Transport is beset by uncertainties that undermine attempts at long-term strategy. Rapidly advancing technology, climate change, political upheaval and changing customer needs all play a part in making the future ever harder to predict. COVID-19 has been a huge disruption yet it’s also given the industry a chance to reset. Nothing less than a complete rethink of strategic planning with a new focus on customers will do, as transport sets out to recover in a post-pandemic world.
The big issues apply across the sector. Finding the innovative technology to keep ageing networks safe and reliable is an ongoing challenge, whether it’s creating smart motorways or upgrading and expanding the rail network. Responding to climate change as the sector wrestles with being the number-one contributor to carbon emissions, creates regulatory and financial risk. Then there’s the importance of making investments to maintain and repair networks already stretched to their limits, operating beyond capacity and facing questions about their resilience.
Politics throws up more uncertainty, ranging from the upheaval of Brexit to the government’s ‘levelling up’ agenda. The government is set to invest £600 billion in infrastructure over five years. It’s a positive development, but exposes the limitations of rigid planning and timetables for current and future transport projects. The recent announcement of the Williams-Shapps Plan for Rail underlines the impact of political decisions upon the sector, changing the landscape for decision making.
Amid all this, customers continue to expect more. This alone threatens to wrongfoot the long-term projects that dominate transport. COVID-19 has added more variables, posing new questions about how and why people travel. For example, the rise of megacities was a solid pre-pandemic trend, but signs are growing that more people now want to relocate away from cities. London has already seen a three per cent drop in population. It’s hard to tell how permanent the COVID-induced switch to remote working will be. Cycling and walking have grown sharply in the pandemic, as customers are less willingness to be in large crowds. Here again, no one can yet be sure if this change will stick. But with rail
passenger numbers currently just 30 per cent of pre-pandemic levels, and satisfaction at a ten-year low in 2018, the industry can’t rely on customers automatically coming back.
So, how do businesses make investment decisions now when planning for an uncertain future?
Retake the initiative
The big challenge for transport is how to retake the initiative. The industry is built around complex projects and long-term funding cycles that call for long-range planning. But this is a bad fit with rapid, unpredictable change. Businesses will need to reset their planning to understand the strategic questions they should be answering. This includes focusing projects on the needs of customers, not the supply chain, as they have in the past. They’ll also need to learn to be more adaptive, making better use of data that gives them a clearer view of the future.
Get clarity on key strategic questions
Transport projects are getting bigger and costlier. The UK government’s Major Projects Portfolio has reduced by a third since 2016, but costs have risen by 44 per cent. Meanwhile, confidence in their success has dropped every year since 2013. A 2020 study of why major projects fail singled out decision-making and strategy as leading causes. Too often strategy isn’t keeping up with reality. The assumptions that lead to a green light no longer apply several years into the project, and the risk is that it will end up meeting a need that’s changed.
According to the 2020 Infrastructure Projects Authority (IPA) annual report, transport has the second-biggest portfolio and the second-highest whole-life cost by department. Of 17 live projects, three have red flags for delivery confidence: Crossrail, East West Rail and High Speed Rail. The DfT and IPA have already recommended managing the portfolio better to cut risk, boost efficiency and get more value for money.
All this means organisations have to become clearer about the strategic question the project is answering. If this still isn’t resolved by the time delivery starts, it’s far less likely that projects will deliver the benefits they’re meant to. Only through strategic clarity comes the ability to align delivery and cost management from the portfolio level down to project delivery.
Use data better to look beyond the horizon
The past is no longer a guide to the future. Modelling based on known scenarios and predictable outcomes used to be a solid base for decision-making, but not anymore. COVID-19 has underlined that. So the industry needs a better basis for its plans. Above all, it needs more horizon scanning and more access to real-time data.
Building real-time data into modelling is essential to make current trends part of future strategy. In June 2020, the Department for Transport (DfT) used data from 2002-2014 to update the Transport Demand Model it uses to forecast traffic. But this data was already six years out of date and didn’t include the effects of the first three months of COVID-19. Six months later, the DfT predicted road traffic could fall by 19.2 per cent.Building real-time data into modelling is essential to make current trends part of future strategy.
Businesses need continuous horizon scanning they can ramp up to match disruption. The European Commission Joint Research Centre has showed what this kind of foresight capability could look like. Its Transport Research and Innovation Monitoring and Information System (TRIMIS) is an open-access system that analyses and spots new and emerging technologies and trends, and helps assess current and future research needs. The DfT’s National Public Transport Access Nodes (NaPTAN), an open-access register of every place where passengers can join or leave public transport, is potentially a good basis for understanding UK usage trends, and a start for sourcing real-time data.
Learn to adapt
Better data and horizon scanning are an essential first step to becoming more adaptable and flexible. They give insight into emerging issues and help organisations make better decisions. But disruption can still come without warning. And responding well means being adaptable. In its Autumn 2020 spending review, the government cut £1 billion, or about 10 per cent, from its five-year pipeline of rail enhancements. The industry will now have to reprioritise its portfolio to minimise the impact on the programmes that customers most value. Upheavals like this mean having to adapt and still deliver on strategy.
Currently, though, transport is more likely to shut out the reality of complexity than embrace it, preferring to lock plans in place to keep projects focused. Only a few long-term projects (LTPs) are conducting more frequent reveiws to re-evaluate strategic value mid-project. This leaves them with little defence against disruption, and no way of benefiting from it. Being more adaptable will keep value in sharper focus even as it changes – and that will make investment less risky.
Rail is a case in point. With demand so far down on pre-pandemic levels, rail must adapt if it’s to build back stronger with a different proposition based on leisure travel. And it must do it against a backdrop of competing priorities for public money and lower revenues. Only an integrated public transport service offering door-to-door connectivity across all modes will make the sector resilient. But this calls for planning based on new assumptions, and working towards different outcomes. Meeting the UK’s net-zero target by 2040 is a prime example of the prize on offer. Transport has a lead role to play here, but it will have to bake new thinking and targets into its planning before it’s too late.
Like other industries, transport will also need to take an adaptable approach that brings results earlier in projects. The IPA’s annual report says the median length of DfT projects is 11.6 years. It’s no longer possible to wait this long to realise the benefits of major projects. Working towards aims like lower emissions and more accessible transport means opening up benefits at different stages in the project lifespan. In those 11.6 years, needs will change, along with the ability to meet them. A more flexible, incremental approach to projects keeps up confidence in projects and lowers risk. It also makes it possible to end projects that aren’t delivering. And in an environment where funding and circumstances are forever uncertain, that could become essential.