May 22nd, 2020
COVID-19 is undoubtedly having a massive impact on the world, and the effects on capital projects will be far-reaching and long-lasting. On a global scale, almost all organizations will need to adapt and evolve, as the status quo will leave them ill equipped to address new paradigms going forward. One industry that has been significantly and uniquely impacted is the transportation infrastructure industry.
I recently had the privilege of speaking with Ben Hammel, Director of Strategy for Transportation and Digital Identity Markets at Microsoft. We talked about the impacts of COVID-19 on the transportation industry, how organizations are adapting to this new reality, and how the industry is looking to evolve in order to be stronger going forward. We also talked about how technology can provide a foundation for this evolution, enabling new ways of working that are safer and more efficient.
What have been the impacts of COVID-19 on revenue and projects for the transportation industry?
I think if we look at public transportation across the United States, there’s been a significant impact on ridership due to stay at home orders or shelter in place orders. A significant amount of people are working from home right now, which has lowered the primary demand for public transportation of getting to and from work.
This has had a major impact on revenue. Traditionally, transportation is a significant source of revenue for many cities, counties, and states. It hasn’t just been an impact on revenue from public transportation, but also on toll systems and the collections of tolls. So projects that traditionally relied on this revenue stream for funding are significantly impacted in the short-term. And even long-term, the impact isn’t fully understood yet in terms of how that will affect future funding for projects.
Are there any specific characteristics of transportation that make it more susceptible a crisis like COVID-19?
Yeah, of course. The concept of mass transit is moving lots of people in a small space for efficiency. The traditional idea is to create efficiency with least amount of capacity. And in this case with COVID, we want to do the opposite. So that’s important to understand. How can we address still moving the same number of riders and getting there on time without risking the spread of COVID? Movement of people requires people to touch railings, touch ticketing booths, touch turnstiles, and so on. There’s a lot of physical touch in the process of people getting on and off of public transportation.
What are you seeing organizations do in order to mitigate the impacts of COVID-19?
The transportation industry as it relates to COVID has been affected based on safety and health concerns. Collections of more than 10 people using public transportation, potentially spreading COVID, has required transportation agencies to increase spending on cleaning and sanitizing all of the forms of transportation they support. They’ve also changed internal and external policies and procedures to accommodate these types of impacts to keep employees and riders safe. Some examples of new procedures are loading buses from the back instead of the front, limiting number of people on a given form of transportation, and changing frequency of transportation methods based on demand. Lower demand requires a lower capacity of vehicles.
How are organizations deploying technology to help keeps riders and employees safe?
From an employee point of view, they’ve implemented policies of measuring individual employees’ temperatures, looking for people with fevers or any kind of symptoms before they start work. So that’s one way. Number two, is instituting face-based or mask-based algorithms on the security video feeds that already exist in many transportation spaces to help understand how many of the riders are actually wearing masks. And then being able to determine what other methods do we need to do to encourage people to be safer while riding public transportation. Third, they are collecting and aggregating baseline data around ridership and the reduced capacity so when restrictions start to loosen up, they can see the impact. The measurements have actually been staggering in terms of pollution rates that have dropped significantly. Carbon outputs have dropped significantly. In many major cities, smog has disappeared, and the quality of air has significantly improved. So those are some positives of lower ridership and the reduced capacity on transportation. It has had an amazing effect on the environment. If we had to try to find a silver lining in this, right?
Are organizations looking at ways where they can keep those positive impacts going forward, but still return to a level where ridership is up and revenues start to climb?
That’s going to be an impact on how they do business moving forward. We’ve already had conversations with both our partners and major transit authorities to implement incentive-based programs for their riders to encourage them to take electric and low carbon footprint offerings. Also, to encourage folks not to use single occupant vehicles, to look for ways to leverage public transportation to continue to impact the environment through clean energy and clean transportation methods. So those incentive-based programs are some of the major research going on right now, including how to implement those as people emerge out of COVID.
How are they balancing the need to limit a large number of people in a small space, but at the same time encouraging people not to use single occupancy vehicles?
That’s a good question. And that is through data analytics. Understanding how to manage on time scheduling so that people can understand that if they skip this bus and take the next bus, they’ll still be able to get to their destination on time with confidence. That way they can actually spread the required capacity across the existing schedules. An example would be notifications and smart signs at bus stops that say the next one is arriving in eight minutes and we’ll get you to your destination at the in time for your appointment or something like that. So distribution through data analytics and implementation of smart schedules.
Second, is to utilize technology to expand transit on demand, where people can order and coordinate their trips from doorway to doorway, going across public and private transportation to get to your destination efficiently. Artificial intelligence and machine learning will allow end users to request beginning and end points and see the optimal way to get there – from a safety and clean energy point of view, a financial point of view, and efficiency of time.
