Transport and renewables to drive new infrastructure projects

Out-Law News | 15 Feb 2021 | 1:54 pm | 2 min. read

Infrastructure businesses see opportunities for growth in the transport and renewable energy sectors in 2021 despite the challenges they will have to deal with coming out of the Covid-19 pandemic, a new survey by international law firm Pinsent Masons has found.

A year of change in the sector is also anticipated by figures in the industry, from consolidation in the market, to greater use of technology and the adaption of businesses to the growing decarbonisation agenda.

The annual Pinsent Masons global infrastructure survey gathered the views of almost 150 individuals involved in the infrastructure sector, from project owners and contractors to designers, suppliers and funders. Respondents were based across Europe, Asia Pacific, the Middle East, Africa and the Americas. The survey findings will inform discussion at the global infrastructure law review of the year series of events that will be hosted by Pinsent Masons between 23 February and 4 March 2021.

Jonathan Hart of Pinsent Masons, the law firm behind Out-Law, said: "The annual Pinsent Masons global infrastructure survey is always important in highlighting issues and trends that clients are discussing with colleagues in our offices around the world. What has been particularly striking about this year’s responses has been the common themes – the challenge of decarbonisation, alongside the need to drive for greater efficiency and productivity and the best ways of achieving these objectives. We’re looking forward to reviewing these findings in our forthcoming series of international webinars in the next few weeks and in conversations taking place right now and over the coming months."

In the survey, which took place between 30 November and 21 January, participants were asked to select the three areas they expect most infrastructure investment to be directed to in their region over the next 12 months. Nearly a third of respondents, 66%, said transport projects, while 57% said clean energy and renewables.

Investment in those sub-sectors is anticipated despite the fact a significant majority of respondents identified major inhibitors to growth as stemming from procurement processes (71%) and skills shortages (57%). Problems with sub-contracts and supply chain arrangements were also seen as an issue by just under half of the survey respondents.

The survey findings also highlighted expected change in the sector, including a period of potential consolidation and market changes, with just under half anticipating an up-turn in M&A activities over the coming 12 months.

Automation and the use of technology was also predicted to become more important, with greater use of digital technology in project delivery, alongside a more collaborative approach in relation to contracting processes, deemed the top two most important issues and enablers in industrialising the construction process and, ultimately, improving productivity.

Other results show that there is an acknowledgement within the infrastructure sector of the huge challenge that achieving 'net zero' carbon emissions targets represent for the industry. Just under two thirds of respondents described decarbonisation as critically or very important to their businesses and organisations.

Stacey Collins of Pinsent Masons said that decarbonising the supply chain is a major challenge for the sector, but that it is incumbent on businesses to embrace the international agenda on climate action in order to avoid missing out on commercial opportunities.

Collins said: "There is increasing pressure on the infrastructure sector to embrace decarbonisation, and it is no surprise that our survey highlights that it is a board-level issue. Those that fail to adapt to 'net zero' carbon voluntarily will face increasing regulatory, commercial and financial pressure to do so."

"However, it is not all about challenges: there are huge opportunities for those within the sector that are already transitioning to low, zero and even 'net zero' businesses. The carbon-cost of tendered solutions is increasingly becoming a factor in project procurements, and those that can provide low-carbon options are ultimately going to find they win more work than those that do not. We are helping a number of businesses in their decarbonisation transition at the moment, and will talk about that at our law review event," he said.

The full results from the annual Pinsent Masons global infrastructure survey will be outlined on 23 February at the first event in the Pinsent Masons global infrastructure law review of the year series. The events are free to register for and address both sector-wide pivotal issues of global impact and local construction law issues affecting the infrastructure industry.