From The Ground Up

Island communities face a constantly evolving array of infrastructure challenges, including climate change resilience, energy security and transition, connectivity, food security and affordable housing. These pressing issues are calling both the public and private sectors to reimagine traditional approaches to infrastructure development. 

As the world around us changes at an unprecedented pace, building resilient and sustainable infrastructure is vital for ensuring long-term prosperity and growth. Along with the increasing frequency and intensity of major climate-related events, some island jurisdictions, such as the Cayman Islands, are experiencing rapid population and tourism growth, all of which places immense pressure of the backbone of the economy - infrastructure.

Innovative and creative approaches to infrastructure planning are essential. Forward-thinking solutions and collaboration between the public and private sectors will be crucial in addressing these challenges in order to secure a sustainable future.

Thorough planning is arguably the most critical factor in successful infrastructure development. The planning process is often complex, involving multiple facets of research and analysis that can significantly inform and enhance decision-making throughout the course of a project. Here’s a closer look at what makes for effective infrastructure development in island communities:

When embarking on an infrastructure project, especially a private sector driven one, such as a new school or hospital, understanding the local market landscape is crucial.

Market feasibility assessments offer valuable insights into whether a proposed development meets the unique needs of island markets. They include analyzing historic, current, and future local and regional demand, existing competition and broader market trends.

By conducting these assessments, stakeholders can confirm that their projects align with the island's requirements and have a solid chance of success. This proactive approach helps prevent investment into resources and projects that may not achieve their intended goals.

A project’s financial health is a cornerstone of its success. Financial viability assessments delve into the economic aspects of an infrastructure project; evaluating costs, revenue streams, and potential financial risks. These assessments are instrumental in determining whether a project is likely to be economically sustainable over the long term.

By examining funding options, return on investment, and long-term financial projections, stakeholders can make well-informed decisions about whether, and how best, to proceed. Ensuring financial viability is essential for securing the necessary investment and support, ultimately driving the project toward successful completion.

In small island economies, where different interest groups (and even different Government departments) are often competing for limited resources, developing a robust business case is key to justifying an infrastructure project and securing support from key stakeholders and the public.

For private sector projects, business cases focus on profitability and strategic value, offering a clear picture of the project’s financial and operational benefits, and often being built largely around the market feasibility and financial viability studies described above.

For Government-led projects, UK HM Treasury Green Book Business Cases, as mandated by the Cayman Islands Government for major projects, helps the project sponsor to determine and define the ‘Preferred Option’ for a major project. The Green Book Guidance specifies analytical techniques and encourages stakeholder and public consultations to define a project and procurement route that represents value-for-money and is affordable. Both types of business cases should provide a structured framework for evaluating objectives, benefits, costs and risks, ensuring decisions are made based on comprehensive evidence and align with the island's development goals.

Understanding the broader economic implications of a development is crucial for contextualizing the project within an island’s ecosystem. Economic impact studies evaluate how a project will affect local and regional economies, including Gross Domestic Product (value-added) impacts, job creation, and Government revenues.

These studies provide valuable insights into the potential direct, indirect and induced economic impacts, helping decision-makers ensure that the project contributes positively to economic development and aligns with the island’s policy objectives and goals.

In island jurisdictions, protecting the environment is a top priority. Environmental impact studies assess how infrastructure projects might affect the island’s natural environment, including pollution, habitat disruption and resource consumption.

By identifying potential environmental risks and proposing mitigation strategies, these studies ensure that projects adhere to regulations and minimize their ecological footprint. Incorporating environmental considerations into the planning process is vital for achieving sustainable development and preserving the island’s natural resources for future generations.

Effective planning acts as the roadmap for successful infrastructure development. It involves setting clear objectives, defining timelines, allocating resources and devising risk management strategies.

A well-developed plan ensures that all stakeholders are aligned and helps keep the project on track and within budget. Planning also identifies potential challenges early on, allowing for proactive solutions and smoother project execution. In a rapidly evolving environment, a solid plan is crucial for navigating the complexities of infrastructure development.

Our Deal Advisory team is incredibly fortunate to advise on many major national infrastructure projects across KPMG Islands Group, supporting public and private sector clients with the workstreams outlined above.

Explore our Credentials Deck for details of how we have helped our clients effectively plan and execute their infrastructure projects. 

The views and opinions expressed herein are those of the respondents/authors and do not necessarily represent the views and opinions of KPMG LLP, Cayman Islands.

Assistant Manager, Advisory 
KPMG in the Cayman Islands 
+1 345 815 2653
jemmagreen2@kpmg.ky