Institutional friction is slowing infrastructure delivery
Deloitte’s 2026 infrastructure survey highlights how complex permitting, procurement, environmental reviews, and fragmented coordination can delay infrastructure delivery
Capital and financing are among the longest-standing challenges of infrastructure development, but many of the factors that determine whether projects succeed or stall often emerge long after capital has been secured.
Cost and time overruns are rarely the result of a single failure. They often reflect a pattern of inadequate planning, shifting project scope, poor stakeholder coordination, and fragmented delivery processes that compound over time.1 The constraint is no longer simply whether infrastructure can be engineered or financed, but whether institutions have the capacity to move complex projects through the systems that govern delivery.
Deloitte’s Future of Infrastructure Survey (see “About the survey”) reinforces this picture. Across 21 countries, respondents identify complex policies, regulations, permitting, procurement processes, and workforce and technology capacity among the most persistent barriers to infrastructure delivery.
Collectively, these barriers create institutional friction. Rather than isolated bottlenecks, they point to systemic strain in the way infrastructure is planned, approved, and delivered. Fragmented and duplicative rules, complex processes, and poor coordination across organizations can slow infrastructure delivery, even when funding is in place.2
According to a global research report, more than 1 in 10 large-scale mega- and giga-infrastructure projects (valued at over US$1 billion and US$10 billion, respectively) globally are at risk of significant delays or cancellation, tying up billions in committed capital and undermining confidence in future investment.3
These processes exist to protect the public interest, safeguard stewardship of public money, and reduce environmental impact, among other reasons. But when they become fragmented or duplicative, they can become bottlenecks that delay projects and slow delivery.
Regulatory complexity creates different delivery bottlenecks
Complex and fragmented regulations often slow approvals, creating bottlenecks that make it difficult to deliver even small public works projects on time and on budget, let alone larger infrastructure projects such as highways, bridges, or renewable-energy networks.4 The challenge becomes even greater when projects have to navigate overlapping approval processes across local, state, and national jurisdictions.
In Deloitte’s 2026 Future of Infrastructure Survey, respondents rank complex policies, regulations, and permitting processes as the top global implementation challenge (39%) (figure 1). Ultimately, these challenges test an institution’s ability to translate plans, funding, and technical feasibility into approved and executable projects.
What the survey tells us:
- Regulatory complexity is especially acute in Latin America, where 88% of surveyed respondents cite it as a major implementation barrier.
- It also ranks as a top implementation challenge in the Middle East and Africa (59%), Europe (40%), and Asia Pacific (36%), although the degree of concern varies.
- North America stands apart. Respondents are more likely to identify procurement complexity (34%) and obtaining environmental clearances and reviews (34%) as the primary implementation barriers, rather than regulatory complexity (19%).
- Europe also reports relatively high levels of procurement complexity (29%) and environmental clearances and reviews (33%), alongside regulatory challenges.
While institutional friction may take different forms across markets, the underlying challenge is the same. Infrastructure delivery depends on the capacity of public systems to coordinate approvals, manage risk, and advance projects.
Regional differences tell only part of the story. Stakeholders’ roles within the infrastructure ecosystem shape how they experience institutional barriers as much as geography does.
Public and private stakeholders face different institutional bottlenecks within the same delivery system
Institutional bottlenecks do not affect all stakeholders equally. Although public and private stakeholders operate within the same delivery system, survey responses indicate that governments are more likely to report fiscal and procurement constraints. Private-sector respondents are more likely to cite regulatory complexity, environmental reviews, and technology talent shortages as barriers to delivery (figure 2).
What the survey tells us:
- Private-sector respondents are more likely to cite complex policies, regulations and permitting processes as implementation barriers (45% versus 37% of government respondents). They are also more likely to identify technology talent gaps, particularly in cybersecurity and AI as a constraint.
- Government respondents are more likely to cite budgetary constraints as a bottleneck (34% versus 20% of private sector respondents).
- Government respondents are also more likely than private-sector respondents to identify their own procurement processes as a challenge (30% versus 26%).
The data reveals a systemwide delivery challenge. Improving delivery requires redesigning how public and private stakeholders move through the system together—from regulations and approvals to funding, procurement, and workforce capacity.
These differences in experience have broader consequences. Over time, institutional complexity can influence which organizations are able to participate in the infrastructure market.
