Uncertainty Defines the Global Outlook for Infrastructure Projects in the Coming Years
By Novid Parsi
Consider two scenarios: a continued downturn in China's economy or an upswing in the global economy.
US$1.7 trillion The amount that global infrastructure spending could vary between 2015 and 2020, depending on the scenario.
IF CHINA'S ECONOMY SLOWS …
US$1.1 trillion Projected decrease in global infrastructure spending through 2020—from US$28.2 trillion to US$27.1 trillion
IF THE GLOBAL ECONOMY SPEEDS UP …
US$600 billion Projected increase in global infrastructure spending through 2020—totaling almost US$29 trillion
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75% of infrastructure spending reductions would happen in three industries: extraction, transportation and utilities.
7 STRATEGIES FOR AN UNPREDICTABLE ENVIRONMENT
1. Prioritize essential projects; cut or delay others.
2. Renegotiate contractors' and subcontractors' terms.
3. Control schedules, deadlines and costs.
4. Review projects that see the greatest risk during downturns and create a risk mitigation plan.
5. Partner with multilateral development banks such as the World Bank, especially in emerging markets.
6. Form public-private partnerships.
7. Remember the big picture—the project's ROI.
Source: Capital Project and Infrastructure Spending Outlook: Agile Strategies for Changing Markets, PwC and Oxford Economics, 2016
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