of infrastructure CEOs implemented a cost reduction initiative in FY12.
Infrastructure -- Where the public and private sectors meet
Each year, PwC’s Annual Global CEO survey gives business leaders, governments and the world’s business community a unique insight into the vision and decisions of the global CEO. As in past years, we have deepened the research for PwC’s 16th Annual Global CEO Survey by including a selection of interviews with senior decision-makers in governmental organisations across the world. This year, we've added a new perspective by taking a separate look at infrastructure company CEO views and comparing their responses to public sector infrastructure priorities.
What we found was a distinct focus on collaboration from both sides. The government is looking to the private sector for financing and expertise while infrastructure companies are looking to government to invest more in infrastructure for a country's overall competitiveness. Meanwhile, the private sector as a whole is concerned about the inadequacy of basic infrastructure. In fact, 60 percent of CEOs in all industries believe infrastructure should be one of the governemnt's top priorities today. Both the public sector and private infrastructure companies are concerned about funding and the need for community support for infrastructure to progress. At the same time, the demand for infrastructure development in emerging markets is creating talent shortages and disruptive events are threatening infrastructure -- changing the nature of risk which needs to be managed, in both the public and private sectors.
We explore below how businesses are adapting their approaches and priorities to:
In light of growing government involvement in private sector activities, either through ownership or regulation, CEOs are changing their views on the role and influence of government in the key areas that impact on business. Government and regulators are a key stakeholder: In fact, 90% of infrastructure CEOs stated that government and regulators have some or a significant influence on their business and 74% say that they are making some or major changes to strengthen their engagement with government and regulators. In addition, 72% say they are focused on strengthening their local community engagement programme.
Uncertainty in the global economy continues to influence business confidence and investment. Last year, four out of five CEOs were concerned about uncertain or volatile economic growth and two thirds of CEOs were concerned about fiscal deficits, including countries not undertaking major austerity measures. This year, concerns about uncertain or volatile economic growth have stayed at the same high level, but concerns about fiscal deficits have risen further. Now 74% of infrastructure CEOs surveyed are somewhat or extremely concerned. It follows that 83% of infrastructure companies ranked cost control as their top initiative for the past 12 months. Further addressing potential risk, 78% are strengthening their supply chain partner engagement programme and over half report that a natural disaster disrupting a major trading/manufacturing hub would have a negative impact on their companies.
Closing the talent shortage gap
Close to 80% of infrastructure companies are strengthening their employee engagement programme. With the high demand for engineers and construction talent, creative strategies are needed. 79% of infrastructure companies say encouraging global mobility and international experience is effective and 85% believe dedicated executive development programmes are effective.
Infrastructure agenda for action
Infrastructure companies -- such as those involved in transportation, power, energy, water, healthcare and construction -- have a greater opportunity to make a difference in their communities and their countries. With a focus on collaboration, governmental leaders are seeing an important role for the private sector. Beyond financing, the private sector's expertise is being recognized in areas such as managing risk and construction project oversight. This message is well articulated by Helen Silver, Secretary Department of Premier and Cabinet in Victoria. "We see a very important role in the area of infrastructure for the private sector. Not just in terms of financing, which is one aspect of it, but it is also the expertise that they offer in the sense of managing the risk of both construction and the ongoing maintenance involved. The Public Service is excellent at service delivery, why should we become experts at building the best and cheapest construction project, when that is really a very strong private sector capability?"