Every year, this publication predicts that the infrastructure sector will finally embrace digital, innovation and technology. And while there have certainly been some pockets of digital transformation seeping into the infrastructure sector, progress has been comparatively slow versus other sectors. So why do KPMG professionals think things will change this year?

Some of our optimism is based on the technology landscape. Generative AI showed us that disruptive technologies can emerge and go mainstream in months or even weeks. The uptake of digital twins in asset management and design demonstrates that industry has the capacity and desire to transform. Demand for digital services from users and consumers is amplifying the pressure.

Recognizing potential funding shortfalls and environmental objectives, many governments and asset owners see technology as a way to maximize the value of existing assets and investments. There is also pressure rising from investors and owners who recognize that technology can enhance the sustainability and resilience of their assets. They don’t just expect to see technology embedded into designs, they also want to know how the assets will absorb or integrate new (and possibly as-yet unimagined) technologies in the future.

There is some cause for skepticism that this trend will materialize in the next year. The reality is that it has taken decades for the construction industry to adopt things like Building Information Modeling(BIM), modular construction and digital twins. Margins for construction companies remain tight and there are few demand- side incentives to encourage them to invest in technologies that aren’t either mandated or evaluated in their contracts. That they will suddenly become innovation evangelists seems far-fetched.

However, there is some room for optimism. Over the past few years, a growing number of governments and international institutions start to think much more critically about how they might more appropriately contract for innovation and technology. New models and approaches are being developed which, if proven successful, could unlock a wave of innovation across the sector.

There are also pockets of innovation to be found around the world. Many construction companies in Asia, for example, are using IoT technology, digital dashboards and AI-enabled cameras to drive operational improvements. In some markets, these types of technologies are becoming business as usual in the design phase.12

KPMG member firms have global experience in helping clients navigate innovative and technology forward approaches. A client was supported in developing a framework for Digital Twin development to support the development of transport digital twins.

While for another client, a KPMG member firm wrote the full business case to successfully draw down funding to establish the testbed program.

Perhaps the greatest catalyst to this trend materializing is capability and capacity development. Procurement leaders need to properly understand the value technology provides and how to contract for it. Regulators need to develop the right mechanisms to support it and govern it. Contractors and developers need the capabilities to integrate and operate it. Consumers need the digital skills to use it. And while the market for these types of skills is tight, it is slowly expanding.

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.

We also expect to see significant action and adoption driven by innovation in other sectors such as fintech for payments (toll road), logistics infrastructure (better fleet management), hospitals (effective patient online care and information management) and governance (e-gov). Technology will also be an important enabler to fast tracking sustainable and green infrastructure.

We are confident that technology will remain an enabler and key driver for growth. Don’t expect it to fall off our list of top trends any time soon.

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12 KPMG International, 14th Global Construction Survey, 2023