Out-Law / Your Daily Need-To-Know

Better understanding of technology needed to transform infrastructure

Out-Law News | 06 Feb 2020 | 12:46 pm | 2 min. read

A lack of understanding and focus on traditional approaches is holding back the infrastructure sector from embracing technological change, according to new research by Pinsent Masons, the law firm behind Out-Law.

Respondents to a global survey were willing to invest and develop their in-house technology capabilities over the next five years, and many have already begun to embrace modern methods of working such as collaborative working and use of digital technology in construction. However, over one fifth of respondents said that they were yet to adopt any of the technologies listed in the survey, putting them at risk of falling behind.

Among survey respondents, 64% said that lack of understanding was a barrier to their adoption of technology while a similar percentage, 62%, cited the "traditional and disjointed approach" taken to technology by their business. One fifth of respondents listed concerns about cybersecurity and other security concerns as a barrier, while 18% listed a lack of suitable procurement and delivery models and 13% a lack of suitable regulation.

Laing Ian

Ian Laing

Partner, Head of Infrastructure, Head of Asia

Whilst there is a lot being done, it is clear that more work is needed particularly in upskilling the sector and lobbying governments to take a more active role in establishing the regulatory frameworks.

Survey respondents were based in major infrastructure markets around the world including the UK, Asia, Africa, Middle East and Europe. Respondents were predominantly consultants and contractors, but also included asset owners, developers, investors and funders.

Global infrastructure expert Ian Laing of Pinsent Masons said: "Technology is essential in supporting connectivity that enables economic advancement and importantly has the potential to transform the way we use resources. It also presents opportunities to address the productivity challenge in the sector and attract talent".

"Whilst there is a lot being done, it is clear that more work is needed particularly in upskilling the sector and lobbying governments to take a more active role in establishing the regulatory frameworks. We do also need to recognise the need for profit as an enabler of necessary investment," he said.

Governments will have the biggest role in driving digital transformation of the infrastructure sector over the next five years given their potential role in respect of new regulatory frameworks and standardising processes, according to 24% of survey respondents. Other stakeholders expected to play important roles include asset owners and contractors, both of which were cited by 15% of respondents.

Looking to the next five years, 60% of respondents said that they were planning to develop their in-house technology capabilities while 34% said that they planned to enter into an alliance, partnership or other long-term agreement with a third party technology provider and 32% said they planned to appoint a technology provider as a subcontractor. Other potential models included entering into a joint venture with a technology provider, cited by 21% of respondents, or acquiring a technology provider, cited by 17% of respondents.

Morris Neal

Neal Morris

Partner, Head of Construction Advisory & Disputes

Businesses need to make sure they are prepared, as they grapple with new ways of working and new contractual structures.

Almost half of respondents, 48%, said that airports would provide the greatest opportunity for digital transformation over the next five years. Other potential areas of opportunity cited by respondents included electricity generation and transmission, by 35%; railways, by 34%, and telecommunications, by 31%.

Although respondents were generally positive about the possibilities and opportunities arising from digital transformation of the infrastructure sector, 56% said that an increased use of technology would not lead to a reduction in disputes. Reasons given for this included lack of capability across delivery teams, lack of standardised tools and documents, uncertainty over risk allocation and arguments over ownership of data.

Construction disputes expert Neal Morris of Pinsent Masons said: "This new chapter will involve contracting with new parties in different industries, it will deliver new untested products to the market and the growing use of systems such as BIM [building information modelling] means there will be more data needing to be managed and owned than ever before".

"As such, businesses need to make sure they are prepared, as they grapple with new ways of working and new contractual structures," he said.