Have things gotten permanently more complex for the industry or do you think this is temporary instability?
Permanently more complex. There has been two years of digital change happening within two months based on COVID. And so what is going to be important is looking at how to leverage technology and data analytics to emerge more efficient with strategic priorities in place. Introducing new policies and procedures, as well as the implementation of technology to strengthen and grow the transportation business moving forward is, will be very complex.
What do organizations need to do in the short-term to adapt and get through this crisis?
I think the primary short-term need is to take care of employees and riders – their health and their safety. Next is making sure you get organized and in control of costs and resources. How do you optimize resources? How can you be efficient with the minimum number of workers? That’s short term.
Midterm, as we start to emerge out of COVID, as we continue to open up businesses, as we start encouraging people to move out of their house, we need to look at how we are managing capacity limits on certain forms of transportation. How are we actually reducing touch? Introducing ticketless solutions. How are we managing schedules more efficiently to offset the impacts of lower capacity? Introducing new platforms like mobility on demand, or mobility as a service. And from a projects perspective, how can we be more efficient? Are we prioritizing and selecting the right projects to support new business goals and initiatives?
How are transportation organizations going to need to evolve going forward?
I think long-term one focus will be on how to manage money differently. There will be new programs to figure out that will drive revenue. So how do we include smart parking? How do we include congestion based tolling prices? That’s a very hot topic in transportation right now, to figure out congestion-based pricing and incentives. On given days in New York City, the wait to get in and out of tunnels and across bridges is ridiculous. So what they basically are doing is increasing tolls during those times to discourage people from driving and encourage them to take public transportation. How can agencies manage these new funding sources and revenue streams so that they go back into the projects that will have the greatest impact?
We will also see more implementations of drones doing video analytics with AI and machine learning. They can do object recognition around cracks and potential impacts on road and bridge deterioration. Railways are traditionally difficult to do maintenance on. The collection of data from drones will help make smarter decisions regarding the prioritization of projects while also helping to control costs.
Do you see any common traits of successful organizations over the past few years? Will those organizations be better equipped for the future?
Yeah, I think there are. The transit authorities and the transportation agencies that have gone cloud-based have much greater flexibility to implement new policies, procedures, and technology to address these challenges. So, the migration from a traditional data centers to cloud based solutions allows them to take advantage of software as a service, mobility as a service, and platform as a service. It has been a positive impact for transportation organizations across the world. They need to manage costs better. They need to reduce costs related to their technology infrastructure. Basically, technology can enable decision makers to implement solutions that provide a high level of service at a lower cost. With the lack of revenue coming in, budgets are significantly impacted. Budgets previously allocated to fund physical infrastructure improvements – improving our roads, improving our bridges, improving our tunnels, improving the safety for transportation, now have to be re-evaluated and prioritized differently. So, transportation leaders have to think differently and take advantage of technology to help with that rather than just conducting business as usual.
What are you seeing in terms of digital transformation initiatives in the industry?
Another trend in the industry is for transit authorities, departments of transportation, and other transportation agencies to form a transformation committee. And the transformation committee’s goal is to work as a team to bring a new way of business into a traditional structure that’s been run the same way for decades. And so what I mean by that is it’s actually a layer of individuals hired in some cases from outside of government to come in, analyze, make data driven decisions, and implement efficiency and cost management solutions on top of technology to optimize the agency, reduce costs, and provide a higher level of service to riders and employees.
Are the organizations that are leveraging these committees moving faster and with more agility? Do you feel like they’re in a better position going forward?
Yes to all of those questions. Governors have typically provided expanded empowerment to transformation committees in terms of acquisition of technology. In many cases this can eliminate red tape and gets solutions implemented quicker and more efficiently. Bringing results quicker to the agency.
Do you think having data centricity, or a single source of truth for all projects is important for success?
Having a single point of view of all projects is important. It helps in understanding the source of funding, understanding the prioritization of one project against other projects in the same agency, and understanding the impact a project has on revenue, ridership, and safety and health of riders as well as its employees. Additionally, it provides an understanding of the impact on investments for the future and helps with project prioritization and selection. For example, instead of just adding capacity, finding ways first to add more efficiency to existing capacity to reduce costs. Data drives all those decisions.
Want to learn more?
For more insight on the transportation infrastructure industry and how technology will play a pivotal role in the future of projects, watch our on-demand webinar “Overcoming the Status Quo to Drive Transportation Project Success.” In this joint webinar co-presented by Microsoft and Hexagon, Ben joined Mark Nelson, Director of Project Portfolio Management at Hexagon to discuss new expectations for infrastructure projects and programs.