Capital projects & infrastructure

CEO interview quotes

"... we see the need for diversification more and more, especially a technologically oriented, knowledge-based, people-focussed diversification, and it is tremendously important to know how to learn through that."
"From our business we see that new technology is impacting how quickly and efficiently we are able to drill and complete wells. It also impacts on cost at the end of the day."
"Net-net, you’ve got to look for the developed markets to be your growth, but the developing markets are where the action is going to be. You can’t walk away from them, but you can’t put all your eggs in that basket today."

Infrastructure CEOs are cautiously optimistic this year as there is a global need for adequate physical infrastructure, but they see threats too. To cope with disruption they are looking to new industries, gaining value from technology, building diverse partnerships and partnering with government.

Opportunities for industry growth

With more than half of CEOs concerned that inadequate basic infrastructure could threaten growth, there is clearly a worldwide need for infrastructure development and capital projects.
Even so, the outlook in 2015 of CEOs in the capital projects and infrastructure industry (infrastructure) appears slightly less confident compared with global peers.  72% of infrastructure CEOs expressed confidence that their company revenue will grow in the next 12 months as opposed to 84% of all CEOs surveyed.

Strategic growth opportunities do exist - 53% of infrastructure CEOs believe there are more growth opportunities for their company today than there were three years ago. This optimism is supported by the fact that 79% of infrastructure CEOs expect to maintain or increase their organisations' headcount over the next 12 months - a percentage that is on a par with global peers.

Where do infrastructure CEOs expect to find growth? They rank China and the US at the top of their list of markets with strong prospects, followed by Germany.

Riding the waves of disruption

But infrastructure CEOs see more threats, too. Nearly two-thirds (64%) say there are more threats today than three years ago. Their top worries include increasing tax burdens (74%), government responses to fiscal deficits and debt (73%) and geopolitical uncertainty (71%). For nearly half (46%), access to affordable capital is a concern too.

Even more, pressing, though, is over-regulation, which more than four-fifths (83%) believe could threaten growth. And nearly as many infrastructure CEOs (79%) believe that new industry regulation will disrupt their industry over the next five years.

More capabilities; more competitive edge

To survive the disruptive trends, many organisations are rethinking and rebuilding their capabilities to compete in adjacent sectors/industries that offer profitable growth. Fifty-three percent of infrastructure CEOs believe that organisations will increasingly compete in adjacent sectors/industries in the next three years.

The strategic value of digital technology

Eighty-five percent of infrastructure CEOs say operational efficiency is one of the best returns on their digital technology investment. In our view, the key lies in using technology to align operating models with business objectives so that they can deliver value to stakeholders. Most infrastructure CEOs believe their companies are gaining value from digital technology in a variety of other areas too, with data and data analytics as well as digital trust including cyber security next on their list.

Partners who share the wealth and the risk

Business partnerships are on the rise. Fifty-four percent of infrastructure CEOs plan to enter new strategic alliances and joint ventures in the next 12 months. Many plan to collaborate with customers, suppliers, academia and even competitors. Their main priority for these partnerships is to gain access to new technology and customers as well as share risks.

Working with government

Like their peers across the sample, nearly half of CP&I CEOs believe that adequate physical infrastructure should be one of their government’s top priorities. Only around a third believe that government has been effective in achieving it to date, though.  Infrastructure CEOs intend to do their part to change that situation. 40% say their organisations are focusing on collaborating with government on physical infrastructure over the next three years, more than across the sample overall (24%).

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