In conversation with Shi Yifei

How do you expect the global recession trends to impact financing considerations for local infrastructure projects in Kuwait?

It is difficult to make precise predictions as to how the global recession trends will impact financing considerations in Kuwait or any other specific country as there might be several factors that can influence this. 

However, during a recession, there may be less money available for infrastructure projects as private and public sectors may be more cautious in terms of investing in large-scale projects. This could potentially make it more challenging for local infrastructure projects in Kuwait. 

On the other hand, the public sector may also be more likely to invest in infrastructure projects during a recession as a means to stimulate economic growth. Therefore, it is important to closely monitor the economic situation and policies in Kuwait to assess how infrastructure projects may be affected by the global recession trends.

Overall, what will be the impact of sustainable financing on various infrastructure projects?  Will sustainable financing cause more project delays or push infrastructure players to plan more sustainable projects?

If the sustainable financing we are talking about refers to financing that takes into account environmental, social and governance (ESG) factors in addition to financial considerations and forms such as green bonds, sustainability-linked loans and social impact bonds, the adoption of sustainable financing might potentially cost more time as additional due diligence and verification processes may be required to ensure that the projects meet the sustainability criteria. This can increase the complexity and cost of financing, which may slow down the development process. 

Overall, the impact of sustainable financing on infrastructure projects will depend on various factors such as the specific sustainability criteria, the availability and cost of sustainable financing, and the regulatory and policy environment. However, in the long term, it is likely that sustainable financing will drive infrastructure players to plan more sustainable projects which can benefit both the society and environment.

Sunk costs caused due to delayed and abandoned infrastructure projects pose a challenge to all of the players. How do you anticipate such situations and create a plan to mitigate the associated risks? 

From the project owner/developer’s perspective, it is better to: 

• conduct thorough feasibility studies and risk assessments: before initiating an infrastructure project, it is important to conduct a comprehensive feasibility study and risk assessment to identify potential obstacles that may cause delays or lead to abandonment. This can help in developing appropriate mitigation strategies to address those risks; and
• develop a clear and realistic project plan: a clear and realistic project plan can help identify potential delays and risks early on and allow for the implementation of appropriate mitigation strategies.
  

From the project contractor’s perspective, it is better to:

• use effective project management tools and techniques: effective project management tools and techniques such as project monitoring and control, progress reporting and risk management can help identify and address issues before they escalate; and
  
• implement appropriate contractual frameworks: appropriate contractual frameworks, such as performance-based contracts and dispute resolution mechanisms, can help manage risks and ensure that parties fulfill their obligations.
  
• For all the players of project, it is better to engage with local communities that can help recognize potential areas of concern in a timely manner so adequate mitigation measures can be put in place to resolve them.

How do you see infrastructure owners, operators and users benefit from a comprehensive digital transformation?

The most obvious benefit is that it would improve project planning and management. Digital tools such as Building Information Modeling (BIM) can help contractors plan and manage infrastructure projects more efficiently. BIM allows contractors to create 3D models of structures, which can help identify potential issues before construction begins, reducing the risk of costly delays and rework. Digital tools can also help contractors gather and analyze data on project performance, which can be used to improve decision-making and project outcomes.

Beyond the benefits mentioned above, we firmly believe that by embracing digital tools and technologies, contractors can position themselves for success in an increasingly competitive and complex industry.

With inflation at its peak globally, the cost of running a large project has increased significantly with the increase in cost of labor, parts and technology. How do you plan for inflation and other geopolitical shifts?

Planning for inflation and other geopolitical shifts is an important consideration when running a large project. There are quite a few aspects that shall be considered:

• To conduct thorough risk assessments before starting any project: this will help you identify potential challenges and develop strategies to address them.
  
• Try to build flexibility into your budget: despite it being difficult to implement, in such a scenario, your contingency fund will help you if and when unforeseen circumstances arise.
  
• Keep an eye on economic indicators, such as inflation rates, currency exchange rates and commodity prices, which can affect your project: this will allow you to make adjustments to your budget and project plans as needed. Certain financial derivative tools might be helpful for you to transfer the potential financial risk planning. 
• By working closely with your partners and suppliers, you may be able to find an alternative solution to keep your project on track.
  
• Finally, it is important to stay informed about global events and be adaptive in your project planning. If you anticipate changes in the economic or political landscape, be prepared to adjust your plans accordingly to stay ahead of potential challenges.