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Richard Laudy
Head of Global Infrastructure
Key Global Infrastructure Disruptors
Impact on European
International Contractors
Large projects typically take 20 percent
longer to finish than scheduled and are
up to 80 percent over budget.
Construction productivity has actually
declined in some markets since the
1990s. Financial returns for contractors
are often relatively low – and volatile.
McKinsey & Company – Imagining construction’s
digital future, June 2016
Today’s Agenda
1. China – Striking a Deal with Europe on
BRI
2. Technology – Integrating Technology and
Infrastructure
3. Off-Site Manufacturing – Driving a Step-
Change in Productivity
4. New Generations – Driving Change
China – Striking a Deal
with Europe on BRI
Annual value of completed
Chinese FDI in EU-28
2.1
7.9
10.2
6.7
14.7
20.7
37.2
29.1
17.3
20.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F
Annual values (€bn) in current prices
Note – Q1
2019
estimate of
pending
transactions
Source: Chinese FDI in Europe: 2018 trends and Impact of New Screening Policies
Rhodium Group and Merics – Mar 2019 and Pinsent Masons analysis
Chinese FDI in selected
EU countries 2000-2018
46.9
22.2
15.3
14.3
9.9
7.3
6.1
6.0
4.5
1.4
UK
Germany
Italy
France
Netherlands
Finland
Sweden
Portugal
Spain
Poland
Cumulative values 2000-18 (€bn) in current prices
Source: Chinese FDI in Europe: 2018 Trends and Impact of New Screening Policies,
Rhodium Group and Merics, Mar 2019
Accumulated £105 billion of Chinese
investment to flow into UK infrastructure
between 2014 and 2025
Source: China Invests West, Pinsent Masons, November 2014
Investment from China into UK infrastructure, cumulative values, 2014-25 current GBP billions
What is this going to mean for
European infrastructure sector?If the potential investment from China is realised
then this would help unlock growth for the UK
economy. The Challenge for Government and
the private sector is to come together to make
this happenMartin Gilbert
Co-founder and Chief Executive Officer
Aberdeen Asset Management
The key difference is China’s ability to take a
much longer-term view of risk than the UKSir John Armitt CBE
Chairman
National Infrastructure Commission
The real estate and infrastructure sectors are
the two most important markets for investment
from China into the UKZhen Yang
Investment Department
Citic Construction Co Ltd
Technology –
Integrating Technology
and Infrastructure
The evolution of Infratech – How
technology is shaping the future of
infrastructure
Infratech – the integration of
digital technologies with
physical infrastructure to
deliver efficient, connected,
resilient and agile assets.
Pinsent Masons – The evolution of
Infratech – How technology is
shaping the future of infrastructure,
October 2017
Technology and Off-Site Manufacturing
– Driving a Step-Change in Productivity
94%
35%
24%
33%
13%
98%
53%
53%
43%
14%
Sub-Contractor
JV Partner
In-House
PPP
PrimeContractor
How will Infrastructure engage with Technology
Past Three Years
Next Three Years
Source: The evolution of Infratech – How technology is shaping the future
of infrastructure, Pinsent Masons, October 2017
Technology and Off-Site Manufacturing
– Driving a Step-Change in Productivity
58%
18%
36%
53%
35%
87%
58%
36%
14%
5%
Transport
DigitalCommunications
Energy
SocialInfrastructure
Water andSanitation
Which areas of Infrastructure will Technology impact
Past Three Years
Next Three Years
Source: The evolution of Infratech – How technology is shaping the future
of infrastructure, Pinsent Masons, October 2017
Off-Site Manufacturing
– Driving a Step-
Change in Productivity
Construction Productivity
Stagnant for Decades
1.0
2.7
3.6
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Construction Total Economy Manufacturing
Annual % change 1995-2014
Source: Reinventing Construction, McKinsey Global Institute
Technology and Off-Site Manufacturing
– Driving a Step-Change in Productivity
• Lack of skills and labour shortages driving Off-Site
Manufacturing globally.
• China emerging as a market leader e.g. Broad Group.
• Off-Site Manufacturing will drive significant productivity
improvement (50% improvement is needed in UK).
• Contractors will need tighter control over workflow and
improved supply-chain management.
• Significant rise in the number of contractors investing in
Off-Site Manufacturing facilities.
• Major Tech players such as Amazon, Google and IBM
see construction as a sector ripe for disruption.
Global Construction Markets 2018-30Cumulative Volumes US$ trillions in 2017 prices and exchange rates
30.6
30.5
18.9
14.0
12.7
78.3
28.9
10.6
4.5
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0
Western Europe
North America
Asia Pacific(Developed)
Eastern Europe
Latin America
Emerging Asia
Emerging Asia (Excl.China)
MENA
Sub-Saharan Africa
Source: Global Construction Perspectives and Oxford Economics
www.globalconstruction2030.com
New Generations –
Driving Change
Change in Age Structure of EU-28
Population, 2017-2050
15.6 15.5 14.9 14.7 14.8
65.0 64.2 61.2 58.3 56.7
19.5 20.4 23.9 27.0 28.5
2017 2020 2030 2040 2050
% of total population EU-28
Age 0-14 Age 15-64 Age 65 and over
Source: Eurostat, Mar 2019
Population Change in Germany 2018-2060
82.8 83.8 84.6 84.1 82.7 80.8
54.5 54.350.9 48.8 47.6
44.9
2018 2020 2030 2040 2050 2060
Population in Germany (millions)
Population Working Age Population
Source: Eurostat, Mar 2019
Richard Laudy
Head of Global Infrastructure
Key Global Infrastructure Disruptors
Impact on European
International Contractors
