Market and Feasibility Studies

Governments formulating long-term economic-growth strategies, companies in the infrastructure business scouring the globe for markets to support their long-term growth ambitions, and investors all require certain vital information about existing infrastructure assets. Governments need to understand whether current investments are enough to support growth, while companies and investors need to understand which countries and which asset classes represent the best opportunities.

We first establish a baseline view of a country’s infrastructure assets. How much infrastructure does it have, what state is it in, and what more needs to be spent to meet economic-growth targets? And then, assessing them from three perspectives:

  • Historical. The historical perspective looks at patterns of infrastructure spending over two decades and the current state of play, sizing total spending in each country and breaking this down for five major asset classes: real estate, transport, social infrastructure (education, hospitals, and recreational facilities), utilities, and process industries (such as mining, chemical plants, and iron and steel plants). It also shows how infrastructure investments have been financed—publicly, privately, or through public-private partnerships.
  • Future. The second perspective looks at future spending needs. By examining the current value of a country’s infrastructure assets, it is possible to estimate how much additional spending will be required by asset class. The rule of thumb is that the value of a country’s infrastructure stock is roughly equal to 70 percent of its GDP.1 1.The estimation is based on an assessment of 20 countries’ infrastructure stock between 1992 and 2012.A country aiming to increase its GDP by 4 percent a year, for example, would thus need to increase the value of its infrastructure assets by 4 percent a year. And of course, the higher a country’s growth ambitions, the higher its infrastructure spending will have to be to support that growth.
  • Comparative. The comparative perspective benchmarks the infrastructure of one country against that of others, in terms of the quality and penetration rates of each asset class (such as the length and density of a country’s road network, the number of telephone subscribers, or power-generation capacity) and how its relative position has changed over time.

The most vital pricing decisions—and, therefore, the most critical pricing processes—differ dramatically by company and industry. A commodity chemical company, for example, may focus heavily on industry supply and demand to keep prices aligned with market levels. A consumer electronics manufacturer may concentrate on customer value, using focus groups and next-best-alternative pricing information to set and adjust its list prices. An industrial-parts maker may focus on the rules and policies that govern discounts for different products and volumes.

 

Executive Leadership

 Mr. David Solomon

Mr. David Solomon

Risk Management

To make effective infrastructure investments, decision makers must balance a variety of economic, social, and environmental considerations. 

While infrastructure presents unique challenges, it also offers opportunities for both the public and private sector. Our Infrastructure Practice helps clients identify, plan, finance, deliver, and operate infrastructure that delivers economic and social value.

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