Institutional complexity puts smaller businesses and jurisdictions at a disadvantage
These delivery barriers can also limit who participates in the infrastructure system. Twenty percent of respondents say permitting complexity makes it harder for small businesses to compete, concentrating delivery capacity among larger firms and reducing supplier diversity (figure 3). Organizations best equipped to navigate regulatory nuances, lengthy approval processes, and growing capacity requirements are therefore more likely to remain competitive.
Simplifying regulatory and application processes can expand access. Singapore, for example, has established an interministerial committee5 to reduce regulatory complexity and created the SME Pro-Enterprise Office to help businesses navigate cross-agency regulatory issues and unclear requirements.6
Similarly, in Ireland, the government established an expert Accelerating Infrastructure Taskforce in May 2025 to streamline and fast-track the delivery of major public projects. The task force identifies barriers to infrastructure delivery, develops targeted reforms, and oversees their implementation.7
The survey also suggests that institutional complexity disadvantages smaller governments. About 25% of respondents across the surveyed countries say the grant application process for national funds is too complex for smaller regional and local governments to navigate effectively, and can widen the gap between jurisdictions with the administrative capacity to pursue funding and those without it.
Indeed, delivery capacity is unevenly distributed. Larger governments and firms typically have the staff, systems, and technical expertise to manage complex requirements. Smaller governments and businesses may not. As a result, institutional complexity can influence which communities access funding, which firms compete for work, and which projects move forward first.
AI is emerging as a practical tool to reduce institutional friction
Governments are increasingly experimenting with AI to address some of their most persistent delivery bottlenecks. Permitting, compliance, procurement, and environmental review often involve large volumes of documents, overlapping requirements, and repetitive checks—the kinds of tasks where AI can help (figure 4).
Environmental agencies are using AI tools to automate completeness and compliance checks on environmental permit applications. By flagging issues at the point of submission, such tools help applications arrive ready for review, speeding up internal review cycles. This reduces time spent on administrative tasks and frees reviewers to focus on the agency’s core mission areas.8
What the survey tells us:
- Streamlining permitting and compliance is already one of the leading AI use cases being implemented or planned, rising from 36% today to 42% in three-year plans.
- Regional responses show similar momentum. Europe records the largest increase, from 32% today to 44% in three-year plans, reflecting the need to modernize approval processes in complex regulatory environments.
- Even in mature markets like North America, 46% of respondents identify opportunities over the next three years to use AI to reduce friction in permitting, procurement, and environmental review.
Governments are already putting these capabilities into practice. Some governments are using AI to review administrative codes, identifying millions of unnecessary words and hundreds of redundant rules. Such efforts are expected to save governments millions of dollars and thousands of labor hours.9 Similarly, New South Wales developed Legislation Twin, a digital tool that brings laws into a single, machine-readable system to improve regulatory analysis and decision-making.10
AI should be viewed as an enabler of institutional reform, not a substitute for it. Permitting and compliance are fundamentally governance and workflow challenges. AI can help streamline repetitive tasks and allow staff to focus on more complex applications,11 but it cannot redesign the delivery system or replace oversight for high-risk decisions.
Addressing institutional friction requires a systemwide approach to infrastructure delivery. That means looking beyond permitting to examine the full set of processes that shape delivery, leveraging AI and other digital tools to streamline complex workflows, and building the capabilities needed to sustain reform through stronger interagency coordination, clearer data standards, and better stakeholder analytics.
Strengthening institutional capacity for infrastructure delivery
Infrastructure delivery is constrained by institutional capacity. This challenge also extends beyond what gets built to who can participate in building it. The survey shows that institutional friction has become a core execution barrier across the public and private sectors alike, and delivery will not meaningfully improve until the processes that govern it do so.
The next frontier of infrastructure reform is therefore not only about expanding funding or increasing the number of projects in the pipeline. It is about strengthening the institutional operating system that turns investment into delivered outcomes.
by
Rana Sen
James Gordon
Glynis Rodrigues
Stephen Prendiville
Editorial (including production and copyediting): Kavita Majumdar, Pubali Dey, Aparna Prusty, Cintia Cheong, and Anu Augustine
Design: Natalie Pfaff and Harry Wedel
Cover image by: Natalie Pfaff and Jim Slatton
Knowledge services: Rishitha Bichapogu
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