Public entities around the world need more than $8 trillion to fund social infrastructure projects through 2020. This figure exceeds the capital requirements of the oil and gas and mining industries combined. More than 40% of that $8 trillion is required to build social infrastructure in developing economies. With government finances more strained than ever, expectations for public-private partnerships (PPPs) are soaring. While private sector interest in funding public infrastructure projects has increased in recent years, barriers to private sector participation remain. Many government agencies lack the capacity and capabilities to plan, execute, and manage PPP projects. At the same time, productivity in the construction industry needs improvement. Managing these complexities can be challenging for even the most seasoned leaders. McKinsey supports all phases of project execution—from design to construction, from commissioning to ramp-up. We take a holistic view of social infrastructure projects, helping clients optimize quality, minimize costs, and keep projects on schedule.
What we do
Our Infrastructure Practice combines deep industry knowledge with functional expertise. Our global team of consultants collaborates closely with experts in complementary practices, such as Public Sector, Healthcare Systems and Services, Corporate Finance, and Strategy. We are uniquely positioned to serve the public entities and private partners responsible for planning, maintaining, and developing physical infrastructure for social purposes, including:
In collaboration with our colleagues from the Social Sector Practice, we analyze the evolving user-requirements of schools and universities to help clients manage education infrastructure. We apply innovative techniques to ensure safety, security, and health regulations are met. We help clients control investment and facility management costs, while maintaining high-quality buildings with long lifecycles.
Our consultants have a strong understanding of regional patient needs and the most current innovations in health care. We help clients design and build healthcare infrastructure that delivers the best patient and caregiver experience at the lowest possible operational and capital investment cost. By carefully analyzing markets and using regional and site- capacity planning tools, we assist clients in selecting the best long-term location for their healthcare site. Drawing upon extensive experience in capital-intensive projects, our consultants use proven tools and best practices—such as pre-fabrication and innovative contract structures—to build client capabilities and safeguard the long-term success of a project.
Public spaces and buildings
We apply our knowledge of traffic management to help clients design optimal public building and spaces. We support clients in aligning architectural design and public use objectives with capital and operational expenditure budgets. To ensure the long-term relevance of buildings, we advise clients on the strategic use of materials and on design, expansion, accessibility, and sustainability techniques.
Recent examples of our work
- We advised a leading national private hospital operator on infrastructure design. First, we supported the client in optimizing the design of consistent hospital and clinic spaces—such as corridors, patient rooms, operating rooms and offices—and then standardized the design across the client’s portfolio. The result was improved clinician and patient safety, satisfaction, and efficiency and a 20-30% decrease in constructions costs. By implementing an off-site prefabrication strategy, the client’s capital costs fell an additional 5% and its construction schedule improved by approximately two months.
- We helped a leading European football club develop the business plan for a new publicly-owned, 40,000-seat stadium. One year later, we advised the client on the optimal financing structure for the planned stadium.
- We assisted a national government's defense arm in standardizing its planning and construction of barracks and other field buildings. The client renegotiated competitive master service agreements and established incentive structures and continuous improvement clauses to decrease its unit costs over time. After reducing initial construction costs by 15%, the project is expected to decrease unit costs by 3-5% through value improvement incentives.
- We helped a leading engineering and construction firm that was interested in expanding into the healthcare space. First, we supported the client in understanding the opportunity by identifying the number of hospitals that could be built, including the number of patient beds, and the possible owner structure (i.e., public versus private). To define the client’s value proposition for this market, we assisted in interviewing existing customers to understand gaps in care and unmet needs. The client now has an action plan to aggressively grow its healthcare facilities business.
- We advised a public school system in the U.S. on how to improve the efficiency of its property assets and plan its facility and portfolio strategy. We supported the client in developing a ten-year outlook for school buildings in each district, which included identifying facilities that required immediate investment and highlighting those that are presently underutilized. To ensure long-term success, we supported the client as it created a set of criteria for facilities investment and decision-making and merged its operations and facility management units to execute the plan.
Tools and solutions
We have developed and tested a broad set of tools and solutions to better serve our clients, including:
- Design-to-Value (DTV) is an integrated approach to product development that considers customer needs, competitive offerings, and the cost to manufacture and distribute an end product. We apply the DTV optimization framework to healthcare infrastructure projects and use metrics for healthcare and hospital facilities to help clients improve their cost structure.
- Capital excellence diagnostic is a systematic approach and toolkit used to assess an organization’s capital investment practices. Our four-part pyramid to achieving capital productivity excellence touches on capital strategy allocation, portfolio optimization, project optimization, and key enablers—organization, processes, systems, and aptitude—to sustain success. This diagnostic can identify improvement opportunities for a specific project or across an entire portfolio.
- PPP in a box is an approach to transform a PPP unit’s capabilities and concurrently redesign its processes through live deals. The approach hinges on four steps: adopt a new end-to-end PPP deal-making process, use standardized tools and analytics to support the process, create a full-time PPP control tower, and install proper governance structures and enlist the necessary capabilities to enable the process.
- A variety of healthcare infrastructure planning tools, including a healthcare construction category spend- projection tool, a healthcare services supply-demand assessment, and a healthcare system facility planning approach.