New Asset Classes: Smarter Infrastructure Requires Smarter Strategies

As infrastructure assets get smarter and new asset classes are integrated into the system, the need for a more dynamic approach to managing infrastructure is becoming clearer.

New technologies and asset classes are being added to our built infrastructure at an amazing pace. Sensors and IoT devices are being injected into existing hard assets like roads and water treatment plants. Renewable energy assets like wind farms, solar farms and battery solutions are being added to the grid. Data centers and 5G technologies are being developed and deployed in cities around the world. Robotics are being embedded well beyond production lines and into areas like routine maintenance.

Expect the integration of new asset classes to pick up pace over the coming years. In part, this will be driven by the inexorable pull of decarbonization and the energy transition, and the related impact on virtually every aspect of the economy and the way people live their lives. Entirely new industries will be created and new technologies developed. The pace of change will likely be rapid.

At the same time, the integration of new asset classes is expected to be driven by a desire to get more from existing investments. Given the deep demand for infrastructure, asset owners, operators and regulators are keen to sweat existing assets as long as possible. New technologies — like sensors and IoT devices, for example — can often provide fairly low-cost and simple ways to monitor end of life assets and extend an asset's lifespan whilst managing risk. So expect appetite for integrating new technologies into existing assets to remain high.

Expect the integration of new asset classes to pick up pace over the coming years.

Traditional infrastructure asset management plans and strategies are no longer fit for purpose.

The problem is that new asset classes don't always act like the traditional infrastructure they are embedded within. They will have different lifespans, maintenance requirements and replacement schedules. They will require different types of contracting terms, service level agreements and policies. Their business cases will be shorter-term with benefits realized while their implementers are still in their roles. Their management strategies will need to be more agile. Traditional infrastructure asset management strategies and plans are no longer fit for purpose. A fundamental shift in thinking is required.

Reset 2025

Say goodbye to the annual planning cycle. It's simply too slow and cumbersome. By the time your strategy is approved and published, it's out of date. Regardless, few (if any) tend to measure their progress to see if they hit their business case targets. More often than not, asset strategies sit in folders collecting virtual dust until the next planning cycle begins. Smarter assets require smarter strategies.

In their place, expect to see a much more dynamic approach of continuous strategy and planning development emerge. These will become living documents, evolving and updating as market demand, usage and asset conditions change. They will be informed by rich, timely and reliable data, allowing decision-makers to measure and manage performance and reassess business cases. They will provide for more dynamic governance, contracting, performance monitoring and management of assets across their various lifecycles and interdependencies.

More dynamic asset strategies and plans wouldn't just help asset owners and operators improve their decision-making. They would also allow them to better plan and more rapidly adjust their investments as technologies, market conditions and definitions of value change. They would enable organizations to improve efficiency, performance and profitability. And they would help unlock transparent and robust reporting to key stakeholders and regulators. And it would unlock transparent and robust reporting to key stakeholders and regulators.

Expect to see many infrastructure owners and operators start to lay the foundations for a shift towards more dynamic asset management strategy and execution

Our prediction and advice

This year, expect to see many infrastructure owners and operators start to lay the foundations for a shift towards more dynamic asset management strategy and execution. It will take some planning and effort.

For one, it likely will require leaders to develop a very clear picture of what value means for their organization, its stakeholders and its customers. And they should think about the leading indicators that feed into those value criteria and how they plan to measure and monitor them.

Technology will also be a key consideration, both at the asset level and for process automation. Robotics and drones with AI image recognition will be used to not just identify issues but to intelligently solve them. Sensors will need to be applied and visualization tools implemented (refer to trend 4). Data will need to be integrated, analyzed by Gen AI and surfaced to the right people in a timely manner for human-in-the-loop decision making. New analytics tools like digital twins will need to be adopted and developed.

Operating models should also be assessed. New asset classes and technologies tend to lead to multi-organizational asset management models — an arm's-length owner, a small management team, various more targeted outsourced operators and maintainers, technology service providers, and so on — that may require more sophisticated governance and operating models.

It will likely also require a shift in the talent and competencies of the organization, from top to bottom. Decision-makers should get comfortable with a much more dynamic, faster and more data-driven approach to strategic planning and execution. Data is not the new oil, it is the lifeblood of organizations, in a constant cycle of being used and renewed. At the same time, a new cohort of digitally-native talent will likely be needed to implement and operate the new technologies and approaches while being groomed for future leadership positions.

As new asset classes and technologies become more integrated into the infrastructure environment, we believe the reset from static strategic planning to a more dynamic form of continuous strategy development can unlock massive potential benefits for infrastructure owners, operators, users and regulators.

The reset from static strategic planning to a more dynamic form of continuous strategy development can unlock massive potential benefits for infrastructure owners, operators, users and regulators.

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