governance and regulation. For decades we have passed laws, established institutions and crafted processes to manage cost and risks in both the creation and operation of infrastructure.

The reform conversation has started and we expect governance to pivot from a focus on cost to a focus on benefits

Much of it is now looking increasingly obsolete, entrenching inefficiencies and holding back innovation. But the reform conversation has started and we expect governance to pivot from a focus on cost to a focus on benefits – from imposing standards to enabling investment.

Fourth is the what’s next in the digital revolution. Companies have got increasingly serious with data, technology adoption and integrated management systems. There is a long way to go, but that path is clear. 

What is new is the emergence of industry-wide platforms. Whether it is across the ports supply chain or healthcare ecosystems, the challenge seems daunting but the opportunity is immense.

What is within grasp is not just transformational improvements in efficiency but also a comprehensive understanding of – and hence basis to minimise – the industry’s environmental, societal and governance impacts.

Fifth is the geopolitical and pandemic impacts on supply chains. The latter may, perhaps, be unwinding as the coronavirus crisis finally recedes, but we will never know if physical, tax and cultural walls continue to rise.

We see increasing localism of supply as inevitable, and with it greater inefficiencies (going backwards on Adam Smith’s economies of scale) and asset redundancy necessitated for greater resilience. However workforce constraints – from greater restrictions on freedom of movement but also from changing employee expectations – may have a silver lining in the creation of a more diverse and inclusive industry.

Sixth is what we perceive as the bifurcation in living patterns, more sharply delineated between those wanting to be in the 15-minute city and those working from their rural home. Infrastructure must serve them both. We have seen this played out in broadband and mobile access and now it will play out in electric vehicle charging.

But we also believe that it will lead to the trends of mass customisation becoming ever more significant to the sector. For example, what will the exponential rise in home delivery mean for the infrastructure of retail, wholesale and distribution?

Prioritisation will be more rigorous when there is less cash to go round

Seventh, and last, how on earth will we pay for it all? How will we finance the replacement of polluting infrastructure with green, and the decrepit with the new? How will we build the foundations of quality of life and economic prosperity that emerging markets and deprived communities crave?

Governments are impoverished by the pandemic and scared of making consumers pay more. But pay more they will, either now because a worse service is even less acceptable, or later, under further expansions of the use of private finance.

And prioritisation will be more rigorous when there is less cash to go round, hence the contraction of the Chinese belt and road initiative and, in the UK, the chopping of Northern Powerhouse Rail and HS2’s eastern leg.

Finally, allow me to make an observation that has only just occurred to me in writing this piece: our forward gaze at KPMG was a global one, but I would argue that all of the trends apply here in the UK, in spades.

In this age of rising nationalism, there continues to be a relentless globalisation of ideas and aspirations, of technologies and finance. That has led to a high degree of uniformity of the industry’s challenges and its opportunities. It means that we have more than ever to gain by learning from other countries and embracing global collaboration.

Richard Threlfall is a partner and global head of infrastructure at KPMG IMPACT