Our local infrastructure perspectives

Our 2024 Emerging trends in Infrastructure report is a culmination of discussions and roundtables with multiple experts from across the globe.

In this, our local perspectives, KPMG Ireland Infrastructure team leaders, along with local experts from across the public and private sectors explore these global trends in the context of our own challenges and opportunities in delivering on ambitions set out in the National Development Plan (NDP).

The successful implementation of the National Development Plan (NDP) hinges on fostering increased collaboration across government and the construction industry, coupled with a transformative shift in mindset toward key infrastructure projects and construction industry modernisation. This was the consensus at the 2024 KPMG Emerging Trends in Infrastructure roundtable discussion with participants emphasising that while challenges are present, viable solutions can be realised. 

The sheer scale of the NDP demands greater coordination across government, according to PJ Rudden, Managing Director of Aengus Consulting Ltd. He noted that several departments were responsible for multi-billion-euro budgets under the NDP with each seeking to draw on the same pool of construction industry resources. He emphasised the need for “a central body to support the delivery of NDP projects”.

This siloed approach taken by individual departments is a significant obstacle, agreed Sisk’s Chief Commercial Officer, Mark McGreevy. “You can see the overall picture of the NDP … but when you get to ground level, there is a lot coming at the industry from different directions and more to the point, is being procured and delivered in different ways”.

Mark further emphasised the importance of a centralised delivery office to provide a comprehensive view of forthcoming projects across various sectors “[if we look at] housing, water, rail and roads, each one of them has major projects about to happen but there is a siloed approach to how they all get delivered.”

Paul O’Neill, KPMG Managing Director, Infrastructure and Government agreed that the lack of collaboration and joined up thinking was very evident.

“Infrastructure development is spread across multiple departments with no one centre of expertise. While there are welcome signs, with responsibility for NDP delivery now sitting with the Department of Public Expenditure and Reform, it remains to be seen whether this will serve as the much-needed enabler to reduce bureaucracy and accelerate project delivery.

Paul adds that the frustration is the challenge is not new and that “there are numerous examples of good governance and oversight in delivering complex projects, such as the Criminal Courts Complex and the National Broadband Plan. We should not lose sight of this experience”.

This sentiment was echoed by Freda Quinlan, Head of the National Transport Authority (NTA) Capital Programme Office, who called for increased communication and learning opportunities among departments elaborating that siloed thinking continues in approaches and methodologies. “We don’t talk to each other enough and we don’t learn from each other enough. We need to create more opportunities to do that.”

“There is optimism that some countries, institutions, and leaders will start to focus on “collaboration over competition, global good over national protectionism, and action over rhetoric. Should the world veer towards less partnership and collaboration, the impact on the infrastructure sector will be significant”. 

Transitioning to capital investment, participants were prompted to recall the 2000s, a time when Ireland excelled in drawing significant market interest, including overseas expertise, to support our capital programs.

“We were lauded in so many other jurisdictions for how well we developed our infrastructure” noted Paul O’Neill adding that “it is imperative for the government to assume a leadership role in this context as we currently lack depth in our contracting market”.

He added that capital programmes also need to be treated for what they are – “long term, multi project delivery programmes with funding certainty to match, spanning many years, rather than adhering to an annual budgetary cycle as is typically the case”. 

Addressing the contract dynamics for major projects across Ireland, participants advocated for greater contractor involvement at early stages, favouring collaborative over traditional fixed-price contracts.

“There is a lot of focus on costs and schedules, not on outcomes and longer-term benefits,” Freda Quinlan explained, “the delivery and contractual models in use are no longer fit for purpose for the scale of the projects we are planning”.

Freda elaborated that the experience internationally is that the front end of the process, primarily the planning and design stage is the most crucial in setting projects up for success. “It’s about thinking slow and acting fast. We need to focus on that.”

Mark McGreevy welcomed the increased granting of derogations by government to enable the use of Option E contracts which allow a more equitable sharing of risk and a more collaborative relationship between contractor and client, while still maintaining rigorous cost control. The successful use of this form of contract was exemplified in a €200 million modular housing project, carried out by Sisk.

Mark went on to explain “[there were] four modular builders involved. They competed on price, but all delivered within the same framework, and all shared the same certification. There was no reluctance to share and collaborate and that benefited the programme of delivery which was a priority for the client. There was an understanding that no one firm could do it on their own and that we can all learn from each other.”

“To improve investment flows, governments could focus on improving deal preparation, project pipelines and regulatory regimes. They could be helping to cut red tape for renewables developments. They could be reinforcing project and contract certainty through clear policymaking”.

Amid the challenges, the NDP's vast scale presents an opportunity for industry efficiency through modernisation and technological advancements.

While there is an increasing interest in new technologies and modern solutions, Mark McGreevy suggests “the challenge is how to bring the supply chain along with us … businesses will require a degree of certainty in relation to NDP rollout if they are to adopt new technologies and approaches.” 

