Walking on a tightrope

Holding your nerve is our first energy and infrastructure report, which shares our expert insight on the major issues facing the sector and in regions across the globe. This report explores three key issues to achieving sustainable infrastructure in an uncertain world: need, challenges, and solutions:

• We examine why the industry needs to respond to the climate crisis, meet COP26 commitments, support social and economic recovery, and build sustainable communities
• We discuss the challenges that the industry faces from the effects of the COVID-19 pandemic, government investment, and escalating costs due to materials and labour issues
• As well as presenting solutions on how best to overcome these challenges through long-term investment and better use of digital and data to achieve project efficiency.

We all have a responsibility to reduce carbon emissions. The UN Secretary General António Guterres recently declared the Intergovernmental Panel on Climate Change (IPCC) report a “code red for humanity” – immediate action is required to avert climate catastrophe and there is a call to arms for government leaders and all stakeholders to ensure the 26th UN Climate Change Conference of the Parties (COP26) hosted in Glasgow between the 31 October and 12 November is a success.

Alongside this is the need for economies to recover from the unprecedented impact of the COVID-19 pandemic. The International Monetary Fund (IMF) has called for governments to capitalise on the low interest rate environment and boost infrastructure spending to drive economic recovery. In its Fiscal Monitor report published in October 2020, the IMF calculated that by advanced and emerging market economies increasing public investment by 1 percent of Gross Domestic Product (GDP), their GDPs could grow by 2.7 percent and create 7 million jobs directly, and between 20 million and 33 million jobs overall.

As well as economic growth benefits, there are also positives for society when investment in infrastructure is made, such as improvements to quality of life and health and social inclusion. In the UK there is the opportunity for infrastructure projects to assist with the ‘levelling up’ agenda, promoting growth and further investment to improve life opportunities and productivity.

While the need for infrastructure investment is clear, there are some challenges to delivery. The Department for Business, Energy and Industrial Strategy (BEIS) ‘All Work’ material price index increased by 20.1 percent in the year to July 2021. The Office for National Statistics (ONS) data indicates that the 38,000 construction vacancies in the period May-July 2021 was the highest number in 20 years. These pressures are likely to cause cost escalation. There is also uncertainty surrounding the level of government investment and the level of funding following the extraordinary spending to support individuals and businesses during the COVID-19 pandemic.

As seen in our recent webinar, despite these challenges, the time is now to invest in infrastructure and change old behaviours and patterns. Projects will not get cheaper, and by delaying delivery, the benefits will be postponed. An integrated and committed pipeline is required to enable investment to alleviate skills shortages and encourage innovation. Investment will allow the industry to embrace digitalisation using digital tools and data to improve project delivery and outcomes by increasing efficiency and reducing waste.

There is a world of opportunity, but the question is, will we all hold our nerve?