Global challenges - a summary from our CE Helen Davidson
With predictions the global economy will continue to weaken over the next year, global challenges in our industry are seen here too in Aotearoa New Zealand. Our CE Helen Davidson recently attended the 2023 FICIC conference with other world leaders to discuss the challenges.
There’s an energy you get when you’re sitting in a room full of leaders from around the globe talking about the world’s biggest infrastructure challenges. From economic investment, sustainability and technology. That’s the experience of the FIDIC Global Infrastructure Conference that I attended in Singapore last week.
The global challenges are our challenges – here’s a summary of a few key takeaways in relation to the economic outlook, sustainability, and digital transformation for ACE members from this conference.
Economic outlook
The Managing Director of the World Economic Forum started us off with a pessimistic view of the global economy over the next year, with predictions it will weaken though also noting that concerns about a global recession have eased. Nevertheless, we’re in the weakest mid-term outlook in decades. While resilient infrastructure is key to meeting many of our challenges including population growth and decarbonisation, current global investment is not enough. With around a USD $350 billion annual investment shortfall, global efforts to invest are falling short of the world’s ever-expanding needs.
This means that challenging trade-offs are unavoidable if our investment needs are to be met, and we’ll need both public and private investment in sustainable, inclusive, resilient, and future-ready infrastructure.
Sustainability
There was a strong focus on sustainability and carbon zero / carbon positive at the conference, with FIDIC releasing four thought leadership reports:
- Closing the sustainable infrastructure gap to achieve net zero - This comprehensive guide takes a global view, outlining the challenges we face and presenting actionable steps to bridge the sustainable infrastructure gap
- Decarbonisation of the infrastructure sector - Delivered in collaboration with Arcadis and Ramboll, this report considers operators, clients and investors globally and the opportunities to influence and decarbonise throughout the infrastructure lifecycle
- Infrastructure and climate change - This document delves into the critical nexus between infrastructure development and its impact on climate change
- A playbook for nature-positive infrastructure development - FIDIC, AECOM and WWF joined forces to develop this first iteration playbook for 'nature-positive' infrastructure development to drive change, to complement, or in some cases even replace traditional or 'grey' infrastructure - it points to a future living playbook to expand global recognition of new solutions and construction techniques that are truly nature-positive
We’ll be working with members to deep dive into each of these reports to understand how they apply in our context in Aotearoa New Zealand. If you’re keen on being involved in reviewing one of these documents with us, let me know.
Again, the shortfall of investment was noted here, with the global investment in meeting our net zero targets needing to increase by USD $2-3 trillion per year within the next seven years. The message is that existing commitments are not enough, and the largest sector where investment will need to be targeted is the electrification of the global energy supply, with the remaining investment directed towards decarbonising heavy industry such as steel, the transportation system and retrofitting buildings to make them more energy efficient. There was a lot of talk about financing.
We were challenged to enact our goal as infrastructure professionals to help the Government turn their net zero policy ambitions into a clear pathway for action on projects that will help us achieve our goals. It was also noted that we need to transform supply and demand by putting sustainability and whole-of-life cost at the front end of our contracts, and by adopting different procurement models that put emissions reduction front and centre of design procurement and contracting.
Digital transformation
In the wake of Chat GPT, it’s easy to think of AI as just being about generative AI. But, as was discussed at conference, AI comes in many forms, many of which we have been using for years – from machine learning to robotics, to digital vision, to predictive AI and generative AI. With generative design AI on our doorstep. The question was, is AI our friend or our foe?
The way in which predictive and generative AI can support our design work in climate change was highlighted, including providing stimulations of different events, population growth, and mitigation scenarios. And the way in which it can support construction through calculating construction routes and emissions reduction, and for asset owners in visualising assets and monitoring asset status including for maintenance recommendations to keep our assets at peak efficiency.
Research suggests that architecture and engineering will be the third most impacted profession by AI automation, with 37 per cent of our tasks being automated – but this will be in a complementary way with a goal of making our jobs easier, rather than replacing our jobs – it will be our co-pilot. Some design firms are already using AI to automate aspects of their RFP process, deconstructing RFP requirements and identifying the services that are needed, client goals, and appropriate and available staff. In this way, AI supports productivity.
The consensus was that AI is our friend, but we need to use it responsibly. We were challenged that those who are not investing in or exploring the use of AI could find themselves being left behind.
So where to start? Firms might invest in developing their own processes with AI teams. Smaller teams can start by investing in a data and digital strategy, identifying the outcomes you want, talking to partners about what tools they use and how they find them, making a decision about whether you are going to build or buy off the shelf, and assign someone in the organisation to be in charge of your data strategy and the role of keeping up to date on what’s available. It was also suggested that firms should talk to their current vendors to understand what you already have and are paying for within your current suite of digital tools – there may be add-ons that you are not using that will help you achieve the outcomes you are after. This can help you use what you pay for already better, and isolate where you need to target further investments. Talk to your Chief Information Officer colleagues in other firms and share information. And if you want to build something, consider whether it would be a good project for a local university data science or software engineering student.
Aligned to this is the conversation of our business models and how we package and sell value in an increasingly automated world. This leads into the conversation about values-based pricing, which we have touched on before in our communication and you can still access our webinar on this topic.
Conclusion
It’s hard to boil down all the learnings from conferences, but I hope these comments on the economic outlook, sustainability, and digital transformation give you some food for thought. Just get in touch if you want to discuss any of these with us further – we’d love to hear what you are doing in your own businesses to prepare your business and clients for the sustainability challenge and digital transformation – when we share, we are stronger together!