Nordic transport infrastructure market
– modelling and forecasting methods for asset
management and business development
10.8.2009
Markku Riihimäki, Pekka Pajakkala
and Pertti Lahdenperä
VTT TECHNICAL RESEARCH CENTRE OF FINLAND
Background
• Nordic civil engineering and construction markets are integrating towards a common market.
• Several companies have developed an internationalisation strategy which results in merges
and acquisitions, networking with Nordic partners, or joint ventures for a project with other
market actors.
• Some resources (labour, equipment) are common for the entire Nordic region while the
contractors operate in numerous countries; market conditions in another Nordic country affect
the contents and price of the tender in another country.
• Also more integrated delivery methods are gaining in popularity and projects are procured in
larger than earlier entities which gives room for larger international players.
• Common markets with numerous potential implementers increases competition and ensures
economical realisation of contraction activities.
• Along with the open borders and markets, a national market is tied to international markets in
terms of volume and cost development: in the case of infrastructure this is likely to happen on
the Nordic level in particular.
• Clients and companies should have a more and specific market information about forthcoming
projects in the Nordic level.
• Transport infrastructure sector may receive, in a financial crisis, a lot of stimulus money for
rebuilding (on the global level). It is important to understand market mechanisms in this
situation.
• Infrastructure property of is a major asset of the society.
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VTT TECHNICAL RESEARCH CENTRE OF FINLAND
Targets
• The aim of this study is to establish forecasting and modelling methods for the
Nordic transport infrastructure markets as well as to anticipate new international
business opportunities.
• In more detail the target is
• to create a reference model and the data collection system for the anticipation of market
size by segments. “The Nordic level segmentation” is to be made by end products
(roads, streets, railways), i.e. by recognising investments as well as periodic and daily
maintenance as separate segments. Market segmentation will also be made by main
regions in each country.
• to deepen market information to the work/labour segments (asphalt work, piling, bridge
construction, etc.) at domestic market in Finland.
• to create a system that allows the anticipation of and reaction to market
changes/fluctuation in civil engineering construction. Market information can be updated
quite easily.
• to create a base of an Internet portal on future projects for (the owners to inform)
companies. Nordic level market information about markets and its segments.
• search for new knowledge and business opportunities for various actors.
• to consider a long-term transport infrastructure needs, service capacity and repair debt
as required by the development of the forecasting and disclosure system for the
transport market
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VTT TECHNICAL RESEARCH CENTRE OF FINLAND
Benefits and effectiveness
• Better, focused information on the market for the transport infrastructure sector actors,
property owners (governments) and large companies as well as other project stakeholders.
• Critical information on changes in market volume and demand for the well-timed investment
decisions by the public sector.
• Public investments aim to keep the market activities stable (quantities and prices).
• Appropriate scheduling of significant and large scale projects is a means to avoid cyclical peaks;
it can also reduce costs significantly.
• The selection of different project delivery methods and work break down structures may also be
affected by the market situation (degree of competition, time of entering in a contract).
• Critical information on changes in market volume and demand for the development of the
planning and investment decisions by companies.
• Information needs: Corporate strategy, investments, expansion, anticipation of the growth, export
opportunities, new business opportunities, strategic agility, networking, new business models and
operative management, etc
• Open portal and market information on future projects covering the entire Nordic region.
• The improved monitoring and forecasting of industry trends and costs levels makes the
governments’ control more effective in general.
• The interaction between the owner and companies increases both parties' knowledge of the
market and contribute to recognition of new service needs and business possibilities.
• The impact of market activity/volume on the construction prices becomes transparent.
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VTT TECHNICAL RESEARCH CENTRE OF FINLAND
Research project
• The study is co-operative effort between the Finnish Road Administration (Finnra)
and companies, other Nordic road administration organizations and research
institutions / universities / consultants.
• Multidisciplinary project requires knowledge on public economics, construction
process, physical assets and modeling, as well as the skills of incorporating the
results in asset and investment management and social control.
• A funding application is to be submitted to Tekes (Built Environment program) by
VTT; this is not supposed to cover the costs in other Nordic countries although the
development of the common information system is to be included in the budget
• According to the rules of Tekes the shares of financing are (budget to be fixed later)
• Tekes (the Finnish Funding Agency for Technology and Innovation)
• Industry actors (including Finnra)
60 %
40 %
• Duration of the study is approximately 24 months
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VTT TECHNICAL RESEARCH CENTRE OF FINLAND
Project parties and main results:
– knowledge, models, system, reports … common market
Project
Finnish Road
Administration
Companies
Tekes
VTT
R&D
partners
Communication, data transmission
Nordic road administrations
Nordic road administrations
Nordic road administrations
Nordic road administrations
Nordic road
administrations
National research projects
R&D
partners
GNA partnership
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