How rethinking infrastructure could boost the economy and improve quality of life in the post-COVID world

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Negash Haile, Manager of Economic Analysis and Modelling, Infrastructure Canada

• The pandemic has brought a once-in-a-lifetime opportunity to rethink the type of infrastructure investments we can make and how we deliver them.
• Canada has joined the ranks of countries, such as the UK and Australia, in launching a national infrastructure assessment.
• Ultimately, the aim is to build better, faster and more resilient in order to optimise the economic contribution of the built asset to society.

Recent events surrounding the COVID-19 pandemic have presented policymakers with unprecedented health and economic challenges. Across the world, governments responded with large fiscal packages to strengthen their economies and combat the virus. With unprecedented levels of fiscal spending and a challenging global economic growth environment, it is now more important than ever that infrastructure spending is spent wisely on strategic projects that maximise short-, medium- and long-term outcomes for all.

The pandemic has also brought once-in-a-lifetime opportunities to rethink the type of infrastructure investments we can make and how we deliver them. With a fresh outlook, we can raise quality-of-life outcomes, address rapidly emerging climate and sustainability risks, and build more inclusive societies. New infrastructure policies can help lead this shift and stimulate long-term economic growth – growth that benefits everyone.

As the world moves towards a post-COVID-19 era, it will be vital to take advantage of the lessons learned and prepare for a “Great Reset”.

Integrated long-term planning

As the pandemic unfolded, Canada’s local governments quickly implemented lockdown measures and identified essential industries, such as critical construction work sites. At the same time, construction companies needed to respond rapidly to real-time changes in health and safety protocols, contractual disputes and long-term project pipelines. The challenges were unprecedented in recent times and all parties needed to come together to find practical solutions. The federal government responded with new programmes with broader eligibilities and higher cost-sharing to ensure project pipelines kept moving forward and Canadian cities were able to fund needed critical health infrastructure.

Infrastructure policy decisions being shared among various levels of government – each with its own distinct priorities, financial realities and needs – often leads to different government jurisdictions moving at different speeds and directions. Moreover, the private sector, largely responsible for delivering projects, plays too little a role in the long-term planning process. The post-COVID-19 environment provides a unique opportunity to enhance dialogue with infrastructure stakeholders, including capital (finance and insurers), designers, contractors and suppliers to tackle common challenges and seek opportunities for more efficiency and positive outcomes.

COVID-19 has taught policymakers about the need for closely integrated policies to respond rapidly to crises. The greater the dialogue between key private and public sector stakeholders pre-crisis, the greater the possibility to establish coordinated infrastructure policies flexible enough to respond to quickly moving events.

Changes to human behaviour, transportation needs and increased reliance on broadband connectivity during the crisis highlighted the importance to rethink infrastructure planning. Where, what and how we invest today will determine the quality of life for future generations. In this regard, Canada joined the ranks of countries, such as the UK and Australia, in launching a national infrastructure assessment.

In the UK, the long-term priorities and recommendations identified by the national infrastructure commission were well-received by the public and private sectors, and today provide an important benchmark on how infrastructure is planned and delivered. Such an initiative will identify Canada’s long-term infrastructure priorities, based on data, evidence and desired outcomes. It is an important step in creating the country we would like to inhabit in the future.

Focused outcomes

Infrastructure – in particular public infrastructure – is about much more than bricks and mortar; it is about people, improving the quality of life for all residents and raising long-term economic growth. Investments in roads, bridges and highways, public transit modernisation, and broadband expansion create the kind of economic and social opportunities necessary for individuals and communities to thrive.

Rethinking our data in the post-COVID-19 environment will be important to make evidence-based infrastructure decisions. —Negash Haile, Manager of Economic Analysis and Modelling, Infrastructure Canada

Naturally, there is still work to be done to ensure people have the best quality of life possible and economic inefficiencies are minimised. For example, the Canadian Urban Transit Association estimates that the economic benefits of Canada’s transit system is $19 billion per year, while traffic congestion and limited transportation options in rural communities costs the economy $15 billion in lost productivity. Closing gaps such as these will be important for future generations.

Rethinking our data in the post-COVID-19 environment will be important to make evidence-based infrastructure decisions. We know enhanced data will play an integral role in achieving better outcomes, higher quality investment decisions and increasing overall transparency. Additionally, quality data helps reduce infrastructure lapses and asset monitoring.

Driving innovation

The pandemic provides an opportunity to incorporate much-needed innovation in infrastructure planning, procurement and delivery. Experience has shown that the traditional lowest-cost option of major infrastructure procurement has, at times, reduced incentives for innovation and technological adoption.

Moving forward, there is a growing need to focus on outcomes-based approaches to procurement: outcomes that reduce costs, incentivise contractors and allocate risk appropriately. Ultimately, the aim is to build better, faster and more resilient in order to optimise the economic contribution of the built asset to society.

What is the World Economic Forum doing on infrastructure?

Infrastructure is one of the least technologically transformed sectors in the entire economy, with crucial components like construction ranking second to last in digitization according to industry rankings. Technologically-enabled infrastructure has the potential to change the way we plan, design, finance, build and operate our infrastructure systems and, more importantly, help achieve broader goals around sustainability, social cohesion and inclusive economic growth.

The World Economic Forum’s Infrastructure 4.0 initiative, supported by the Global Infrastructure Hub, is working to improve the adoption of emerging infrastructure technologies across asset and system lifecycles.

By creating recommendations for decision-makers and providing best-practice case study examples to the Global Infrastructure Hub’s G20 Infratech Use Case library, this initiative aims to refocus the infrastructure development conversation around how infrastructure as a tool to provide better outcomes in people’s lives and technology’s role in enabling this people-first future.

Adopting new technologies enables companies to employ their resources more efficiently, by supporting data capture, analysis and the automation of processes. In the context of COVID-19 and increased health and safety requirements, companies should proactively apply technology. Technological adoption also enables improvements to work-site productivity. Contractors need to be incentivised to optimise asset performance and incorporate innovation. In the future, procurement pricing models that demonstrate greater transparency and competitiveness will have positive outcomes.

For a better tomorrow

When the COVID-19 pandemic ends, countries that strategically seize this opportunity to re-position their long-term infrastructure investments will be in a unique position to build stronger communities, improve living standards and position their economies for long-term economic growth.