The 2022 New Deal for Construction & Engineering

The latest forecast by Global Construction Perspectives states that 2022 will be the year infrastructure will overtake housing as the main source of revenue for construction contractors. With the large government investment from the Infrastructure Investment and Job Act (IIJA) set to come into effect, construction and engineering contractors have a great opportunity to earn lucrative public-private partnership (PPP) business from the $1.2 trillion cash injection. This is just the impetus the construction and engineering industry needs to kick-start its post-COVID-19 recovery. Digital technologies can improve project delivery to help contracts and governments get the highest rate of return on their infrastructure investment. Infrastructure underfunding has been a long-standing issue.

When compared to the newly constructed infrastructure across other geographies such as Asia, the inadequacies of older infrastructure in the U.S. and the U.K. become apparent. With outdated systems that are no longer fit for purpose or are approaching end of life, these countries are sinking large sums into decaying networks. According to the American Society of Civil Engineers, the infrastructure investment gap has now reached $2.59 trillion over a 10-year period. And that’s not all — this lack of funding has greater costs than meets the eye. Estimates suggest that by 2039, this continued underinvestment could cost the typical U.S. household as much as $3,300 a year.

The need for new and improved infrastructure is clear. The timing of the IIJA is no coincidence. Much like the New Deal after the Great Depression, the IIJA is hoped to boost jobs and economic activity in the aftermath of the pandemic. The much-needed improvements in U.S. infrastructure will have long-term business benefits but there are other factors at play. Sustainability is another key driving factor. With new net zero targets set during the 2021 United Nations Climate Change Conference, infrastructure improvements will play an important role in helping the U.S. attain crucial environmental, social and governance goals.

Optimizing Investments

The government will be looking to get the highest rate of return on this substantial investment in infrastructure and will look to construction and engineering contractors who can secure the lowest cost, optimum quality, most efficient delivery and lowest maintenance and operational expense throughout an asset’s lifetime. Infrastructure and large-scale construction projects are often plagued with delays and cost overruns. In order to become the most attractive candidate to win the valuable PPP’s offer, contractors must ensure they operate effectively and efficiently with digital technology.

Standardization With MMC & BIM

Standardization is the key to construction efficiency and project delivery. Modern methods of construction (MMC) play a huge role in seamlessly standardizing builds through the use of techniques such as modular, off-site or prefab construction. Modular or prefabricated construction enables the standardization of builds to improve efficiency from design to construction. The assembly of pre-manufactured modules reduces the risk of delays by manufacturing large portions of the build in a controlled environment and reducing the complexity of on-site construction. A recent IFS study suggests that within five years, 50% of all construction projects will use modular manufacturing and/or 3D printing, with prefabricated modules accounting for up to 25% of the construction.

Building information modeling (BIM) also improves efficiency by integrating different data sets into a 3D model. Layers of data from existing construction assets can be added or overlayed, to allow repeated design processes and standardization of different construction modules. In the U.K., BIM compliance has become part of the selection criteria for contractors, but this practice is yet to reach widespread adoption in the U.S. However, its adoption could significantly improve competitiveness over less tech-adapted contractors.

Advanced Monitoring

To tackle the age-old problem of construction project delays and cost overruns, precise monitoring is essential for contractors to manage project timelines and budgets to keep progress on track. Augmented reality (AR) technology can be instrumental to this process. AR devices can automatically perform measurement scans of construction sites at precisely the same point as the previous scan, using enhanced mapping capabilities to plot the exact location. This provides accurate updates of construction project progress, to allow irregularities and errors to be detected and resolved faster.

Internet of Things (IoT) sensors can similarly monitor and relay real-time data into a digital system creating a virtual overview of project activity. IoT sensors in construction equipment can help project managers (PMs) organize efficient use of equipment and resources for optimal operation. IoT sensors can also be used to monitor conditions within construction sites, such as temperature and humidity, as these factors can cause delays and even damage to construction. Access to accurate, real-time data heightens PMs’ responsiveness to crises so that the right action can be taken at the right time to avoid unexpected costs and delays.

Service Offerings

The aim of the IIJA is long-term development so contractors would do well to align their practices with this mindset and become total asset life cycle service providers, where they can offer the service to design, construct, operate and maintain construction assets. Servicing from a single contractor has several appeals: the contractor is familiar with the asset and its maintenance history, and the client knows the quality of service that will be provided, to name a few. It is also highly beneficial to contractors as it provides a continuous revenue stream throughout the entire life cycle of asset — and for infrastructure assets that can mean decades.

One way to achieve this is to view enterprise resource planning (ERP) as much more than a back-office finance system but as an integrated business system that manages all the processes that are executed across the whole asset life cycle. This will allow a business to transition to a true digital asset life cycle model, operate with one version of the truth and give the client more value for their money. In addition, this data-driven approach will allow construction organizations to foresee where repairs, retrofits and servicing will need to take place. Then contractors can schedule these ahead of time before it is urgently needed over the course of an asset’s life cycle, keeping citizens safe and businesses running. Infrastructure projects have incredibly high sunk costs, and need to stand the test of time, as well as the rigorous demand of a fully functioning economy. Therefore, high-quality maintenance through a servitization model is essential and results in greater return on investment.

Tech-Driven Project Management

As new infrastructure projects are proposed under plans set out by the IIJA, construction and engineering firms will be vying to win profitable contracts. The increased focus on contracting for outcomes means there is greater pressure for contractors to improve project management, increase efficiency and deliver projects on time and on budget. Project delivery is key, and the integration of critical digital technologies will be a deciding factor in who is awarded high-value PPPs. These technologies will reshape the construction landscape and the way contractors compete. Contractors who ignore modern methods of construction and digital processes will run the risk of missing out during this time of huge opportunity.