Wood recently embarked upon a scenario planning exercise on the potential futures of sustainable urban infrastructure, to look back at today from potential scenarios in 2035 so we can better plan and prioritize solutions and decisions now. This followed a similar exercise looking at energy transition scenarios.
Why focus on sustainable infrastructure?
Sustainable infrastructure can enable sound economic development, job creation, enhance quality of life and protect resources. It is built to last, resilient to climate change impacts, efficient in its use of capital, and able to deliver multiple benefits to communities. Ambitious, undoubtedly, but is it achievable? Despite a well-documented investment gap, it has to be, especially in an urban context.
Rapid urbanisation is expected to be the biggest driver of global infrastructure spending, fuelled by rapid global population growth from 2.5 billion in 1950, to 7.6 billion in 2018, to potentially 9.8 billion by 2050, with all net growth occurring in urban areas. Currently more than half of the world’s people live in cities, a figure expected to reach 70% by 2050. In parallel, the impacts of climate change on livability are subjecting urban society to previously unknown stresses and strains.
Infrastructure investment is also crucially important as economic stimulus. In developing economies, as roads are built, reliable electricity installed and clean water made available, infrastructure can have a truly transformative impact. In more mature economies too, keeping pace with demand, building new and upgraded infrastructure is integral in efforts to sustain economic growth, given an estimated socioeconomic return rate of around 20%.
So, with this reasoning in mind, and in the context of an ongoing conversation about what sustainable infrastructure means for Wood, we prioritised a scenario planning exercise on the future of urban infrastructure where the bulk of our client challenges will be focused.
Why are we using scenario planning?
Scenarios are stories about the future. Good scenarios are relevant, plausible, challenging, divergent and address the most critical questions that decision-makers need to face.
While scenarios are often used to provide decision-makers with tools to anticipate potential hazards, they have also proven to be a powerful tool for creating opportunities and making strategic decisions in uncertain business environments:
· Enhancing a strategy’s robustness by identifying and challenging underlying assumptions and established wisdom
· Making better strategic decisions by discovering and framing uncertainties, leading to a more informed understanding of risk
· Improving awareness of change by shedding light on the complex interplay of underlying drivers and critical uncertainties
· Increasing preparedness and agility for coping with the unexpected by visualising possible futures and rehearsing responses
· Facilitating mutual understanding and collaborative action, opening the space to create effective and innovative multi-stakeholder options
For our sustainable infrastructure scenario development, I led a team of business leaders and infrastructure experts through the intuitive logics scenario planning process, as pioneered by Shell, to produce the frameworks for four future scenarios.
We concluded that the two most critical uncertainties affecting the future of urban infrastructure were the availability of finance and society’s relationship with technology and digitisation. The interplay between these ‘axes’ then formed our developing scenarios.
Having tested our workshop assumptions, and consulted with outside partners such as Citi, Macquarie, Resilient City Catalyst and the Global Resilient Cities Network, we fleshed out and further developed the scenarios, releasing our report at two key events in February 2020: the World Urban Forum in Abu Dhabi and the GLOBE conference in Vancouver.
How are the scenarios useful through the current crisis?
The world’s economy is seeing tremendous upheaval and few in our workshop could have imagined what was about to play out. Despite that, the underlying drivers which were identified through the scenario analysis process haven’t changed, and perhaps the arguments in favour of sustainable infrastructure investment have become even more compelling.
Our conclusions that the future of sustainable infrastructure will be guided by the availability of finance, alongside the relationship that society has with digital technology, remain valid, but the events we envisioned playing out over 10-15 years may well now be accelerating at pace. The uncertainties identified were also shown to be key focus areas to build better projects from pandemic impacts and will benefit our clients in the design and implementation of solutions.
Infrastructure stimulus packages could put us on the path to higher levels of infrastructure finance sooner than expected. Seemingly minor changes like digital tracing on mobile phones to bring the pandemic under control may be a sign that society is willing to accept a loss of privacy where benefits clearly outweigh the negatives, and this technology penetration could spread into other aspects of urban life. Employers may be more willing to embrace virtual workspaces and home-working, leading to a rethink about what transport and digital infrastructure is required in our cities. These were all themes present in our scenarios, now brought sharply into focus in 2020.
We are now utilising the scenarios to understand what types of cities will emerge in future and working with partners and clients to collaborate on compelling, positive outcomes for future infrastructure and the solutions they will require. Building a flexible future
As tools to track early directives to paths we may be moving towards, our scenario frameworks provide reassurance for the choices we make. Wood’s leadership have embraced scenario planning and use it to better align our business to the wide range of possible futures for our end markets, meaning we – and our clients – are better positioned to react to the current turmoil with poise, agility, and more robust, innovative strategies.
Ultimately, the infrastructure we build today needs to function for today’s world, as well as tomorrow’s. The scenario process tells us that flexibility is critical, and the challenges we face now have only underlined this further. Our choices now must meet the needs of a pandemic response too, opening better access to healthcare and home technology, while embracing resilience towards new challenges of the future.
Drop me a line (firstname.lastname@example.org) if you’d like to see our full sustainable infrastructure scenarios report. I look forward to hearing what you think and invite you to join us on our journey to a more sustainable future.
My personal journey with scenario planning
When I joined Wood, I was delighted to learn that the company’s leadership had decided to use scenario planning. I have had a long and varied experience with scenario thinking spanning 20+ years and believe strongly in its use as part of the strategic toolbox – for our business, teams and for personal use.
My first experience was during my undergraduate degree when I developed scenarios for a small marine archaeology start-up and did some minor research for the Scenarios For Scotland project. Since then I have been lucky enough to do a master’s thesis on scenarios for the Middle East, and an MBA dissertation on scenarios for the energy industry – to be published in the Futures and Foresight Journal. The best experience so far has been developing these energy transition and sustainable infrastructure scenarios for Wood – a potential game changer for our business and our client partners across infrastructure and energy markets.