Thumbnail of Peter Adriaens

Building the Future Series Smart Infrastructure Finance: The Transformational Role of Data for Democratized Digital Project Delivery

CEE’s Building the Future Webinar series hosts a presentation and Q&A about risk management and financial strategy that will help benefit the community

In the Strategic Directions Distinguished Lecture webinar series, the Department of Civil & Environmental Engineering (CEE) brings together industry professionals, educators and students to discuss important issues that affect communities around the world. Our most recent meeting focused on determining the best ways of sharing financial data and building trust to benefit community projects through “Smart Infrastructure Finance–The Transformational Role of Data for Democratized Digital Project Delivery.”

Portrait of Peter Adriaens

The March 18 meeting consisted of an in-depth presentation from our speaker, CEE professor Peter Adriaens. Adriaens earned his MS and BS degrees in environmental science and engineering from Ghent University in Belgium and his PhD in environmental science from the University of California. He is a professor of engineering at U-M CEE and the Director of the Center for Smart Infrastructure Finance. In this webinar, Adriaens discussed how the way governments finance large infrastructure projects is starting to shift towards the integration of data monetization models to reduce costs and lessen the tax burden to the community.

Adriaens noted that the end goal in financing is to deliver resilient infrastructure projects as value-added services, by converting assets into revenue-generating projects to pay for the debt or bonding of the project. According to Adriaens, several “megatrends” are driving the digital delivery of infrastructure assets and services. He noted that automation and digitization have expanded infrastructure value chains to include information technology that serves to operate, maintain and create value-added services. 

The integration of physical objects with sensors and computer abilities is resulting in new data-driven business and revenue models. Traditionally, infrastructure projects have been financed through municipal or government bonds, with additional private financing from banks, other financial institutions, and private equity investors. Smart infrastructure can be financed by innovating on the traditional model of debt and equity investments towards data securitization, blockchain models and more. Smart energy and water grids, intelligent transportation systems and early earthquake warning systems are just some of the examples that Adriaens cited in his presentation. The new finance models allow for new revenue streams, the securitization of future revenues or savings, capital reduction and operational efficiencies. 

Adriaens closed his formal presentation by highlighting future areas of research, including water risk pricing inequities and indices; environmental, social and corporate governance and green premiums in bond pricing; infrastructure asset tokenization; demand-driven harbor financing; sustainable agriculture financing; financial technology for industrial renewal; business and financing models for connected vehicle integration; and infrastructure performance management using blockchain. Data-rich financing allows for – and may require-  the leveraging of blockchain technology to securely store, transact and make transparent risks to investors.  The effect of transparency and up to date information will result in lowering the cost of capital, and reduction in financial processing and transaction costs. The combination of lowering costs through blockchain and unlocking new revenue streams democratizes smart infrastructure financing, allowing communities who may have difficulty gaining access to traditional banking centers the ability to participate in the evolving economy. 

The final portion of the webinar was a Q&A section with the panel guests, Britany Affolter-Caine, Mayank Gupta, and Tim Sylvester. Affolter-Caine is the executive director for the University of Michigan’s research corridor. Gupta is the director of data analytics and digital solutions at WSP. Sylvester is the CEO and chief technology officer at Integrated Roadways. During the panelist Q&A, Caine highlighted the need to democratize data to help underserved communities. In our current system, the organizing of funds is short on trust, not research and money. She noted that investors need to de-risk situations through relationship building and healthy competition. Gupta added that there is a need to articulate a clear vision in order to integrate funding into public projects and define the development of new business models. Lastly, Sylvester explained there is a strong need to modernize roads and to stop thinking in the mindset of doing things the way they’ve always been done. Engineers need to be concerned with the lifecycle benefit-cost to the whole community, not just to public agencies. 

U-M CEE is proud to host the Distinguished Lecture series and looks forward to more sessions in the future with industry professionals, students, staff and faculty. We appreciate all the information and guidance our special guests provided and look forward to joining everyone in our next webinar, which will be Tuesday, April 12, from 12:30 to 1:30 p.m. EDT. Our focus for the upcoming session will be Shared Resource Flows. Stay tuned for details on registration coming soon.