Engineering & Construction Trends for 2020
Capitalizing on growing infrastructure and smart city opportunities requires new partnership models and increased adoption of digital technologies
By Michelle Meisels
Engineering and construction (E&C) companies are poised to benefit from two significant opportunities in 2020 – the US infrastructure upgrade initiative as well as the rise of smart city projects. Both are expected to position E&C companies as active participants in building a smart and connected future, thereby driving industry growth. Moreover, digital technologies will continue to reshape how this industry operates. 2020 will experience the proliferation of disruptive technologies that provide the efficiency and productivity breakthroughs the industry sought for decades.
Infrastructure upgrades promise opportunities, but require funding. The US federal government has agreed, in principle, to spend $2 trillion over the next 10 years on infrastructure, one of the biggest investments in US history . The 2020 US federal budget allocates $200 billion for infrastructure priorities across a range of sectors. This plan to invest in upgrading infrastructure – roads, bridges, water systems and the power grid – is intended to restore the country’s competitive advantage and brings with it a significant opportunity for E&C firms work.
In addition to the federal, state and local budget allocations, private funding is needed, and there is an opportunity for E&C companies to engage in public-private partnerships (PPP) that are mutually beneficial. 2020 could bring an opportunity for US firms to emulate their global counterparts who have been successful in funding major infrastructure projects using a build-operate-transfer (BOT) model. For instance, France has roadways managed by private firms. The industry could look for similar models to address increased activity in upgrading US core infrastructure assets.
Urban planners will deploy new technologies to transform their urban environments into “smart” cities. The E&C industry is experiencing the continued proliferation of digital transformation projects within smart cities around the globe. This aligns with the global megatrend toward urbanization, where 68 percent of the world population is projected to live in urban areas by 2050 . Urban planners are turning to smart solutions to support this trend, and 2020 will likely present a multitude of opportunities for E&C firms to take part in the activity.
Urban sustainability will also be another area ripe for digital opportunities. As E&C firms engage with cities to build the smart infrastructure, there will be a rise in initiatives such as sustainable buildings, energy, water and transportation that contribute to citizens’ quality of life. Cities will continue to embrace and leverage sensing and intelligent technology, to optimize traffic in urban environments, utilization of public spaces, and other vital aspects of city living.
Innovation could be a potential solution to address talent shortages. Talent shortages are a persistent challenge for the E&C industry. Bureau of Labor Statistics data suggests that since 2014, while the number of construction job openings has almost doubled, the number of new hires has only increased by 14 percent. Increased adoption of digital technologies could alleviate the pressure. For example, using autonomous rovers, E&C firms could increase the efficiency of site inspections, and deploying mechanical arms could automate highly repetitive tasks like brick-laying.
However, many of these innovative technologies bring with them new skill requirements and eventually could change the jobs of the future. Adding robots to handle repetitive tasks could redefine the roles that the humans on job sites perform. Therefore, it is crucial for E&C firms to anticipate these changes and start developing a coherent human-and-robot-talent management strategy.
What should E&C companies do to position themselves for sustained growth? E&C companies, especially those in the infrastructure project ecosystem, must focus on choosing an appropriate partnership model for delivery and funding. Additionally, making infrastructure intelligent could facilitate maintenance and enable new monetization opportunities as part of the BOT model. And addressing talent shortages requires contractors to embrace innovation to tap into the efficiencies that advanced technologies bring.
As E&C firms become further embedded in smart city development, they must bring digital capabilities to the smart city planning table. This requires an ecosystem approach, where digital offerings can be presented to city leaders as a cohesive solution. Understanding the landscape of this ecosystem play can help firms identify and invest in those smart technology capabilities that are most strategic for demonstrating proficiency in digital offerings related to smart cities. E&C firms cannot take a “one size fits all” approach. Each city is unique in terms of where they are in their smart city journey. For example, focusing on smart lighting might be the best place to start in certain cities. Therefore, E&C firms must spend time upfront developing a strategy, start small, and then expand.
With the right mindset, E&C firms could create and execute a strategy to use partnerships and embed digital in their businesses, which will position them to address the current challenges facing the industry and thrive in the long-term.
Michelle Meisels is a principal in Deloitte Consulting’s Technology practice and leads the Engineering & Construction practice. She helps clients integrate best-in- class technologies with organizational and process standard practices to achieve both qualitative and quantitative benefits.