Are we too slow to innovate in infrastructure?

When I look at global infrastructure, I see optimism, social impact, economic value and a better world supported by projects that are desperately needed, those that are opportunistic, and others that are truly visionary. However, I also see hard realities and understand the difficult decisions a society must make.

Infrastructure is a world of complex choices, affordability concerns and governments trying to prioritize limited infrastructure spend. It’s one thing for leaders to smile for the cameras and cut a ribbon before opening a new US$200 million children’s hospital. It’s quite another to approve without ceremony a US$17 billion, 10-year plan to repair and upgrade an aging urban water and sewer system. Society might need both, but few will cheer (or vote) for the politician who approves an adequate maintenance budget for existing infrastructure. Where should our leaders focus – on necessity or opportunity?

Infrastructure is part of our social conscience. It’s something that we all seem to want, but can’t always agree on what we need. Poverty, for example, remains at desperate levels all over the world and many people lack the essential services that others take for granted. A city might address an immediate concern by providing social housing to help the urban poor move out of a slum. But is that addressing the underlying issue of poverty? The same city could take a longer-term view and prioritize a metro system to connect people to jobs and create wealth over time. Maybe it doesn’t need to choose one over the other. Effective mass transportation supports economic inclusion, but can society wait ten years or more for the impact to be felt? Can our conscience deal with the time lag?

The Catch 22 of infrastructure

We build infrastructure to change the world. It can be good business, but it has to have a positive impact. Without economic growth and the social mobility of people moving out of poverty into middle class, a constrained tax base cannot afford necessary investments in water, energy, schools, etc. It’s a virtuous circle on one end of the social curve and a Catch 22 on the other.

As in other industries, technology might eventually be the great leveler of infrastructure inequality. Innovation already exists (think telecoms), but our industry finds technical change both difficult and expensive. Infrastructure assets cost millions if not billions of dollars; they are built to a previous generation’s standards and designed to operate for decades.

Even where technical change exists, it is not always revolutionary. A Chinese construction firm began creating homes last year with a 3D printer, but they are still essentially pouring concrete and fitting houses with traditional materials. No one, for example, is yet experimenting with graphene in commercial projects. It has the ability to conduct heat and electricity, and it has widespread applications for energy, healthcare and construction. However, you will likely find it in your cell phone long before it’s widely deployed in everyday infrastructure.

As economies struggle to find growth, we know that developing and putting in place the right infrastructure now can play a major role in guaranteeing the future. Selling this type of investment when public spending is tightly constrained isn’t easy. We see leaders grapple with these challenges every day. These projects, the most significant and truly visionary infrastructure projects, as well as the more mundane ones show us just what the impact of infrastructure can be. This is why whenever I see a major infrastructure project get built, I think to myself: “What a wonderful world.”

Author: James Stewart is Chairman of Global Infrastructure at KPMG

KPMG’s Infrastructure 100: World Markets Report was published in November 2014.

Image: Construction workers are silhouetted while standing on scaffolding at the construction site of the new headquarters of the European Central Bank (ECB) during a guided media tour in Frankfurt, October 31, 2013. REUTERS/Kai Pfaffenbach