Freda Quinlan agreed adding “we need to give the supply chain confidence to invest and that means giving them confidence that schemes will go ahead”.

Mark McGreevy adds that there is a “major opportunity for the Government to play a role in mandating more sustainable and innovative approaches. That would force the supply chain to evolve!”.

He elaborated with an example from the UK government’s involvement in the ‘Crossrail Project’ to promote new skill and technologies “new technologies and modern methods of construction were mandated on the project and that helped move the industry forward.”

Advances in construction methodologies have a role to play in achieving sustainability goals. PJ Rudden explained that higher levels of Building Information Modelling (BIM) processes open-up new possibilities for the industry.

“There are different dimensions to BIM,” he said. “We want to climb the ladder to BIM 7D which includes embedded carbon and social impacts”.

PJ went on to explain “6D is embedded carbon – that has never been done in this country, but the Office of Government Procurement wants to bring it in. 7D is the asset management cost. Until we get full 7D BIM we are not getting the full picture.”

“… technology will remain an enabler and key driver for growth [and procurement leaders need to properly understand the value it provides]. We believe that modern construction methods and technologies like Digital Twins will increasingly become embedded in the sector and the real benefits of AI will start to show in the next couple of years. Real improvements in terms of construction efficiency, operational improvement, and innovative design will emerge”.

A change in how infrastructure project benefits and impacts are measured is required. “We need to use natural capital accounting when we are measuring the benefits and value of projects,” says Dr. Conor Quinlan, Senior Manager, Climate Services, Environmental Protection Agency; “[for example], when you look at flood defence options, the wall will always win on the basis of traditional cost benefit analysis. But the result changes if you apply natural capital accounting to nature-based solutions”.

Matthew King, KPMG Director Infrastructure and Government advocated for a similar approach to be taken to public transport investment. “How we measure the performance of the public transport system needs to change, it needs to be much broader than passenger numbers and take wider ESH outcomes into account. We tend to focus on the risks associated with delivering the project not the wider societal risks that we all face if we don’t do the project. Big, brave decisions are needed in relation to public transport”.

New thinking is required across a wide range of areas, according to Conor Quinlan who explained that a growing population, which is ageing, has very different infrastructure needs to one which is seeing growth come at the younger end of the spectrum. “Who knows what Ireland’s population will top out at and what the population mix will be”.

“Nature-based solutions, biodiversity and climate mitigation and adaptation were high on the agenda at COP28. To mainstream nature-based solutions, organisations need to be able to properly measure and account for the real value of these assets”.

Elaborating on transport it was noted that there had been almost no reduction in car usage in Ireland despite significant investment in alternative transport modes.

This is a complex issue, according to Conor Quinlan, Scientific Officer with the Environmental Protection Agency (EPA). “People want changes, but change is difficult… they are willing to make choices if choices exist. But there is an intention-action gap. People don’t want to, and in some cases can’t, give up their cars”. Conor further explains that there is sound behavioural science research which notes people are “bound by status and other factors … but the policy interventions might require more demand management as well as persuasion'.

Freda Quinlan noted the Netherlands as an example for inspiration “The Netherlands is seen as a beacon for active travel, [but this was not always the case] when we went to Utrecht to see how it works there, they showed us pictures from the 1970s when the streets were clogged up with cars. This shows that it can be done.”

Conor Quinlan expressed the belief that cycling could be marketed better. “We need to simplify things around promoting cycling,” said Conor Quinlan. “We could have something analogous to 'super food’ for cycling”. Conor went on to explain the benefits of cycling to not only ones’ health but in “reducing traffic, cutting emissions, and assisting with adaptation. We need to get better at communicating those benefits.”

“The path to net zero globally is becoming increasingly complicated with barriers to progress on sustainability also extending beyond physical infrastructure and construction methods”.

KPMG’s 2024 Emerging Trends in Infrastructure highlights the global trends stressing that “humanity’s success or failure will largely rest on the shoulders of our infrastructure”.

It is clear from our discussions locally that this heavily weighted responsibility can be felt across the infrastructure sector in our collective mission of delivering on ambitions set out the in the National Development plan (NDP).

The NDP provides the platform for the delivery of an ambitious capital programme which must be leveraged by all stakeholders as we look to progress much needed projects and deal with challenges and issues across the industry effectively as they arise.

The introduction of the Public Spending Code (replaced now by the Infrastructure Guidelines) has played a very important role in ensuring projects are properly thought through, well costed and risk adjusted.

The framework is in place, but it is still taking far too long for projects to be delivered, with the need to repeatedly go back to Departments/Government for approval remaining.

The successful implementation of the NDP hinges on fostering increased collaboration across government and the construction industry. We need to shift our mindset, leverage greater collaboration, and take advantage of innovation and new technologies.